Impact Of Corporate Restructuring On The Financial Performance Of Airlines

The purpose of this paper was to investigate the impact of corporate restructuring on financial performance of airlines in Kenya. The research involved portfolio restructuring, operational restructuring and financial restructuring as the measures of corporate restructuring. Financial performance measurement was in regards to return on assets. This research was based on M & M, agency and lifestyle theory. Descriptive research guided the study. The research targeted a total of 30 airlines licensed and operating in Kenya by the Kenya Civil Aviation Authority. This study depended heavily on secondary data collection approaches; published financial statements, audit reports and financial reports. Secondary data was quantitatively analyzed for purposes of the paper spanned a time span of 10 years, from 2011 through 2020. The researcher made use of Statistical Package for the Social Sciences tools. Data collected was subjected to multiple regressions models to ascertain the correlation between corporate restructuring and financial performance across the airlines in Kenya using the sample size of two airlines. The test for multicollinearity, normality and heteroscedasticity was employed in this study as diagnostic tests. The study determined that corporate restructuring generally has an effect on financial performance of airlines. The corporate restructuring variables negatively affected financial performance. Financial restructuring was noted to have a negative but insignificant influence on financial performance of airlines. This research found operational and portfolio restructuring to have a substantially negative impact on financial performance of airlines. The finding of the study showed that corporate restructuring has negatively affected financial performance of these firms. Hence, it is recommended that airlines operating in Kenya should review their restructuring options and processes to ensure that the airlines accrue the benefits of a well-crafted and implemented corporate restructuring. This would reduce the negative effects of the current restructurings adopted by these firms.it is suggested that the same study can be done in all the 30 Airlines operating in Kenya to see if the same outcome will be established.