Kenya throws in the towel and calls for nationalization of national carrier, Kenya Airways, after years of being in the red

Kenya Airways plane
  • On Tuesday, Kenya’s parliament voted to nationalize the national carrier in a bid to save it from mounting debts.
  • The loss-making airline, which is 48.9% government-owned and 7.8% held by Air France-KLM, has been struggling to return to profitability and growth for years now.
  • The airline says it is open to a model similar to Emirates Airline and Ethiopian Airlines, which operate as units of state-owned holding companies. 

Kenya Airways, Sub-Saharan Africa’s third-largest airline is set to be nationalized.

On Tuesday, Kenya’s parliament voted to nationalize the national carrier in a bid to save it from mounting debts. 

The loss-making airline, which is 48.9% government-owned and 7.8% held by Air France-KLM, has been struggling to return to profitability and growth for years now.

The airline posted a Sh6.1 billion ($61m) after-tax loss for the nine months ended 31 December 2017. KQ’s results improved by 30.8 percent from a pre-tax loss of Sh5.771 million ($57,710) in 2017 to Sh3.992 million ($39,920) for the period ended 30 June 2018 due to increased passenger traffic and overall yield improvement.

KQ’s management has previously cited rising fuel costs as one of its major stumbling blocks in its recovery path. To keep a watchful eye on its rising fuel bill, the carrier recently inked a contract with US firm GE Aviation, to provide realtime digital data on all the carrier’s fleet to help improve efficiency.

In June, the International Air Transport Association (IATA) warned of grim prospects for Kenya Airways and other African airlines and the airlines will continue to experience a free fall in profitability in 2019.

In March, Jomo Kenyatta International Airport, the country’s biggest airport, grinded to a halt after Kenya Authority (KAA) workers went on a go slow opposing proposed takeover of the airport by Kenya Airways.

The proposal required Kenya Airways to invest in the airport and keep part of the income from the facility.

However, the government later bowed to public outcry and quietly backtracked on the plan to merge Kenya Airways with the Kenya Airports Authority (KAA).

After lawmakers and the airports authority rejected the proposal, the airline said it was open to a model similar to Emirates Airline and Ethiopian Airlines, which operate as units of state-owned holding companies. 

Kenya Airways currently has 53 routes, less than half of those operated by Ethiopian Airlines, according to the report. Last month Kenya Airways touched down at the Genève airport in Geneva Switzerland to a warm welcome, effectively connecting four United Nations offices - New York, Nairobi, Geneva, and Rome from Nairobi.

The nationalization plan would entail delisting Kenya Airways and buying out of other shareholders, the lawmakers said in the report. 

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