KQ,is it a Mirage?

I’m surprised that anyone would be buying or advising anyone to buy KQ shares. However,the stock market has informed investors and speculators. Without the two,the prices of shares would be based on a cartel arrangement for informed investors and sentiments for speculators.

Sample this in Kenya Shillings:

15.6 Billion = KQ’s annual expenditure on fuel as of March 2008.

53.8 Billion = KQ’s Total annual expenditure

29% = KQ’s Percentage of fuel cost to total expenditure

40% = Usual fuel to total expenditure for airlines

3.8 Billion = KQ’s 2007 Net Profits which sunk 5.6% from previous 4 Billion

65 dollars a barrel = What KQ has been paying for fuel upto March 2008.

NB,the price of oil did hit 148 dollars a barrel but KQ has been enjoying the same for less than half that price due to hedging.

The above was achieved because the airline had hedged its fuel supply which means they saved slightly over 14 Billion on fuel.

Their current financial year will see the company save only half the cost of fuel as only 57 percent of the fuel is hedged. After that,KQ will be at the mercy of Oil merchants. The better if the oil was ever to hit 200 dollars a barrel next year. But if the oil was to drop to under 80,KQ will have committed suicide if not bleeding losses.



KQ will not receive the 9 dreamliners it was supposed to receive starting 2010. They will be delayed by two to five years which means the company will not enjoy the 787’s fuel efficiency and higher carrying capacity during those five years.

We are yet to register the effect on KQ of political upheavals in the country in Jan to Apr of 2008.

Did you know that the Americans have ensured the oil prices remain above 100 dollars so that they can reap maximum profits from Iraq oil? In other words,when you pay more for oil,its like paying tax to Americans to cover for expenses they incurred waging war against Saddam.

Did you know if Iran is attacked for making nuclear energy,oil prices will sky-rocket to above 160 dollars a barrel?

United America,American Airline etc are planing to ground close to 100 aeroplanes due to expensive fuel factors that have made air passengers prefer other cheaper modes of transport. Some airlines have already folded

After Brian Davies left,we have not seen any new and serious Strategy Formulation at the Pride of Africa.

This is not personal; Naikuni drives himself to work in a Range Rover from Kiserian. I love driving but if I have such a serious job,I would need to be driven so that I create a job for some two poor guys and also ensure a carjacking incident or an accident does not tie me down waiting for cops instead of focusing on the National Carrier’s future… The much Naikuni does is report on plane accidents. Insiders have more stories about how KQ is being run today.

I like African managers,remember Mugo,Mahinda,BOC guy,etc,so I have nothing against Naikuni. Engineers simply don’t make good managers.

The profits they are making now are strategies Brian left in place but soon they will wear out and KQ will either have to merge or go under.

Are you going to dismiss this? I have heard it before but time vindicates me.

I got into the bourse more than ten years ago and I do thorough research and profile a company before investing in it.

KQ recommendation is a SELL for short term SELL for long term. Buy when the oil comes down to 65 dollars or less a barrel if that will happen.

Actually,the only piece of advice I tend to give budding investors is:-

Put 70% of your money in Bluechip Companies and spend 30% speculating.

Then ensure you buy at least 100 shares of a Bluechip Company every month or so and by the time you are through with ten years,you will be a millionaire. I speak from experience.

Jsanchiazh



Son,when we were young,we squandered opportunities,invest now.

interesting observations. i know most big holders of this share have quietly sold off....akina paul ndungu the single biggest individual share holder. KQ recently created a board level position on strategy. ehhh i thought that was part of the MD's brief...atleast then call the guy a consultant. the point really is that KQ clearly has realised there needs to be a serious re-look at its strategies going forward. perhaps its time naikuni was moved to another more relevant organisation where his skills will be better utilised,because running a rapidly expanding airline has proven to be a herculian task. maybe he goes to the port and we get some guy who has hand-on experience running an airline...even a mzungu....to run KQ. as for their customer service...and time keeping...wacha tu

I won't worry about KQ as long as KLM is a stakeholder.
By global airline performance standards,KQ has done marvelously well for a developing country airline.
If they hedged fuel @65,what makes one think it wasn't followed @80?
I maintain a HOLD and BUY.

surealligator you are surely an alligator out to keep off competition or just out to get a big bite. KQ has never gone below the 45 region for the past one year lowest was 43 and every time it regained. So its a nice catch if you include the 1.75 dividend book closure on 26th september.

It has dropped 3 times to this range and risen . They will most likely declare an increase in profit since nothing happened to dampen their profits unlike the first quater.



No matter how often a man quarrels with his wife he does not do so in hours leading to bedtime.

Reading through your post,one doesn't get any advise on stocks,rather a personal vendetta against Engineers,Naikuni and KQ.

DREAMLINERS:

KQ ordered the 787s long before the issue of oil got to where it is now.It was about fleet modernisation(KQ has one of the most modern fleets,if not the the most modern in Africa).The main aim was to replace some of the aging 767s which dont meet their customer satisfaction standards. The fuel efficiency only came as a plus.And when you talk of the delay in 787 delivery,why do you make it sound like a KQs problem?KQ was to get those 787s in 2010,so far Boeing still says KQs delivery hasnt been affected(whether true or not we'll find out).Why dont you talk of our neighbours Ethiopian Airlines who were to get them this year,and other airlines ??Since august last year,KQ has acquired 2 new Embraers,the super fast babies (with unmatched fuel efficiency and fastest quick turn around times),with a third having been delivered last week. This week,TODAY,KQ has taken delivery of another 737-800,with two more coming in October and November,(Now u know).

POLITICAL CRISIS:

I believe we saw the impact of the political crisis effect on KQ last financial year results. If you are waiting for more bad results out of that I think you are living in times past. Even the tourism industry has picked up.You should watch news more often.

STRATEGIES:

You sound like u want KQ to advertise every strategy they plan on billboards and the world wide web.Theirs is a business in a cut throat competition and I can assure you,you wont know everything that happens there.If you followed news quite often u'd know that KQ now has a COO,inline with the expansion that has been happening there,and also getting into alliances to offer customers more connections world over,plus opening new routes(Madagascar and Angola). You suffer from 'kasumba ya ukoloni'. You are the kind of person who believes that the white man is superior,that nothing can come out of a black man,thats why you are heaping praise on Brian Davis and cant see anything good that Naikuni has done.For your Information,Naikunis contract has been extended for another 5 years,if he was that bad,would the board do that?Think about it.

NAIKUNI DRIVING HIMSELF??????

Well I dont know what I can say about that. What does running a top airline got to do with the CEO driving himself??For your Information KQ does not employ personal drivers,even all the directors drive themselves. Who are these insiders peddling lies to you? I hope you aint talking about one media house along harambee avenue..You want the kind of situation we see with our parliamentarians(personal drivers,bodyguards,chase cars and all) so that you can believe He is doing a serious business running KQ??Please...Naikuni holds an MBA from Harvard Business School. He was picked from Magadi Soda Company,where he had joined in 1979 as a trainee engineer rising to become its managing director as well as the MD at Magadi Railway Company. Having being at the helm of the 'Pride of Africa' since February 2003,he has steered the airline through the turbulence of the aviation industry into a powerhouse in Africa. Kenya Airways plays in the billion profits club in the country and region with its stocks among the most traded and best performing at the NSE.

ENGINEERS AND MANAGEMENT:

To name but just a few

Michael Joseph Safaricom

Wilfred Kiboro Formerly Nation Media

Obath Shell

Mang'eli KBS

Michael Muturi Karanja Sameer

Kibati East African Cables

and to boot...Raila Odinga PM,the Republic of Kenya

Which of these institutions are headed for the dogs?

KQ AND MERGERS:

KQ is already a partner with KLM DUTCh Airlines (and thus enjoys economies of scale out of this relationship),one of the Biggets airlines in the world,I bet u ddnt know this.So with KLM holding 23 % of KQ,you want it to merge again with what so that it doesnt go under??

OIL AND KQ:

KQ is not the only airline that uses JET A1 on its aircrafts( for your info every other airlines uses the same).So whether oil goes to a million a barrel or one bob a barrel,it wont just affect KQ alone,even that sugar you use at the breakfast table will feel the heat,everything in this world consumables,non cunsumables,whatever,is tied in an intricate relationship with OIL. Big airlines have already started grounding their ailines because of this,but you havent heard it from KQ.I bet you this: Before KQ goes down because of Oil,the small airlines here in kenya will be gone,and very few carriers(OR NONE) will be operating in Africa.And then when KQ goes down,you and all kenyans will be at the mercy of International carriers(the only ones surviving),then you'll be paying through your nose to fly out of this country bro.

You can speak out of experience,but you shud do a little more home work.




face your fears live your dreams...

Yesterday i saw this thread and didnt know wea to start dealing with this negative info.
I was hoping the thread would die out.
I salute all who took their precious time off to help this fellow bridge the gap between his perception and the reality. asante sana

To all value investors,are u seeing what am seeing on KQ?

The thicker the thigh the sweeter the pie.

@myks: that was an informed response...Well done.

I also drive myself but this has not affected my firm's share prices...just going up and up.


Life is worth living cos God planned it to be so.

i agree with myks,and,no am not in their PR office,nor did i register Jana..

The thicker the thigh the sweeter the pie.

@myks
Good thread very insightful.
Ps....I thought kiboro is a pharmacist?? In fact i think stocksmaster might be kiboro!!!

veni vedi vici

me thinks all the bad news is in the price

in a bull market all the cows get laid

KQ is a buy

The poor will inherit the earth But the rich will own the mineral rights