Implementation of restructuring strategy at Kenya Airways

Abstract

This study was undertaken in order to understand how the restructuring strategy was implemented at Kenya Airways. The objective of the study was to determine and document how Kenya Airways implemented the restructuring strategy and the challenges the Airline faced in the process. In depth interviews were conducted with highly experienced managers and their representatives who played key roles in the restructuring process. Secondary data collected from the company's journals and financial reports supplemented the interviews.

The study established that the mechanism and process of restructuring at Kenya Airways was guided by circumstances that were prevailing in the air travel industry. The process started with an understanding of the company's strategic position emphasizing on strengths, weaknesses, opportunities and threats. Then the key stakeholders were informed and allowed to participate in the process. These included employees, government, strategic partners and clients. Since the airline was a state corporation, the change agents ensured that the process was consistent with laws and regulations relating to restructuring of public corporations. The strategy was ) implemented through debt restructuring, revenue enhancement, process innovation, cost reduction and reorganisation.

Among the challenges faced by the airl ine were, Restrictive covenants with partners, delays arising from political patronage, lack of funds, lack of expertise, Aero-politics especially imposing of stringent visa conditions on some African states by the developed countries. Negative travel advisories by the US in response to insecurity in Kenya and neighbouring countries and Instability in the Kenyan economy especially sharp rises in fuel costs. In response to the above challenges, the airline formed strategic alliances, engaged consultants, lobbied with parliamentarians to get favourable bills through parliament and used the government to negotiate its way out of debts and gain access to new markets.

Limitations of the study included the company's strict policy on information outflow that could not allow free flow of strategic information from respondents. These led to significant use of secondary data which did not give the specifics that was interest for the study. There was a1i.o..ablurred demarcation between the results springing from IV

restructuring and those resulting from privatisation and other related strategies by the

Company.

Further research was recommended in other firms that have not had good results with restructuring. Probably by so doing, the conclusions of the study would help in indicating the tactics that don't work for restructuring. Another area of interest would be finding out ifthere is competitive advantage derived from restructuring since Kenya airways was a monopoly in the local market at the time of restructuring. Since

this study focused on an individual unit of study by design, it was suggested that a study on the experiences of a number of restructured firms in the same industry would shed more light on flexibility in implementing this strategy.