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Kenya Airways Expansion

Kenya Airways: The staggering cost of getting to the top

Dr. Wolfgang H. Thome, eTN, Uganda  Sep 20, 2011

Details have emerged about the potential cost of Kenya Airways’ drive to become the number one airline of choice in Africa, connecting the continent’s various destinations via their Nairobi hub.

Only recently did ‘The Pride of Africa’ sign a record breaking deal of 10 firm orders and 16 options with Brazilian manufacturer Embraer, which, should all options to turn into firm orders as, will double the size of the carrier’s current fleet. Also, when Boeing delivers nine 787 aircraft on firm order, it will allow KQ to add more long haul destinations such as flights to the US, India and the emerging tourism markets in the Far East and the South East.

The cost however is mindboggling with figures ranging from 2+ billion US Dollars upwards, according to sources in Kenya. The forthcoming share rights issue by Kenya Airways is expected to create a core fund to finance this growth, but borrowing and retaining profits at the expense of higher dividends will be other avenue the airline will have to use to be able to pay for the ambitious expansion plans.

At the same time there is intensive lobbying going on to have government boost aviation infrastructure at the country’s main airport in Nairobi, where a second runway is a must to roll out the fleet expansion, while more terminal space and parking spaces for aircraft too are required in order to handle the added passenger and aircraft load. Delays by past KAA management are now coming home to roost as capacity constraints are not only hampering Kenya Airways’ growth plans, but also prevent more airlines from flying to Nairobi or just boosting the number of the existing flights.

Kenya Airways: The staggering cost of getting to the top
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