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"id": 1393941,
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"type": "speech",
"speaker_name": "Hon. Kingi",
"speaker_title": "The Speaker",
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"content": " Proceed, Cabinet Secretary to respond."
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{
"id": 1393942,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393942/?format=api",
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"type": "speech",
"speaker_name": "Hon. Kingi",
"speaker_title": "The Speaker",
"speaker": null,
"content": "The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
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{
"id": 1393943,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393943/?format=api",
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"type": "speech",
"speaker_name": "Hon. Murkomen",
"speaker_title": "The Cabinet Secretary for Roads and Transport",
"speaker": {
"id": 440,
"legal_name": "Onesimus Kipchumba Murkomen",
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"content": " Mr. Speaker, Sir, by way of introduction, I hope this is the last time I will answer the question about KQ because it is our intention to return it to a private company so that the Government of Kenya does not continue subsidizing it. Therefore, the public will not have a stake and we shall not come to answer questions about private companies in Parliament. Our effort in the Kenya Kwanza Manifesto is to make sure that we offload all the shares that the Government owns in KQ so that we return it to a profitable private company that will not require the subsidies that we have had to provide. If we convert the debts that they owe the Government of Kenya to equity, it increases their shareholding. Hopefully, our manifesto objectives of getting a strategic investor will make it the last time we discuss KQ. Mr. Speaker, Sir, as captured in the table below, I am sure the hon. Senator has the response which was submitted in good time. The Ministry through KQ reported an operating profit in the first half of the Financial Year 2023; a milestone it had not reached in the previous six years. The Airline has made a 120 percent significant improvement reporting an operating profit of Kshs998 million compared to the same period in the previous year where there was a reported loss of Kshs5 billion. Table No. 1.0 explains further. The growth was fueled by the 56 per cent increase in group revenue reaching an impressive Kshs75 billion. Additionally, our passenger numbers surged to 2.3 million, an impressive 43 per cent growth from1.6 million. Our earnings before interest tax, depreciation, amortization and rent costs witnessed a commendable upswing of seven points. Our gross profit improved by an impressive 131 per cent resulting in these commendable outcomes. We acknowledge that our legacy debt brought down the impressive operating results primary to the huge forex losses because of the depreciation of the Kenya Shilling against the United States (US) Dollar. These forex losses were primarily due to the re-evaluation of the US Dollar denomination loans and liabilities. This finance charges in total amount of Kshs22 billion therefore heavily impacted on our overall results. The airline industry is highly competitive and therefore profit margins in the industry are thin. According to the International Airport Transport Association (IATA), the average net profit margin for the global airline industry is typically less than five per cent. An overview of airline profitability compared to other industries is captured below- Vulnerability to external factors. Airlines are highly vulnerable to external factors that can impact the profitability including fluctuations in fuel prices, currency devaluation, supply chain challenges and geopolitical events. Capital intensity: Airlines require significant capital investment in aircraft maintenance and infrastructure which can limit their profitability. This is unlike other businesses that do not have the same level of capital intensity."
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"id": 1393944,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393944/?format=api",
"text_counter": 99,
"type": "speech",
"speaker_name": "Hon. Murkomen",
"speaker_title": "The Cabinet Secretary for Roads and Transport",
"speaker": {
"id": 440,
"legal_name": "Onesimus Kipchumba Murkomen",
"slug": "kipchumba-murkomen"
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"content": "The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393945,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393945/?format=api",
"text_counter": 100,
"type": "speech",
"speaker_name": "Hon. Murkomen",
"speaker_title": "The Cabinet Secretary for Roads and Transport",
"speaker": {
"id": 440,
"legal_name": "Onesimus Kipchumba Murkomen",
"slug": "kipchumba-murkomen"
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"content": "Cynicality: The airline industry can be cynical and can be sensitive to economic cycles. During economic downturns, demand for air travel may decline affecting airline profitability. Regulation: Airlines are subject to extensive regulations including safety and security requirements, which can add operational costs. Competition: The airline industry is highly competitive with many players operating in the market. Competition can lead to price wars and reduced profit margins. Operational challenges: Airlines face operational challenges including maintenance, scheduling and workforce management, which can impact costs and profitability. Pricing strategy: Airlines often use dynamic pricing strategy that can affect their profit margins. Prices for air tickets can vary widely based on factors like demand, time of booking and seat class. In summary, while airlines provide essential transportation services, their profit margins are typically lower compared to many other industries. Their profitability is subject to a range of external factors and competitive pressures. Additionally, IATA indicates that the global airline industry is expected to return to profitability in 2024. However, financial performance across regions remains diverse. The industry’s finances are improving in all regions after COVID-19-related deaths, although not all regions are expected to deliver a profit this year. Africa remains a difficult market to operate an airline, with the economic infrastructure and connectivity challenges impacting the industry’s performance. Despite the challenges, there is still robust demand for air travel in the region, which underpins the continued move towards a return to overall industry profitability. Kenya Airways’ (KQ’s) current performance for 2024 projections is predicated on this forecast. KQ targets to return to profitability in this financial as depicted in the table. The table shows the loans acquired by KQ. I am sure hon. Senators can read about loans from the Government of Kenya. You can see what we have been giving KQ, including Kshs10 billion we gave as soon as the Government came to office. I wish to inform the House that KQ was not the only recipient of Government assistance specifically to cope with the negative impact of COVID-19. Various governments in and outside Africa have provided direct support to airlines. They include Senegal, USD128 million relief package for its tourism and air transport sector. Seychelles waived all landing and parking fees from April to December 2020. Cote d’Ivoire waved tourism tax for transit passengers. In addition, other governments that provided physical support to their travel and tourism sectors include Egypt, Ghana, Zambia, and Cameroon. We have given the list. Technically, it is worth noting that KQ has no loan facility from the Export- Import Bank of the United States of America. The US Exim Bank is a guarantor of USD841.6 million to procure six 787-8 aircraft, one 777-300ER range aircraft, and one Genx engine. This is 90 per cent of the total facility of USD924 million provided by Citibank N.A. and JP Morgan Chase Bank N.A."
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"text_counter": 101,
"type": "speech",
"speaker_name": "Hon. Murkomen",
"speaker_title": "The Cabinet Secretary for Roads and Transport",
"speaker": {
"id": 440,
"legal_name": "Onesimus Kipchumba Murkomen",
"slug": "kipchumba-murkomen"
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"content": "The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
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{
"id": 1393947,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393947/?format=api",
"text_counter": 102,
"type": "speech",
"speaker_name": "Hon. Murkomen",
"speaker_title": "The Cabinet Secretary for Roads and Transport",
"speaker": {
"id": 440,
"legal_name": "Onesimus Kipchumba Murkomen",
"slug": "kipchumba-murkomen"
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"content": "The table there gives a detailed overview of the firms contracted to provide services. We have Mckinsey on operational support in Project Safari---"
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"id": 1393948,
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"type": "speech",
"speaker_name": "Hon. Kingi",
"speaker_title": "The Speaker",
"speaker": null,
"content": " Hon. Cabinet Secretary, kindly pause there. What is your intervention, Senator for Nandi?"
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"id": 1393949,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393949/?format=api",
"text_counter": 104,
"type": "speech",
"speaker_name": "Sen. Cherarkey",
"speaker_title": "",
"speaker": {
"id": 13217,
"legal_name": "Cherarkey K Samson",
"slug": "cherarkey-k-samson"
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"content": "Mr. Speaker, Sir, since I have the answer and I have gone through it, I would like to assist the House to move fast."
},
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"speaker": null,
"content": "(Sen. Faki spoke off record)"
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