The Kenya Airways’ board has appointed consulting firm Deloitte to undertake a forensic audit of the airline’s financial decisions dating back six years.
The national carrier is seeking to identify areas of weakness in its operations. The forensic audit will investigate the conceptualisation and financing of the ambitious but ill-fated Project Mawingu.
Kenya Airways reported a Sh25.7 billion after-tax loss for the year ended March 2015, followed by a Sh10.95 billion net loss for the six months to September.
The carrier is in a negative equity position of Sh33.9 billion while its revenues have remained flat, further impeding its targeted rebound to profitability.
“Deloitte will be with us for about three months within which we expect to receive one or two interim reports before they submit the final one,” said KQ chairman Dennis Awori in an interview.
The Treasury, which is represented on the KQ board, has previously said that those found culpable of financial improprieties would be held to account, including current and former senior managers of the airline.
“Their main task is to carry out an interrogation of the company’s finances dating back to 2010 to determine where and how the leakages started. If need be, they will look into transactions that are much older,” he added.
Deloitte joins a growing list of consultants that the airline has engaged as its seeks to get a lift out of the current sticky financial hole it has found itself in, and ease pressure from shareholders.
The carrier in November 2014 hired New York-based firm, Seabury, to evaluate its commercial business.
The Seabury contract lasted six months. The American consultant’s task involved interrogating its sales, ticketing and network planning functions and thereafter benchmarking them with best practices in the airline industry.
Around the same time, KQ mulled hiring another international financial adviser to restructure the airline’s debt and retire short-term loans but later chose to rely on its internal finance team to do so.
Last July the airline hired McKinsey & Company to help implement a 24-item strategy that the management had crafted, which is to be implemented over one-and-a-half years.
The plan, which is currently being implemented, includes review of prices, revenue management, sales, cost reduction and cash and financial optimisation among other elements.
This restructuring, KQ says, will boost its bottom-line by about Sh20 billion, adding onto the Sh14.6 billion expected from sale of assets, as the airline chases a profitability target of “one to two years.”
“The objective of this (forensic audit) is to identify areas of weakness and give recommendations that will complement the ongoing turnaround strategy,” said the KQ board in a statement.