KENYA AIRWAYS TAKES ANOTHER NOSEDIVE .... DOWN SOUTH!
Kenya Airways posted a net loss of 25.7 billion for the year 2015, from net loss of 3.3 billion for the year 2014. The losses were marked at Sh. 29.7 billion before taxes. Meanwhile, her greatest competitor The Ethiopian’s revenue for FY 2010 was $1.3 Billion though the airline did not make the list of the top 25 most profitable airlines back in 2011 as several airlines who were in the red last year made a whopping profit in FY 2010. In 2009, Ethiopian was ranked 25th in the World’s Top 25 Airlines, appearing for the first time. And in 2015, the two neighbors are flying in different latitudes and altitudes altogether!
According to KQ’S Chief Executive Officer Mbuvi Ngunze, this loss were circumstantial, he said that the airline has “had turbulent times and this loss is obviously significant. It is, however, important to know that we have made significant investments at a time when the industry generally was going through hard times,”
Strangely, Kenya Airways has pursued a similar strategy to Ethiopian, expanding in Asia and regionally within Africa to leverage the ideal location of East Africa for Asia-Africa flows. But Ethiopian’s expansion in Asia has been much faster and its pursuit of Asia-Africa transit passengers is much more aggressive.
While the airline has been struggling to secure a direct flight to Washington D.C. Ethiopian was having a field day. The airline operates the youngest fleet in the continent with an average of less than 7 years and currently serves 85 international destinations across 5 continents with over 200 daily departures. About Ethiopian Ethiopian Airlines (Ethiopian) is the fastest growing and most profitable airline in Africa. In 2014, IATA ranked Ethiopian as the largest airline in Africa in revenue and profit.
The First Service Linking the Two Cities with Africa Ethiopian Airlines, the largest airline in Africa, finalized preparations to start flights to Dublin and Los Angeles starting from June 19, 2015. Ethiopian flights to Dublin and Los Angeles will be operated three times a week with the ultra-modern Boeing 787 Dreamliner, which offers unparalleled on-board comfort to passengers.
The flights will be the only direct service connecting Africa with Ireland and the West Coast of the United States.
Travelers from Los Angeles and Ireland will be able to enjoy seamless and convenient connectivity options thanks to Ethiopian extensive network in Africa covering 49 destinations. This has been the trend even after the government initiated a multi-million dollars GREANFIELD’S project – to modernize Kenta’ biggest airport.
In fact, Ethiopian is the first airline in Africa to own and operate these aircraft. Ethiopian is currently implementing a 15-year strategic plan called Vision 2025 that will see it become the leading airline group in Africa with seven strategic business units: Ethiopian International Passenger Service; Ethiopian Regional Service; Ethiopian Cargo; Ethiopian MRO; Ethiopian Aviation Academy; Ethiopian In-flight Catering Service and Ethiopian Ground Service. Ethiopian is a multi-award winning, including SKYTRAX and Passenger Choice Awards in 2013 and has been registering an average growth of 25% per annum in the past seven years.
KQ attribute most of its losses to the cancellation of its lucrative destinations of West Africa states following the insurgence of Ebola! According to The Reporter, Ethiopian was facing these similar challenges when it made a record high profit. There is the economic recession in Europe, fuel price hike and Ebola outbreak in Africa. It was only a while ago the airline reported it has been losing USD eight Million in sales every month due to the virus outbreak which scared away passengers coming to Africa.
Apparently, other African airlines too, reported heavy losses during the same period. While Kenya Airways reported a net loss of USD 139 Million in the six months that run from April to September 2014. South African Airways incurred a net loss of USD 223 Million during its fiscal year which ended March 2014. Africa’s oldest airliner, Egypt Air, on the other hand registered net loss of USD 350 Million for the fiscal year that ended on June 2014. So what so magical about the Ethiopian?
Ethiopian Airlines generated 46.5 Billion Birr operating revenue which is up by 21 percent. It transported six million people and 187,000 tons of cargo, an increase in 13 and seven percents respectively. By revenue, Ethiopia Airlines is ranked third after South African Airways and Egypt Air. By number of passengers carried Ethiopian is third after Egypt Air and South African Airways. Ethiopian carried 3,344,000 passengers in 2010, an increase of 14.8% from previous year.
Kenya Airways currently has only four destinations in Asia compared to nine for Ethiopian Airlines. Ethiopian also has eight more regional international destinations in Africa – 45 compared to 37 for Kenya Airways, according to OAG data. In the key market of mainland China, Ethiopian has more than tripled annual capacity since 2007 while Kenya has pursued relatively modest growth.
To cement the importance of the Ethiopian in the USA market, Obama along with US Government Senators and House of Representatives paid a visit to Ethiopian Airlines, the largest Airline in Africa, during the president’s three days official Visit to Ethiopia, 26 to 28 July 2015. And in addressing the president’s query regarding Ethiopian most profitable routes, the CEO highlighted that Ethiopian is currently flying to 91 international destinations in five continents, among which Washington DC, Beijing, Shanghai, Changzhou, Hong Kong, Luanda are the most profitable ones.
The Kenyan Treasury agreed to a 4.2 billion shillings bailout for Kenya Airways earlier this year, the Nairobi-based Business Daily newspaper reported May 28.
Meanwhile, Air China remains the world’s most profitable airline with a net profit of $1.9 Billion followed by Cathay Pacific, Lufthansa, Emirates and China Southern. The largest carrier by operating revenue is Lufthansa followed by United Continental and Air France KLM. What is strange about this revelation , is that, Kenya Airways is partly owned by the world’s 8th leader in the industry – Dutch-KLM!