● IATA: Outlook improves slightly for African aviation, but government interference continues to stifle growth.

The International Air Transport Association (IATA), in a revision of its Global Aviation Outlook for 2012, has said that now it expects African airlines to break even in 2012, following on from a USD100million loss in 2011.

■ KENYA: Kenya Airways puts faith in newer aircraft and staff cuts as global oil prices continue to hit hard.

Citing "a downturn in passenger volumes, declining revenues, unstable fuel prices and an increasingly competitive environment", Kenya Airways' CEO and Managing Director, Titus Naikuni, (KQ) on Friday announced plans to reduce the Kenyan national carrier's staff overhead in a bit to streamline the airline following a 57% drop in profit from KSh3.5billion last year, to KSh1.6billion in Q1 of this year.

Naikuni stated that Kenya Airways' wage bill had more than doubled from KSh6billion in 2007 to KSh13.4billion in 2012 following a rise in the workforce size from 3'729 to 4'170 over the same period, which, with some 664 foreigners included, brings the overall tally to 4'834 employees. It was this increase that had eaten away at the airlines profitability and thus necessitated the redundancy drive which would start primarily with junior and management staff.

“Despite various initiatives that we have put in place, our cost base continues to be extremely high. This coupled with other direct operating costs, have put pressure on our contribution margin reducing our overall ability to operate profitably,” he explained.

Source [Kenya Airways]

Brent Crude Prices 2007 - 2012

As part of the streamlining initiative, Kenya Airways will first offer a "Voluntary Early Retirement Package" (VERP) to staff willing to leave the organization before 31 August, after which, it will pursue a mandatory redundancy programme, should the VERP fail to attract satisfactory figures.

In recent weeks, Kenya Airways has moved to implement a number of measures designed to ensure the company's viability in both the short term, and long term - with particular reference to the airlines Project Mawingo which aims to transform the airline into a more globally competitive player by 2020. In late June, it signed a mandate with the African Export-Import Bank (Afreximbank) to secure financing for Kenya Airways' fleet renewal initiative which will involve the purchase of nine (9) new Boeing 787-800s (Dreamliners) (B787s), one (1) Boeing 777-300ER (B777-300ER), and ten (10) Embraer EMB190 aircraft (E-190s). The new aircraft and their added efficiency will ensure Kenya Airways' fuel bill is kept as low as possible.