The effect of expansion projects on the financial performance of airline companies A case study of Kenya Airways
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Date
2013-11Author
Nabosu, Simon Sokorte
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The study sought to establish the effect of expansion projects such thirty one numbers of
fleets, cargo volumes, passenger growth, overhead costs, direct expenditures and
operating leases on financial performance. The case study was adopted for Kenya
Airways Company for the period of 10 years (2002 to 2011). Secondary data was
collected for the purpose of this study and descriptive statistics were used to analyze the
data by way of means, standard deviations, correlation analysis, multiple regression
analysis, F and T tests.The study shows a negative relationship between direct
expenditure, overhead costs, operating lease rentaland the profit of Kenya Airways. This
is to mean that, an increase in direct expenditure and overhead costs will lead to a
decrease in profits and vice versa.
The study also found a positive and significant relationship between number of aircraft
fleets, cargo volumes, passenger numbersand financial performance of Kenya airways.
This is to mean an increase in aircraft fleets, cargovolumes and passenger numbers would
increase the company’s profitability and vice versa.These findings are in line with
Homsombat, Fu, and Sumalee (2010) who examined changes in productivity and cost
competitiveness of France carriers and through a regression analysis they identified key
factors that led to such changes; they revealed that expansion enabled many carriers to
improve productivity levels above the industry's average. The study concluded that there
is need to create strong positive and negative correlation between the expansion project
and financial performance in order to create profitability of the organization. The
outcome of the study was beneficial to the Kenya airways and provides managers with
some perspective to see value of the expansion project. The study recommends policy
decisions to shield external shocks that affect financial performance and further research
on the impact of expansion project on other mode of transport in order to appreciate
andrelate to economic growth and development of the country.
Citation
Degree Of Master of Business Administration (MBA)Publisher
University of Nairobi School of Business
Description
A research project submitted in partial fulfillment of the
requirement for the award of the Degree of Master of
Business Administration, School of Business,University of
Nairobi.