KQ admits fleet expansion, poor ticketing major contributors to losses
The national carrier Kenya Airways has sought to assure shareholders that the airline did not make losses as a result of contracting off-shore firms in its investment affairs.
KQ Chief Executive Officer Mbuvi Ngunze and Finance Director Alex Mbugua, who appeared before the Senate Select Committee chaired by Kisumu Senator Prof. Anyang’ Nyong’o, was put to task to explain the cause of losses at the airline.
The KQ top brass defended its fuel hedging policy saying that it cautioned the organization against losses that would have emanated from fuel prices fluctuations in the global market.
The national carrier, which registered an all-time low losses of Ksh 25.7 billion after tax, is under pressure to explain the cause the losses.
However, the KQ management admitted that the implementation of the fleet expansion plan was not executed as planned and therefore contributed to the losses.
They further admitted that tickets pricing and routes cancellation – such as the New Delhi – also affected the company’s revenues.
The select committee will conduct its probe into challenges facing Kenya Airways in three months and make recommendations to salvage the firm from making further losses.
Three days ago, the Senate committee attributed the huge losses incurred by the national career to poor management and relationship with customers.
The committee said frequent cancellation of flights causing inconvenience and poor relationship with passengers, who consequently abandon using the airline is one of the largest contributors to the financial crisis facing the airline.
It also blamed the losses on poor investments decisions by management of buying and leasing aircrafts, and fuel hedging, under arrangements which are not profitable to the company, thereby leading to sky rocketing indebtedness.
The report was released less than a week after the national carrier announced a Ksh 25.7 billion after tax loss, the largest loss ever by a listed company.
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