Allan Kilavuka took the Kenya Airways CEO job on 1st of April, 2020. It was not really just the April fool's day, it was the day the airline have been grounded because of the coronavirus. I visited Kenya Airways HQ last month and have the opportunity to interview Allan.
How are you fixing Kenya Airways?
For the next 12-18 months, we need to stabilize the organization and make sure we have proper funding, the right structure, and the right fleet number to be able to grow. So far we have received about $200 million from the government but we need more to get back on our feet.
We are identifying areas of growth. We'll be efficient going forward, we are now looking at a partnership in which we signed an agreement with Congo airways. Two of our aircraft are in Congo flying for them.
So what percentage of the fleet is operating right now?
We’re operating 65 to 70% of the fleet. We rotate the parked fleet around.
And what's the traffic number compared to the pre-pandemic level at this point?
It's currently about 65 -70%. Last November it was reaching up to 85% in November. In December 2021 (when Omicron is discovered) it dropped as much as 50%.
What routes are doing well for Kenya Airways?
China is definitely profitable but you know the problems, we can only fly there once a week. London is always our flagship. It's always profitable. In Africa, Johannesburg is really good. We also have a good regional route to Juba, South Sudan, and Entebbe in Uganda.
Is your Nairobi to New York JFK route profitable?
Not as much as we'd like it to. I think there are certain things we didn't do right at the beginning cause we were flying quite frequently, so we reduced it. Then we increased it. So we keep moving it up and down a
At the moment is twice a week and it's low season. The load factor is just south of 60%, obviously for a long flight, you want it to be 80% plus.
But the summer is looking very promising. That's good news, very promising, cause there's a lot of leisure traffic that is coming down. The frequency is what is going to take to probably going to be five a week.
Any plans to open a new destination?
Not in the immediate time.
We are trying to stabilize the network and as soon as you stabilize the network, then you look for opportunities to grow again.
How would you describe your labor relationship within the airlines?
We are continuing discussions with our strong unions to give us some concessions in certain areas.
The salary payout is currently 90%.
The agreement was to share the pain instead of letting people go.
There was no layoff. We did two things. We had contracts that were coming to an end, which we did not renew. We also had voluntary exits program which froze the hiring of new people. We were able to reduce the staff by about 1000.
In total, we have about 3,600 compared to about 4,600 staff at 2019 level.
Tell me more about the partnership with South African Airways
We are working with South African Airways to see how we can grow in Africa together. They've just come out of business rescue.
The strategy will make each other’s network more efficient. We believe that's a much faster strategy for growth and for reduction of cost. Also, we can present more options to our customers, as opposed to increasing fleets in your own little airline.
For example, Kenya Airways doesn’t fly to Sydney but with this partnership, we can actually use South African to get to Sydney, also South African Airways can fly to Beijing with Kenya Airways.
The end game is, that we want to form a Pan African airline group.Allan Kilavuka, CEO Kenya Airways
So this is a way of growing two relatively smaller airlines into one bigger group that can be formidable and can raise equity much faster
We had just signed the comprehensive agreement. We have a task force that meets every week to agree on things. For example, what can we do together when it comes to maintenance and repairs?
In Africa, we need to realize that we have a very fragmented industry. Coming up with new airlines is not going to solve the African problem. And that is why I am a champion of the consolidation of African airspace.Allan Kilavuka, CEO Kenya Airways
I have no objection to setting up new airlines, but it has to be coordinated so that we have economies of scale. The Pan African airline group coordinates and make sure that it's the most efficient network and has the lowest possible unit cost.
Otherwise, if we continue fragmenting the market, we will make it so inefficient that we will all not be able to make it.
And that's why our solution, I think, is going to work perfectly because you still have a tail called Kenya. You still have a tail called South Africa and or any other airline that joins. So the national pride and the sovereignty are maintained, but behind that, there'll be a lot of coordination together.
How do you see the future of Kenya Airways in 3-5 years' time?
I think that this airline is very promising. And I'm not just saying that cause I work here.
I'll tell you why. The location geolocation is probably the best location that you can have. Secondly, we have extremely good people here. When you fly with us, you'll see how good they are. We have the right ingredients for growth.
And thirdly, The middle class is growing. The African continent is growing and the content is integrating. So there's going to be demand for more travel and more connections between city pairs.
Now we need to take advantage of that. Of course, we need to be more efficient and make sure we have the right strategy when it comes to network, fleet, schedules and partners.
I think we will be profitable in 2024. I think we'll be the preferred airline. You can hold me down to that.