Why doesnt KQ make profit?

[Gendarme]

I came across this piece on Quora that explains the costs of operating an aircraft, and apparently, 8 passengers on a JKIA-Entebbe flight are enough to cover the operating costs- fuel, airport fees, crew, etc. An average flight on this route will have kitu 40 pax, meaning there is a clear profit from 0ver 30 pax to cover the administrative costs. meaning wakUMBWA kwa maofisi ndio hufirishisha hio kampuni.

How much does a typical flight cost an airline?
A short haul flight of 250 nautical miles or about 460 km, flying the ATR 72-600, costs around US$1,950.00. This includes flight crew wages, airport fees, maintenance and fuel. It costs about $2,200 per flight hour.

Bombardier Q400 costs US$1,800.00 to fly 200 nautical miles, a little less than 400 km, however, carries more passengers, goes further and uses less fuel on flights over 300nm than the ATR. It costs about $2,300 per flight hour.

Boeing 737-700 costs US$3,958.00 per flight hour, which its average speed in the first hour of flight is 720 km/h. About $4,000 every 720 km. A Boeing 747-8i or Airbus A380, cost around 30% less per flight hour, but fly longer haul routes.

$4,000.00 / 120 passengers = $33.33 per passenger flight hour.

https://www.quora.com/How-much-does-a-typical-flight-cost-an-airline

 

[The real voice]

KQ is buried deep in debt...it has to pay off its debt to break even

 

[Blckrogue]

If you get in an easy coach..you are not paying for fuel and the drivers salary among other amenities only.. Easy coach has to make back money to pay for the bus.

I looked through your calculation and it didn't include the cost of the actual aircraft.

Bombardier Dash 8
Dash 8 Q-Series
Produced 1983–present
Number built 1,225 (as of June 30, 2017)
Unit cost Q400 US$31.3 million
Developed from de Havilland Canada Dash 7

I remember when one of the outfits in wilson bought a q400. They took off runway 14 went straight up and into Jomo. Someone told me once KQ expanded too quickly. Got too many planes which were sold to them or leased to them at inflated values by members of government. Don't know if it's true but it's worth looking into.

They've had numerous issues with KALPA and renumerations. Jambo jet was just a way to get people under new contracts with jambo jet essentially being the child of Kq but a different company. A lot of shady stuff going on in HR. Pilot intake only once a year which was suspended for several Years or delayed, guys who were in ab initio program in Sa got kicked out for shoddy reasons after they were in already because Kq didn't want them to graduate then have to pay them a stipend as they were on standby.

So imagine that. New planes coming in that you can't pay for. Can't pay the current staff cause over leveraged on route expansion and planes. Can't pay the new staff or get new staff to fill the new vacancies on new planes. Having old staff fly extra to compensate for increased fleet but not wanting to pay them more. Tried to make it be good will. I think they essentially cloned themselves and rebirthing through jambo

 

[Baby Panay]

KQ ilikamuliwa hadi kwa settings alafu ikawachwa ijipange.

 

[Blckrogue]

Kq typically used to do Boeing and who knows how much they paid for them. Planes are funny. The types have advantages according to where you are landing, size of passengers and range. For instance using jet may not be a good idea when you can use a turbo prop on short haul and lose only a few minutes. Your cost analysis will be differs t as well. Q400 though is expensive. Embraer and Atr are nice as well. Dash 7s, ATRs and Beechcraft 1900s thrived in Wilson and would have done them some good service on shorter haul flights. They gave an opportunity for people to thrive with those aircraft types when they didn't utilize it themselves.

 

[Gendarme]

If you get in an easy coach..you are not paying for fuel and the drivers salary among other amenities only.. Easy coach has to make back money to pay for the bus.

I looked through your calculation and it didn't include the cost of the actual aircraft.

Bombardier Dash 8
Dash 8 Q-Series
Produced 1983–present
Number built 1,225 (as of June 30, 2017)
Unit cost Q400 US$31.3 million
Developed from de Havilland Canada Dash 7

I remember when one of the outfits in wilson bought a q400. They took off runway 14 went straight up and into Jomo. Someone told me once KQ expanded too quickly. Got too many planes which were sold to them or leased to them at inflated values by members of government. Don't know if it's true but it's worth looking into.

They've had numerous issues with KALPA and renumerations. Jambo jet was just a way to get people under new contracts with jambo jet essentially being the child of Kq but a different company. A lot of shady stuff going on in HR. Pilot intake only once a year which was suspended for several Years or delayed, guys who were in ab initio program in Sa got kicked out for shoddy reasons after they were in already because Kq didn't want them to graduate then have to pay them a stipend as they were on standby.

So imagine that. New planes coming in that you can't pay for. Can't pay the current staff cause over leveraged on route expansion and planes. Can't pay the new staff or get new staff to fill the new vacancies on new planes. Having old staff fly extra to compensate for increased fleet but not wanting to pay them more. Tried to make it be good will. I think they essentially cloned themselves and rebirthing through jambo

So, in short, KQ is in deep shiet coz of poor strategy. Na head of strategy amekua replaced ama bado yuko?

 

[The real voice]

So, in short, KQ is in deep shiet coz of poor strategy. Na head of strategy amekua replaced ama bado yuko?

wana badilishaga management ka kinyasa....every bigwig in the government who was going to retirement was dumped to KQ's management....i dont blame them

 

[Ubongo]

Madeni ni mbaya hata kwa nyumba

 

[Blckrogue]

So, in short, KQ is in deep shiet coz of poor strategy. Na head of strategy amekua replaced ama bado yuko?

That was naikuni days. It's issues from then

 

[SnazzyKenyan]

Achana na 'Quora

 

[M2Random]

Reasons why KQ doesn't make a profit. M2Random's analysis:
1. Large government ownership. i.e 29.8%. Although the government does not own a controlling stake, it often bails out KQ and taxpayers shoulder all the losses from its shareholding. Government officials loot the company to the core. It is viewed as a national carrier and therefore, the government will always bail it out. If you want to be rich, join KQ's board or top management and you are enroute to billionaire status.
2. Large KLM shareholding. KLM owns 26.7% of the airline. KLM is a competitor to KQ. I have read of cases where KQ passengers are diverted to KLM flights. Basically, KLM milks KQ from the inside and any agreements between the two airlines are normally heavily skewed in favor of KLM as KQ is left to service less profitable routes just to retain market share. KLM is a cancer that eats KQ from the inside. Otherwise, why would it continue holding on to its stake after the catastrophic losses that KQ has faced over the years? Unless it is somehow responsible for the billions of losses incurred.

Solutions to the above problems
1. The government should dispose its entire stake in the company and establish another national carrier which it will own 100%.
2. The government should buy off KLM and reduce KLM's stake to zero.
3. A third party who is not a competitor like KLM should invest in KQ and own at least 51% of the total outstanding shares. This will prevent government officials and KLM from fleecing the company.
Most feasible route
The third option is the most feasible route. KLM cannot be forced to sell, and GoK cannot be forced to buy more or sell. Since the company is technically insolvent, a third party will have to come in and retire that debt. The only downside to this approach is that the new investor may ask for a rebranding from Kenya Airways to another name and it will no longer be viewed as a national carrier.

 

[shocks]

wana badilishaga management ka kinyasa....every bigwig in the government who was going to retirement was dumped to KQ's management....i dont blame them

Wacha bwana, hebu tupatie examples

 

[shocks]

If you get in an easy coach..you are not paying for fuel and the drivers salary among other amenities only.. Easy coach has to make back money to pay for the bus.

I looked through your calculation and it didn't include the cost of the actual aircraft.

Bombardier Dash 8
Dash 8 Q-Series
Produced 1983–present
Number built 1,225 (as of June 30, 2017)
Unit cost Q400 US$31.3 million
Developed from de Havilland Canada Dash 7

I remember when one of the outfits in wilson bought a q400. They took off runway 14 went straight up and into Jomo. Someone told me once KQ expanded too quickly. Got too many planes which were sold to them or leased to them at inflated values by members of government. Don't know if it's true but it's worth looking into.

They've had numerous issues with KALPA and renumerations. Jambo jet was just a way to get people under new contracts with jambo jet essentially being the child of Kq but a different company. A lot of shady stuff going on in HR. Pilot intake only once a year which was suspended for several Years or delayed, guys who were in ab initio program in Sa got kicked out for shoddy reasons after they were in already because Kq didn't want them to graduate then have to pay them a stipend as they were on standby.

So imagine that. New planes coming in that you can't pay for. Can't pay the current staff cause over leveraged on route expansion and planes. Can't pay the new staff or get new staff to fill the new vacancies on new planes. Having old staff fly extra to compensate for increased fleet but not wanting to pay them more. Tried to make it be good will. I think they essentially cloned themselves and rebirthing through jambo

Although kuna miaka kq did not record any profit from operations, na hapa huyu jamaa anaongea kuhusu paying the cost of operations.

 

[Blckrogue]

Although kuna miaka kq did not record any profit from operations, na hapa huyu jamaa anaongea kuhusu paying the cost of operations.

My fren tulizungushwa karibu I work for those guys. Ikakuwa cinema until I understood these guys didn't reaaally want to hire us.

 

[Big G]

Reasons why KQ doesn't make a profit. M2Random's analysis:
1. Large government ownership. i.e 29.8%. Although the government does not own a controlling stake, it often bails out KQ and taxpayers shoulder all the losses from its shareholding. Government officials loot the company to the core. It is viewed as a national carrier and therefore, the government will always bail it out. If you want to be rich, join KQ's board or top management and you are enroute to billionaire status.
2. Large KLM shareholding. KLM owns 26.7% of the airline. KLM is a competitor to KQ. I have read of cases where KQ passengers are diverted to KLM flights. Basically, KLM milks KQ from the inside and any agreements between the two airlines are normally heavily skewed in favor of KLM as KQ is left to service less profitable routes just to retain market share. KLM is a cancer that eats KQ from the inside. Otherwise, why would it continue holding on to its stake after the catastrophic losses that KQ has faced over the years? Unless it is somehow responsible for the billions of losses incurred.

Solutions to the above problems
1. The government should dispose its entire stake in the company and establish another national carrier which it will own 100%.
2. The government should buy off KLM and reduce KLM's stake to zero.
3. A third party who is not a competitor like KLM should invest in KQ and own at least 51% of the total outstanding shares. This will prevent government officials and KLM from fleecing the company.
Most feasible route
The third option is the most feasible route. KLM cannot be forced to sell, and GoK cannot be forced to buy more or sell. Since the company is technically insolvent, a third party will have to come in and retire that debt. The only downside to this approach is that the new investor may ask for a rebranding from Kenya Airways to another name and it will no longer be viewed as a national carrier.

for the solutions I dont agree with that...all they need is a little govt protection(gava should stop offering these gulf airlines landing spots because inaongeza compe ile mbaya).

Then they need to maximize their profitable routes eg those to west africa(KQ is king)

again they need to lower their prices a bit(compare with ET and rwandair)

KAA need again to make JKIA a transit hub(just like Bole)


after apo count tue dollars and thank me later
and o yeah...get rid of that blood sucker known as KLM(but for NSE investors,watch the KQ counter closely)

 

[GERALD9949]

First of all, KLM is not a competitor to KQ. They have never fleeced KQ. KQ and KLM complement each other when it comes to flight plans.KQ has no direct flights to North America, but KLM has to almost every major American and Canadian city. That is why, if you are traveling to the US, you can fly to Amsterdam via KQ, then go to New York via KLM.In turn, KLM, which has very few destinations in Africa, does the opposite with those flying into Africa.
I agree that KAA needs to make JKIA a transit hub, but with the Greenfield project on hold, that may not be possible as the current terminal, even after the current upgrade, may not be able to handle all that traffic.Had Greenfield gone ahead, I would have proposed that they go even further and make part of the current JKIA terminal into a hub purely for KQ, like how Gatwick Airport in London is a BA hub.
Also KQ has a huge debt, some of which dates to the East African Airways era. This, first and foremost, needs to be rid of if the airlines is to get back on its feet

 

[Slim_fit]

kq is just there so we don't as a country look poor to the outside world. ni kama kuvalisha bibi watu waone mko fiti ilhali mwalala njaa. Debts; Poor management and unsustainable goals. They only stay afloat because we taxpayers exist...ready to give a shot to their arm when their staggering becomes unbearable.

 

[bigdata]

Think about this: KQ has only 45 Planes, but they need 4,000 employees....Do you see that ratio; 4000 people for 45 planes, hope it helps you see the reality of aviation business. Its not simple as you suggest...once heard from a senior engineer at KQ that it takes Kes 1.3 Million to lift off a Boeing 737 plane to fly to particular destination. Just one flight and that was back in 2009 when dollar was about 75 bob. It should be 1.7 - 2 Million by now!!