The current market conditions and business disruptions brought about by the pandemic have been a hurdle to business continuity and organizational transformation which is leading airlines to consider a turnaround strategy as a viable option especially as the complexity of bankruptcy and insolvency filings looms
To guide it on the most viable turnaround strategy, Kenya Airways has reportedly turned to London-based Steer Group to draw up a restructuring plan to steer it through the short, medium and long-term sustainability strategies in the face of considerable losses.
KQ chief executive officer Allan Kilavuka said the London-based firm took up the assignment in May and will be retained for three months.
“Kenya Airways has come up with short, medium, and long-term strategies to help in realising two main objectives. The first is to survive the current depressed market, and the second is to implement strategies that will make the business more sustainable in the long term. Steer Group is to validate these strategies and recommend any additional supportive, or different strategies to help achieve the goals,” Kilavuka told Business Daily.
The national carrier has in recent years been met with considerable headwinds – even before the pandemic – to it’s operations that have affected its structural economic conditions and depressed passenger numbers.
As a result, Kenya Airways posted losses amounting to $335 million on the year ended December 2020. As the company continued to face high finance costs, it turned to Steer Group for a restructuring plan that would help it return to profitability. This was also a requirement by the International Monetary Fund (IMF) in order to grant the Kenyan government $2.36 billion loan.
Kenya Airways had previously in 2016 turned to McKinsey & Company to draw up a restructuring plan in the face of considerable losses. At the time, McKinsey developed a 24 point plan, focusing on debt restructuring and the sale of underutilised assets which was viewed as key for the airline’s long term sustainability.
Steer Group is expected to review and propose options with the least cost which are most effective in steering Kenya Airways back to sound financial footing, with its expertise in aviation policy and regulation, government strategy review, regulatory review advisory studies, efficiency reviews, impact assessment, and evaluation support to changing legislation, according to company information.
By Victor Shalton Odhiambo