Category Archives: 787

KQ’s 787 Countdown

About four years behind schedule, and eight years after Kenya Airways placed an order, the airline is getting ready for delivery of its first Boeing 787 Dreamliner. KQ now has a teaser Dreamliner video on YouTube, and this image of their first aircraft on Facebook.  
KQ 787 at Everett, Washington
From the All Things 787 blog, at least three KQ Dreamliners are in the production stages with  ZA655, a Boeing 787-800, with GE GEnx-1B engines, undergoing final assembly at Everett, Washington
Two Dreamliners were expected in 2010 and four in 2011, but after production delays at Boeing, KQ is now expected to take delivery of a first 787 around April 2014.
Boeing did bring a 787 to Nairobi in 2011 during the Dreamliner World Tour, and Ethiopian Airlines who are the only African airline that currently fly the aircraft, seem to bring one to Nairobi each week.

EDIT: At #Mindspeak chat session on January 25, KQ CEO Titus Naikuni explained he delivery schedule of Boeing 787’s to Kenya Airways as:

1. April (1st week) 2014
2. June
3. July
4. August
5. September
6. October

So KQ get’s new 6 787’s in 2014, and another 3 in 2015, as they retire their Boeing 767 fleet and return all of them, but one, to their owners. They will also add a second Boeing 777-300 in June and another in August, and plan to refurbish their current fleet of 4 Boeing 777-200’s.

Boeing 787 in Nairobi

Boeing brought a new 787 aircraft to Nairobi as part of their Dreamliner World Tour in mid-December.

Boeing were presenting the plane to their customers who had ordered the plane in record numbers, but then had to wait for a few years more for delivery due to delays in completion of the plane. It’s first flight was scheduled for 7th August 2007 (07-08-07) but this took place in 2010 and while airlines like Kenya Airways were supposed to have received Dreamliner planes in September 2010, currently there are still only 2 Dreamliner planes in customer service (both with All Nippon Airways Japan. And while Kenya Airways (KQ) had billboards and newspaper adverts showing the 787 plane in their corporate colours, it was a Boeing coloured jet that was flown in by KQ’s Captain Paul Mwangi after a similar presentation in Addis Ababa.

There was a dinner held at the KQ headquarters the second night that the Dreamliner was in Nairobi that I was fortunate to attend. It was also a treat to meet many of the 40 staff Boeing staff who accompanied the plane on the tour through Africa and the plane attracted hundreds of visitors including local CEO’s, passengers and even a Kenyan born Rolls Royce engineer.

MC Jeff Koinange started the evening off with his tales of how he used to be a PanAm airline steward making on board announcements and this led to the discovery that his voice would take him into journalism, and later Prime Minister Raila Odinga talked growing up in UK (Kisumu) where he watched amphibious planes land on Lake Victoria (flying routes from Europe through Benghazi, Khartoum, Juba, Kisumu, Salisbury, Johannesburg) and later recapped a sequential history of Boeing aircraft development. He later spoke of KQ which rose out of the grounding of East African Airlines, it’s early loss making years as a state airlines, the heavily debated decision to privatize it, the repayment it has made to Kenyan taxpayers, and plans to make Nairobi for an African hub with a new terminal to be built next to presidential pavilion and a second runway (reason for Syokimau demolitions)

KQ Expansion: The Airlines CEO, Titus Naikuni, spoke of the group’s turnover of Kshs 90 billion and plans to double the fleet from 34 to 68 aircraft in five years (now ordered 787 and Embraer and 777-300’s which can carry 400 passengers towards that). But he cautioned that there are not enough pilots in the country (that days’ newspapers had KQ ad’s seeking new pilots for Embraer jets) and that the airline may hire foreign pilots’ out of necessity . He also said that they are happy that the airport (JKIA) is now showing construction progress and commended the Kenya Transport ministry for bilateral negotiations that have enabled the airline to fly new routes in Africa.

Ethiopian vs. KQ: As KQ prepared for their Dreamliner arrival & party events, Ethiopian Airlines ran some in-your-face ads in Kenyan newspaper with the caption that the first 787 landing in Africa was at Addis Ababa, and flown by an Ethiopian pilot. True on both – as Ethiopian Airlines which is a much older airline than Kenya Airways, with a longer history with Boeing and closer relationship in terms of customers, maintenance, training etc. Ethiopian was the first African Airlines to order the 787, (and they have even ordered Airbus A350 which is yet to be built)

Dream Flight?: There was some expectation over the three days that invited guests of Kenya Airways would get to fly on the 787 over Kilimanjaro and Mombasa but that was not to happen. The flight took place with on the last days with only a few Kenya Airways staff on-board, and passengers will have to wait till the end of 2013 to fly on KQ – or given the local African rivalry, Ethiopian may use one on the Addis Nairobi route to feed off our impatience!

Read more on the 787 Dreamliner

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Kenya Airways 2011 AGM

Having not been to an AGM in 2011, I decided to take an hour-long peek at the Kenya Airways (KQ) one as a shareholder and for sentimental reasons, including the love of aviation, because a KQ AGM was the inspiration for this blog.

There’s not been much change over the years: KQ, which has over 70,000 shareholders, has been generous with SWAG to shareholders over the years and this has ensured that they always have some good attendance (they also provide free transport from town to the Bomas venue of the AGM) – however this also means that their meetings are long and drawn out, with lot’s of time wasting (Chami), and inane questions (@ChrisKaranja 90% of all questions are related to umbrellas and food)

Some notable points

Investments: Regarding their Precision Air investment, (It’s now in the middle of an IPO) a shareholder noted KQ which owns 49% of Precision, posted a loss of Kshs. 188 million for the year to March 2011 on their investment – and looking at the Precision March 2011 ones, their pre-tax Kshs. 250 million profit was halved by forex loan revaluation adjustment of Kshs. 125 million (so the current shareholders in Precision swallowed the loss before the IPO). On their dormant investments, the KQ Chairman said one of them would be revived soon (Probably Flamingo Air, or one of two cargo companies)

– The March 31 annual dividend will be paid on 16 November…

Board– Amb. Denis Afande was retiring as a director, but there were no fireworks as in previous years – as this time, the board has settled on his replacement. Amb Denis Awori, a former Kenya rugby official and ambassador to Japan, and currently Chairman of Toyota Kenya was introduced by the KQ Chairman. He spoke briefly on his passion for the airline; he studied aeronautical engineering, was a trainee at East African Airlines (EAA was the precursor to KQ) and as ambassador to Japan participated in promoting the airline as it featured heavily in tourism promotions that were run.

Rights Issue: The Chairman spoke about their need to acquire more aircraft and pay for them including 10 Embraer 190 aircraft. The airline settled with Boeing in April on the delayed 787 aircraft (some of which were to replace Boeing 767) and the first one that was expected in October 2010, will now arrive in fourth quarter of 2013 when they anticipate loads will have increased significantly.

KQ are getting permission from shareholders (and closing the books) so they could go to the Capital Markets authorities in Kenya (& Uganda & Tanzania) but they were yet to determine the size or price. One shareholder (Mr. Karanja) cautioned that it was potentially dilutive (4X), came at a bad time (share price is low – a market price of 26 compared to NAV of 50 per share) and that a convertible bond or cheap overseas loans were better options. (FC) Karanja agreed with this, adding that they had not yet set the date, price, and structure, except that the funding plan would be a mix of debt and equity and that the new shares would create capacity for when the board decided the time was right. The KQ Chairman noted that both the principal shareholders – Government of Kenya and KLM supported the increase in capital and rights issue.

Twitter Week Top 10 December 22

Twitter is a micro-blogging tool that is really nifty for doing mini-posts, forwards and other remarks that (are on any subject) and are maybe not worthy of a full blog post. Here’s a summary of my week on Twitter in a Dave Letterman top 10 format covering tech events, new planes, sluggish car sales, strange naiorbians and other topics

10 Mainstream Blogging: #F1 blogger quits work to blog full time-best wishes @f1fanatic_co_uk! http://tinyurl.com/yegm5l3
– Great reads: the 75 best business-blogs of 2009 http://www.businesspundit.com/the-75-best-business-blogs-of-2009/ includes @emeka_okafor

9. Tech Nairobi @whiteafrican is live blogging from @AfricaGathering today, refresh this post for the latest: http://bit.ly/75WgJ3 #agathering #agnairobi09
– Look out for @afromusing’s guide to buying solar gadgets.(via @sciculturist) <-----it's about time! #giftsforocha
– Stealth Startups, Get Over Yourselves: Nobody Cares About Your Secrets http://goo.gl/fb/hLw6 (via @rafiq)
– R/t: on the @ushahidi blog – 3 misconceptions about #ushahidi

idle castle brew facility

8. Brew Chatter SA giant beer brewer SAB considering re-entering kenya market after Deal with EABL in tanzania sours (Via @Nairobi star)
– konyagi vs waragi http://chickabouttown.com/2009/12/20/konyagi-vs-uganda-waragi/

7. GoK Absurdities 1. We dont accept sealed letters for PS, unless you have delivery book 2.This gate is locked between 9am and 4pm
– Harambee house is a corruption free zone, @SupremeGREAM – and so is a police roadblock #nyayohouse
– So new Police comm. Iteere got the 3rd class Moran/Golden Heart of Kenya; but so did Pauline & Ida
– Labour leader Atwoli sermons on #citizentv opposes privatization of #nationalbank #KCB #newKCC and kenya ports authority

6. Plane Chatter– know everything about today’s maiden boeing 787 flight (weather permitting) http://tinyurl.com/yewg5pl (via @flightblogger)
– 787 has taken off, take that copenhagen. R/t @coldtusker #787 is supposed to have a lower carbon footprint so supports #Copenhagen goals
– via @FlyingEmirates a Kenyan wins Emirates A380 dream prize (to Bangkok, Sydney or Seoul ) <----i'm so jealous! http://bit.ly/8yKvNA
– @coldtusker @alykhansatchu crown will fight to keep emirates independent as long as it can (perhaps pare down new plane buys to do so)
– #onejetone among airlines appying for licenses again – mombasa, harare, london
4:43 PM Dec 18th from web

5. Investor Awareness – ICT Kenya board tender for digitization of court records http://www.ict.go.ke/images/pdfs/6593719R_2.pdf @kenyanpundit
– Securities Industry Training Institute launched in Uganda-progs on capital markets,corp.fin, asset-mgmt, entrepreneurship, corp.govnance etc
– Send Nairobi Stock Exchange complaints by SMS to 8485, cost 10/= (also to receive) http://www.nsecomplaints.co.ke/ (via @NSEKenya)
– r/t @alykhansatchu Kenya Economic Update 2009 from the World Bank http://bit.ly/90sYCp simply definitive and full of Data that will surprise
– On CitizenTV ‘how to be rich’ is a golden dream prod .i.e @alfredmutua – they had ad for cobra squad season 2 DVD as perfect x-mas gift

4. Cars, Cars, Cars – r/t @SupremeGREAM today i was at biggest car yard on ngong rd and the only people there were salesmen, wash guyz and suppliers-grim(econ)! are you seeing some slowdown in autos? soe eyards have KBE and KBH that are gathering dust. – got a KBC Mark II been in the yard that long. today took it for a random drive. 780k bring the money. down from 1050k @inexes – Wambie wapunguze bei ya hizo magari! lol @bankelele
– r/t @Shitawabah saw a LAMBOGHINI today morning at 8;59 a.m yellow KBK 001A… ! eeeiy ! * but nid t say it was hot! <--wow! really? pics?
– r/t @karuoro If you own a Toyota-use toyodiy.com to look up part numbers so you know what to order (thanks-1/2 cars in kenya are toyota)

3. Peculiar Nairobi – @mountainous nation wrote that the only 3D theatre in kenya to watch #Avatar is in Nyali. Also #F1 off-season more
– Reading sundaynation about kayamba africa new album: ‘ KA is made up of 45 members who were all present. It has 6 band members’ (huh?)
– My dad was scandalized by the food portions at ONami, full house though
– Labour leader Atwoli sermons on #citizentv opposes privatization of #nationalbank #KCB #newKCC and kenya ports authority
– Family bank atm’s are so f’n unreliable these days. Spend some of that rights issue cash propely will ya? #gotissuez
Peculiar habits of Nairobians http://sogomo.blogspot.com/2009/12/ten-nairobi-pecularities-i-could-do.html

2. Credit Crunch – @coldTusker wouldn’t be uchumi be a better pick for al-waleed ‘distressed asset’ philosopy? @coldtusker – I think Al-Waleed looks for management as well. Kingdom doesn’t supply management. Maybe he will look at Uchumi as well
– At empty local; not sure if its mid-month economy or competition from new joint up the road with #kidum playing tonight
r/t @siphojanuary More than 8 million South Africans are 3 months behind on their debt repayments – National Credit Regulator
Dubair/t @ coldtusker Read the signs. The day Emirates stops serving alcohol means the new owners are in control. Dubai may keep Emirates in name only. Who knows who owns it now? Not for public consumption. – There is no free lunch. Something has to give. I think Emirates is the ‘guarantee/collateral’
r/t @alykhansatchu Dubai = Ozymandias Look on my works, ye mighty, and despair!’ Nothing remains http://bit.ly/1wWz2g

1. Phone Woes
Safaricom I thought my phone had gone schitso calling me every minute! But its some dude who sent big #mpesa to wrong number one digit off (not me!)
– dear #safaricom there are black hole spots (no service) in Nairobi CBD #gotissuez
– Safaricom have had a really crap network in Nairobi CBD all week. Only way to call their subscribers is by using zain or orange
– #barclays call centre number works and calls picked up instantly 3900000 #safaricom should learn http://www.moseskemibaro.com/?p=763
Zain #ogilvy media clarify that they are NOT repsonsible for advertising & PR of #zain africa #passthebuck #itwasntme (via @NationMedia)
– R/t @JustDes – #Zain PR and Advertising is handled by #ZKAdvertising. #Zain Media will be handled by #OgilvyAfricaMedia. @PeterNjenga – Any URL for this #Ogilvy media #Zain Africa #advertising thingie? Wanna know who’s getting paid but screwing up Zain #marketing?
– @JustDes thanks for clarifying about ZK and Zain http://www.zekgroup.com/index.php?option=com_content&task=view&id=6&Itemid=10 @peternjenga
mobile phones need messengers – Paying telkom,kenya power and safaricom bills this morning-if you are post-paid anything,you need a messenger to hoof around Nairobi – Where can one pay safaricom post pay bill on sunday, other than westgate?
– r/t @tmsruge True, because banks won’t allow transfers to mobile, which I think is another missed rev stream 4 banks – Sounds to me like a biz opportunity to me! Kenyan mobile $$ innovations are a bit one-track minded!
r/t @zulusafari even with mobile $ you still have to physically visit an office to put $ in ur account – seriously! it’s ridiculous. And why can I not pay by cc’d online!!!! @whiteafrican
r/t @ kahenya @whiteafrican @bankelele it keeps messengers busy and employed
r/t @whiteafrican which makes absolutely no sense in this day and age of digital money transactions locally.
competition for MPesa r/ @ Obopay Essar Telecom Kenya & Obopay Launch Mobile Money Transfer Service http://su.pr/21Vq0y

Kenya Airways 2009 AGM

Kenya Airways (KQ) is the cradle of blogging for me – one of their annual general meeting’s (AGM) is the place it all started, the place where the inspiration for blogging, since then it’s been a ritual to attend because I like planes and investments similarly. This year’s AGM, held on September 25, was the first I’ve attended at Kasarani sports gymnasium; previous ones were at their Embakasi HQ, Carnivore and Bomas grounds.

what was remarkable or noteworthy?

shareholders aplenty KQ always draws in shareholders, maybe its because they are rather generous with gifts a.k.a SWAG (more on that later); but the meeting hall is full of the whole rainbow of Kenyan shareholders from business peoples, to student types (perhaps sent as proxies), but mainly older people who perhaps bought shares as far back as the IPO in 1997.

KQ courtesy shames Safaricom a few weeks ago Safaricom held a no frills AGM that did away with many of the niceties that shareholders are used to. KQ, showed they this was no a costly affair to gold; they had shuttle buses from town to ferry shareholders to and from the meeting and also gave out lunch boxes to all shareholders. The AGM did not have the usual red t-shirt that shareholders are used to, but coming on the back of Safaricom, many were satisfied.

in the meeting – CEO Titus Naikuni talked about the tough year the airline had from the credit crunch, which affected travel budgets and the price of fuel, which escalated during the year.
Fuel hedging: FD Alex Mbugua tried to explain the subject of fuel hedging, something he said even many accountants don’t understand, but which had left the company with a 5.6 billion loss. The company was able to manage an operating profit of 4 billion ($52 million) before hedging kicked in, even though the price of fuel had gone up to Kshs. 24.5 billion representing 35% of their total costs.
– For the last 5 years they have engaged in fuel hedging, this worked in their favour till 2008 – when with oil looking to zoom past $200 they locked in some contracts, only for the price to nose dice to $40 . Overall in the five years the gains remain a positive Kshs. 516 million.
In response to shareholder questions he also said
– KQ board is reviewing hedging policy, and this is through the committee of the board
– some hedging parties have been reluctant to enter into contracts with KQ of late, and insist on some cash cover
– while they could not comment on recent prices they have hedged, some to 2011, he mentioned the numbers have swung in their way as at August and they may have a write back in profits this year when they brief investors in October 2009.

Shareholder questions (with answers)
– how will they control costs? Careful choice of routes, try and expand those that work, drop those that don’t. African routes account for almost 1/2 their revenue now.
– Why did employees strike? There were conflicting unions representing employees, and during labour talks, the employees went on an illegal strike as they demanded untenable wage increments. Management was able to come to an agreement with the help of COTU and is looking to learn from mistakes it may have made to avoid this again
– Why is company’s secretary (CS) not an employee? Company did a cost benefit analysis and decided to outsource the function. The CS is still Fiona Fox and she assured shareholders that she responds to all letters written to her; most of which relate to registrar matters
– Where are reports of KQ accidents in Ivory Coast and Cameroon? CEO said investigator reports are still being done by these countries authorities, and they don’t have the former, while the latter has not been released KQ so can’t comment on it. On the Cameroon crash, KQ and insurers had made settlement with 90 of the 105 passengers, but some relatives have chosen to sue the airline or the aircraft manufacturer (i.e. Boeing)
– Why did annual report come out just 3 weeks to AGM? Management said they would try and improve and not just comply with the legal minimum for listed companies
– Why not use Precision Air aircraft (a Tanzanian airline in which KQ owns 49%) to fly to Kisumu since they have no more turbo-props for short runway? The repairs at Kisumu are short term did not warrant fleet change, and will resume flying there with their Embraer 170’s when repairs are done
– Do they plan to fly to the USA? KQ has never said they would fly to US; they have good partnerships and networks (KLM) through which they get feeds from US already, and JKIA will have to make some modifications before they can fly to US.

source: airliners.net

– What will be done about Boeing 787 which they have ordered but us yet to fly? KQ are talking to Airbus and Boeing about getting some replacement aircraft (won’t be brand new) but decision will be made in a few months
– One shareholder asked why managers /directors interest are divergent from KQ i.e. directors own few shares, while executive directors compensation is significant part of employee compensation: The Chairman said buying KQ shares was a personal decision of directors and he himself bought his shares at the time of IPO when he was not even a director of KQ. The CEO said management have not had any salary increments despite what union said during the strike.

Minor #FAIL’s: – The company registrars who had dozens of computers to register shareholder before the meeting, but whose computers were not connected. Anyone could have walked in. They also ran out of ballot papers
– The gymnasium had no water (though understandable at this time of water rationing). It was also not suited to the meeting format; the directors sat so far as to be indistinguishable except on TV screens while poor microphones/acoustics of hall meant some questions/comments were not audible
– Shareholder elections; this year, there was only one independent candidate on the ballot I guess they have realized of the futility of this exercise – and the results out today show all the board nominated director were unanimously re-elected
– CDSC (the share people): had a tent outside to register any of the 78,000 shareholders of the company; but they didn’t just ask if you had immobilized your shares, they practically demanded you pass by their tent and register to receive statements by e-mail or SMS (do away with the postal service)

Goodies: – Dividend of 1 shilling ($0.013) per share despite the loss. shareholder’s register closed day of meeting and this will be paid after October 23
– Lunch box by Sarova with drinks (yoghurt, soda & water), meats (drum stick, beef sandwich, boiled egg), fruits (banana, apple), and breads.