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Kenya Airways embarks on aggressive drive towards profitability

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Kenya Airways has embarked on an aggressive campaign for cost savings and premium passengers, after years of losses following a slump in tourism and large debts incurred to buy new aircraft.

The campaign is being championed by the airlines’ new chief executive officer who took over the helm in June last year, Sebastian Mikosz.

One of Mikosz’s first decisions was to shut the airlines’ outlet in the capital Nairobi’s downmarket Accra Road, which served thousands of small traders who fly to the Far East to buy cheap goods in bulk.

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Polish native Mikosz, who helped turn around flag carrier LOT Polish Airlines as its chief executive, needs to stem those losses before it can begin to pay down $2 billion of debt restructured in November to stave off the airline’s collapse.

To achieve this mission, the airline is banking on some upcoming projects:

  • A new economy plus class to be rolled out by the end of the year designed for business and wealthy leisure travelers, including growing numbers of American tourists and executives from dozens of Nairobi-based U.S. Firms.

  • The airline also plans a direct route to the Indian Ocean luxury tourism island of Mauritius.

  • The “$100 million project”, which is named for the revenue expected from direct flights to New York starting in October.

  • Add a second daily flight to Amsterdam in high season alongside KLM.

The new economy plus project will require new seats with the same capacity by using space between them.

“We are working on a pretty big reshape of the onboard experience,” Mikosz said.

The U.S. route will compete with indirect flights from established players such as Emirates [EMIRA.UL], British Airways and Ethiopian Airlines [ETHA.UL] and test Kenya Airways’ ability to reshape its image from an Africa-focused carrier.

“We still have to prove that we can produce an operating profit,” Mikosz said in an interview in his office overlooking airport service hangers.

“That is the biggest challenge that we have in an environment where you have a lot of competition.”

Twenty five foreign airlines operate out of Nairobi’s main airport, including Turkish Airlines which is expanding in Africa and state-owned Emirates, South African Airways and Ethiopian.

Mikosz describes this state-backed competition as his biggest fear as he tries to turn around a publicly listed firm owned 48.9 percent by the government and 7.8 percent by Air France/KLM (AIRF.PA) and attract a strategic investor.

“It is really sometimes very frustrating when you see that somebody can have much lower costs thanks to this protected environment and you have to face a real free market economy,” he said.

Kenya Airways’ plans mark a shift from a focus on African air passenger demand, which the International Air Transport Association (IATA) sees growing by almost 6 percent a year over the next decade due to increasing economic output and poor road and rail links.

Kenya hosts regional hubs for 48 U.S. or U.S.-based businesses like Google (GOOGL.O) and IBM (IBM.N) and the United States is the fastest-growing source of tourists, many changing planes in Europe or the Gulf in more than 20-hour trips.

Jan Mohamed, chief executive of TPS Eastern Africa (TPSE.NR), which runs the Serena chain of luxury hotels and safari lodges, said people would pay extra for direct flights, which take about 15 hours.

Tickets to New York have begun retailing for around $1,000 return, compared with about $1,500 for an indirect flight.

A former executive at Kenya Airways, who helped return it to profitability after years of losses in the early 1990s, said the new strategy was sensible, but held some risks.

“The money is in the business part of the operation. The leisure side will give you volume but it gives you volume at low rates,” he said, cautioning that the airline must be careful not to undermine Sky Team Alliance partners like Delta (DAL.N) and Air France KLM, which feed it passengers from America.

Forty-year-old Kenya Airlines, which flies to 53 destinations with 38 Boeing and Embraer planes, has not said when it will return to profit.

It lost 80 engineers to higher paying Mideast rivals before the restructuring and Mikosz, who says the U.S. route will create 150 new jobs, fired 140 technical staff after a strike in November.

Kenya only got U.S. security clearance a year ago after a major refurbishment of Nairobi’s main airport and the United States extended a warning last week over the threat to aviation from militant activity in eastern Kenya, which borders Somalia.

The company, which reports full-year results in June, had a $251 million loss in the financial year 2016-17 and negative equity of 45 billion shillings.

The government restructured its debt in November, converting loans to build up its stake from just under a third to preserve a national carrier that serves the vital tourism sector and growing foreign investment.

Shareholders found their holdings diluted 95 percent by the restructuring but shares more than tripled to 18.50 shillings ($0.1829) before dropping back by around four shillings.

The government has guaranteed some of the airline’s debts and Mikosz and his team have 10 years to clear them.

“Sell more tickets and cut costs,” said the CEO, who has headed up major Central European online travel agent eSky.pl as well as helping to rescue LOT from bankruptcy.

“It’s always the same game.”

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Nigeria General Elections postponement not politically influenced – INEC

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Nigeria’s electoral body, Independent National Electoral Commission (INEC) has cleared the air, saying its decision to postpone the general elections a few hours to the commencement was not politically influenced.



INEC chairman Mahmoud Yakubu said at a press conference that “The decision has nothing to do with security, nothing to do with political influence and nothing to do with lack of resources.”

The postponement heightens the political tensions in the country, especially between the ruling All Progressives Congress and the main opposition People’s Democratic Party.

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The parties have accused INEC of kowtowing down to the political influence exerted by either party to postpone the elections which ought to begin the presidential and National Assembly elections on Saturday, February 16 2019.

PDP and APC faulted INEC’s decision to reschedule the presidential and National Assembly elections will hold on February 23 while the governorship and state houses of assembly elections will take place on March 9.

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Nigeria: Reactions trail INEC Postponement of 2019 General Elections

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Reactions have trailed the decision of The Independent National Electoral Commission (INEC), to postpone the Presidential and National Assembly elections earlier slated for today by a week, citing operational difficulties.



Prior to the postponement of the election, the PDP accused INEC of hoarding the presidential and senatorial elections result sheets for undisclosed reasons.

The party also revealed that its monitoring and intelligence showed that INEC had been distributing sensitive election materials in most states of the federation without the Presidential and Senatorial elections results sheets.

The National Publicity Secretary of the Party, Mr. Kola Ologbondiyan, in a statement said that the party’s agents were being denied the INEC accreditation and identification cards, ostensibly to shut them out of the election monitoring process and allow the APC a field day to manipulate the process.

According to him, “The development is already heightening tension and suspicion of underhand method by the commission to open the elections for manipulations and allow the APC to enter fictitious results for onward transmission to collation centres.”

The PDP also rejected alleged substitution of the already trained INEC adhoc staff in various states of the federation with members of the APC.
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The party said that PDP would never allow “this unscrupulous attempt at power hijack to stand.”

He stated, “This surreptitious ploy to use APC members as polling staff is a direct template by the APC in collusion with some INEC officials, to rig the elections for the APC.

“This affront to the collective quest by the people for a credible election is akin to sitting our nation on a keg of gunpowder.”

A renowned political analyst in Lagos state, Isaac Abiola on his part expressed displeasure at the postponement, citing the electoral body’s insincerity the worrisome part.

Mr Abiola said “I am disappointed with INEC. It is obvious that they are not sincere with us. INEC till 11:30pm yesterday claimed to have been ready and even tweeted that their situation room was ready. It is not a must to conduct elections when you are not fully ready. But the decision to postponed should have been reached and announced at least 24hrs before election. Why announce 2:30am when people were sleeping. I feel there is an arrangement somewhere.”

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Also Reacting to the postponement, Senior Advocate of Nigeria, Ahmed Raji, noted that if the postponement was towards achieving a credible, free and acceptable election, it is in order. According to him, if the reason for the postponment is actually on logistics as it is being said, it is okay instead of the Commission to go ahead and conduct an election that would put it to ridicule both locally and internationally.

Raji, while stating that it is high time Nigerians begin to see election as a process, observed that budgetary allocation for the elections came a little bit late.

According to him election materials are not things people just pick from the shop, hence the commission needs adequate time to plan and arrange for some of this materials.

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On the ruling party’s side, Arc Waziri Bulama, the deputy director general of APC presidential campaign council disclosed the party’s readiness for the forthcoming general elections dismissing claims that the APC was looking for a postponement of the polls. Bulama who disclosed this on Wednesday, February 13, stated that the council had carried its campaign all over the country. He said the responsibilities of leaders was to deliver good governance, secure the lives of Nigerians, ensure that they promote justice, rule of law, peace and freedom through their actions.



Meanwhile, the opposition People’s Democratic Party presidential candidate Atiku Abubakar said the postponement of the general election by Independent National Electoral Commission is “obviously a case of the hand of Esau but the voice of Jacob.”

“The Buhari administration has had more than enough time and money to prepare for these elections and the Nigerian people were poised and ready to perform their civic responsibility by voting in the elections earlier scheduled for Saturday, 16 February, 2019,” Atiku said in a stateemnt on Saturday.

“By instigating this postponement, the Buhari administration hopes to disenfranchise the Nigerian electorate in order to ensure that turn out is low on the rescheduled date,” he added.

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