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KQ drops commercial director as revenues drop sharply

Saturday January 19 2013
EA-KQ

Kenya Airways has dropped its commercial director, in a harbinger of a possible reorganisation in the wake of the largest drop in revenues experienced by the airline in the past five years. Photo/FILE

Kenya Airways has dropped its commercial director, in a harbinger of a possible reorganisation in the wake of the largest drop in revenues experienced by the airline in the past five years.

Mohan Chandra, 61, served his last day as commercial director on Friday, January 18, when his contract ended.

KQ head of communication Chris Karanja confirmed Mr Chandra’s exit, while a different source said: “Both parties agreed to mutually end the contract.” The source added: “Being the commercial director, he was the one responsible for the selling.”

Jimmy Kebati, the airline’s head of network planning, has been asked to serve in an acting capacity as the hunt for a substantive replacement for Mr Chandra gets under way.

Mr Chandra had served in the position since August 2009, coming in from the Emirates Post Group where he was the chief operating officer.

The airline reported a Ksh5 billion ($57.4 million) drop in revenue in the six months to September 2012, the largest drop in the past five years, with passenger numbers remaining flat at one million.

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It is losing out on passengers in Europe, possibly because of the economic crisis, increased competition and its reputation for flight delays.

It lost 15 passengers for every 100 carried in the first six months to September 2012 compared with the same period a year ago.

The challenge in Europe has forced KQ to cut back on some routes — such as Rome — which were not as profitable.

“Air traffic in Africa is still growing, and the same can be said about the Middle East, Asia and the Far East. The growth in passenger numbers in those regions was however mostly offset by the declining numbers on the European routes,” said William Githui, an analyst with Faida Investment Bank.

“I personally expect the demand to increase marginally but stiff competition will make it hard to offset losses,” said Mr Githui.

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Mr Chandra’s exit came at the end of a week in which the airline got a reprieve from the courts, on January 14, after the Industrial Court froze the order to reinstate 447 employees it had laid off in September.

However, two days later, the workers moved back to court to overturn the January 14 directive.

KQ laid off 578 workers in September, hoping to reduce the wage bill by about Ksh1 billion ($11.5 million) a year. The airline said the wage bill had doubled by Ksh6 billion ($69 million) in 2007 to Ksh13.4 billion ($154 million) in 2012.

The fact that KQ reported a drop in revenues has piled pressure on the management to grow sales and improve operational efficiencies.

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