The Effect Of Turnaround Strategy On The Performance Of Kenya Airways

Abstract

This study sought to establish the effect of turnaround strategy on performance of Kenya Airways. The theoretical framework of this study was pegged on the Mckinsey 7’s model and the resource based view of strategy that was analyzed in depth under the literature review. Data was collected by the use of interview guides focusing on the managers of the various departments in the airline. Content analysis was used to analyze the data collected. This study found that the introduction of low cost airline Jambo Jet as a marketing strategy was effective and the new routes introduced to Asia with additional flights to Dubai were successful as they broke even. In addition, the sales went up as the customers were able to make and pay for online bookings. The measures put in place to cut cost included fuel hedging, outsourcing and workforce reduction. However, out sourcing and staff reduction have not worked well as strategies since the company still has to pay for the outsourced services and the employees feel overwhelmed with their jobs leading to poor performance. The sale of land and planes was used as a strategy to improve liquidity but the respondents felt that the proceeds from the sale were not put into meaningful use. The airline implemented different strategies to tackle different issues that caused the airline performance to decline. These strategies were implemented at different stages of the turnaround. The measures have improved the performance of the company though it is not out of loss making. With adjustments to their currently implemented strategies and implementation of the final stages of the turnaround strategy, the company will be back to profitability. This study recommends that the selected structure should be the best fit for a particular organization at a point in time. In addition, the number of managers should be limited in a lean structure to enable the company adequately manage the payroll cost. Lastly, there should be optimal workload for the employees to ensure that they perform at their best. Further research should be conducted to establish a trend analysis for the specific strategies based on when they were implemented to show their impact on for duration of the turnaround. In addition, since the airline has just converted debt to equity, a research should be conducted to analyze the impact of this strategy and any other turnaround strategy that will be implemented to the period the airline will bounce back to profitability