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In a bid to retain its financial flexibility and optimize on the lack of connectivity in the continent, the government of Kenya is on the verge of nationalizing its flag carrier to retain market share while aiding the troubled airline in its restructuring process. Lawmakers passed the nationalization bill which entails a National Aviation and Management Bill that will mark a major shake-up to the country’s aviation industry and presumably aid the airline towards profitability.
Among the key agendas in the bill will be its long-term viability plan by ensuring Nairobi becomes the key intercontinental gateway to Africa. Currently, Addis Ababa remains the largest intercontinental gateway to Africa.
Among other agendas, the bill seeks to ensure creating sustainable jobs, increasing aviation revenues and doubling passenger numbers to 8 million passengers in 5 years.
The company’s share went up 31 percent in value a week after the proposed law seeking to collapse it into an aviation holding company was tabled. The airline also reported a Kshs 12.98 billion (USD 121,792,404) revenue in 2019.
“The balance sheet of the aviation holding company will be healthier than Kenya Airways alone,” said Chairman of Parliament’s Transport Committee David Pkosing in a past interview with Reuters.
Kenya Airways was privatized more than 20 years ago and has been sinking in debt and losses with its peak being in 2014 after a failed expansion drive dubbed as “Project Mawingu.”
A common refrain amongst economists and consultants is that airlines should not be owned by governments and instead be owned by the private sector as this creates the primary basis of competition.
Kenya Airways has been a casualty from the above notion even before the global pandemic, while its closest and regional rival Ethiopian Airlines has been doing exceptionally well as a state-owned carrier. It is important to note that it took Ethiopian Airlines 15 years to transform from a small-local airline to the giant airline it is today. Massive Layoffs
Due to the impact of the Coronavirus Pandemic, Kenya Airways PLC started a three-month round of job cut with the process expected to be complete by Sept. 30.
According to The Star , Kenya Airways will be sending home 182 pilots with more than 400 crew members facing job losses.“I regret to advise you of management’s decision to terminate your appointment by giving you one-month notice with effect from June 24,” read a letter signed by Human Resource Officer […]
