Billionaire Aly-khan Satchu responds to Chris Kirubi's call to close down KQ
The Founder/CEO of Investment Advisory firm Rich Management Ltd agrees that...
The business mogul who owns a foray of companies including having multiple shares in Kenya’s troubled national airline, Kenya Airways, urged Kenya to do away with Kenya airways and instead focus on coming up with a regional airline.
“There are very few African countries that have managed to have and operate a national carrier. Our countries are too small; the volumes of travels are too little, which cannot sustain the business,” Dr. Chris Kirubi.
So does his argument much as it may be right hold any water?
Aly-Khan Satchu, the Founder/CEO of Investment Advisory firm Rich Management Ltd agrees that African National airlines have been under turbulence for some time now.
“It's been very binary for African Airlines. The landscape is littered with failure from SAA to Arik Air and numerous others.” He said.
South Africa Airlines for instance is expecting to double its loss for the 2016/17 financial year from a previously budgeted R1.7 billion to R3.5 billion.
However Satchu points out that airlines are not to blame but the board tasked with managing it.
“What is clear is that governance challenges have exacted a heavy price”
Back to Kirubi who is a shareholder in KQ is the carriers, is he sure the board is irredeemable?
Another factor which has complicated KQ’s path to recovery is the entry of Gulf airlines which have eaten into the airlines profit, the latest being Qatar airways which is set to flie directly to Mombasa.
“Gulf Carriers have also staked out a very forward Africa Position “ Satchu added.
Despite all the challenges national airlines face, there are still a few which have thrived and continue to thrive so KQ should not be buried before all options have been analysed first, after all don’t throw the baby with the birth water, right!
“there are a couple of Outliers like Ethiopian and Rwanda Air who are showing that a culture of military like discipline can create success”.
In the year to June 2015, the Ethiopian Airlines recorded a net profit of 3.15bn birr ($148m) compared with KQ which recorded a historic 25 billion loss in the same period.
The financial advisor finalizes by saying it is easy to propose radical measures while what needs to be done is simply being smart.
“So it's a mixed bag. It is easy to blame size but in most examples it's been a case of poor execution. Of course economies of scale around Fuel purchase would be helpful.”
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