The effect of political risk on the financial performance of Kenya airways limited By

Abstract

Political risk and its analysis have changed over the last few decades. The effect of political risk on the financial performance of the airline industry especially in Kenya has received little attention in academic inquiry. The airline business depends on the wellbeing of international trade and the stability of the markets. It is interesting to study how Kenya Airways is affected by the political risks in their market. It is in this light that the study sought to fill the existing gap in this area of study by answering the following res earch question: What is the effect of political risk on the financial performance of Kenya Airways Limited? The objective of the study was to determine the effects of political risk on financial performance of Kenya Airways limited . Secondary Data was coll ected from Central Bank and Kenya Airways and multiple regression analysis used in the data analysis. From the findings on the Adjusted R squared is the study found that there was variation of 79.7% on financial performance of Kenya Airways dues to chan ges in inflation rate, political risk, size of the company, gross domestic product and liquidity of the firm, this was an indication that 79.7% changes in financial performance of Kenya Airways Limited could be accounted to changes in inflation rate, poli tical risk, size of the company, gross domestic product and liquidity of the firm . The study futher revealed that that there was strong postive relationship between inflation rate, political risk, size of the company, gross domestic product, liquidity of t he firm and financial performance of Kenya Airways Limited. The study revealed that political risk in Kenya negatively affect the financial performance of Kenya Airways, thus the study concludes that political risk in the country negatively affects the f inancial performance of Kenya Airways Limited. The study established that financial performance of Kenya Airways was strongly affected by changes in inflation rate, political risk, and size of the company, gross domestic product and liquidity of the firm . The study recommends that there is need for the government to control the country political risk as it was found that political risk negatively affect the financial performance of Companies . The study further recommends that there is need for the govern ment to control the country inflation rate through various fiscal policies, as it was revealed that unit increase inflation rate negatively affects financial performance of Companies.