The Best Airways of East Africa - Assignment Example

Kenya Airways has had a lot of flights around the world and has had minimal incidents and accidents in the airline services this gave me the interest to know more about the company and also to understand how it is managed and what efforts have been taken to make it hit that high.

Being the first flag carrier in Kenya its stocks are traded in different exchange markets including the Nairobi Stock Exchange, the Dar-es-salaam Stock Exchange, and the Uganda Stock Exchange. Kenya Airways has become widely considered one of the leading Sub-Saharan operators and became a full member of sky team in June 2010 and a member of the African Airlines Association since 1977 it has had quite a tremendous growth with 4,834 employees as of June 2012.

Below is the summary of its financial status for the annual report for the year 2011

Sales revenue

The airline has been using web sale service and this has shown some tremendous growth of USD 28.6 million in ticket sales compared to USD 24.2 million in the previous year showing a growth rate of 17.9%, with total revenue of USD 95.2 billion which is an increase of 26.3% above the prior year.

Income/ (loss) statement

The income for the previous and the current year as seen from the audited annual report is as follows

Year ended 31 March 2012

Profit for the year

            (Million)

2012    USD 1,660

2011    USD 3,538

EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted, Average number of ordinary shares outstanding during the year.

2012              2011

Profit attributable to equity holders of the Company (USD million) 1,652                        3,535

The weighted average number of ordinary shares (million)                      462                 462

Earnings per share                                                                                 3.5                  7.6

DIVIDENDS

Dividends – proposed (USD million)                                    374                 374                 693

Number of ordinary shares (million)                                    1,496               462                  462

Dividend per share (USD)                                        0.25                 0.81                 1.5

The total assets for Kenya Airways are as follows

                                                           2011                2012

                                                           USD               USD (Million)

Non-current assets                            54,867             55,461

Current assets                                     20,663             20,303

                                                           81,585             80,569

Total liabilities

Liabilities                                           33,386             30,678

Current liabilities                                27,536             29,588

Total liabilities                                   60,922             60,267

Total equity                                        20,663             20,303

Management discussion and analysis

The management of Kenya Airways has reported that the profitability of the company has been affected by some factors including high fuel prices, the euro crisis, and a generally weak economy in the West. Despite this, the management has announced a high turnover of USD 107.9 billion which represents a 26% increase on the prior year's turnover of USD 85.8 billion, profit after tax realized was USD 1.66 billion compared to the prior year's of USD 3.5 billion.

This represents a net profit margin of 1.5% down from 4.1% achieved in the year 2010/11 with EPS reduced to USD 3.58 from USD 7.65 reported in the prior year.

Information on the auditor’s report

The name of the auditing team is PWC (certified public accountants) and in their opinion proper books of accounts were maintained and the comprehensive income is in agreement with the books of accounts.

Potential investment for you – now or in the future?

I would like to purchase more and more shares from the company so that I have the decision to make when it comes to matters of making any new venture into the airline and come up with a plan to include the availability of air fleets all over the country. And in this, the sale revenue of the airline will increase and improve the service provision.