State drops plans to nationalise cash-strapped Kenya Airways

State drops plans to nationalise cash-strapped Kenya Airways

Tourism CAS Joseph Boinett, Kenya Tourism Board CEO Betty Radier and Kenya Airways CEO Allan Kilavuka during unveiling of Magical Kenya branded aircrafts at Kenya Airways Headquarters, Nairobi on November 25, 2021. The government has dropped plans to nationalise Kenya Airways leaving the airline with no option but to restrategise how to return to profitability.

The state was to take over the KQ liabilities— to the tune of over Sh240 billion and a Sh184 billion debt as of June 2021—and ease the burden on the entity’s daily operational needs.

But that remains suspended until further notice after the state withdrew the bill which was anchoring the transition of Kenya Airways into a wholly-owned parastatal.

The National Aviation Management Bill, 2020, sought to put in place an aviation council chaired by the President and a holding entity to manage the airline.

The National Aviation Council and the Kenya Aviation Corporation were set to be the key decision making organs for the entity’s operations.

KAC was to be a holding corporation for the airline and its operating entities including subsidiaries and connected issues.

Speaker Justin Muturi said he had received a notification from Majority Leader Amos Kimunya—the sponsor, for the withdrawal of the legislative piece.

“This is to enable further consultations and also to incorporate additional input from stakeholders received during the public participation phase,” he said.

Muturi said the sponsor of the bill was at liberty to re-introduce in line with the House rules at any juncture.

However, despite the speaker’s assurances, the government may have as well abandoned the plan in its entirety to focus on a turnaround.

Treasury Cabinet Secretary Ukur Yatani told the Star that the government went slow on nationalisation on grounds it was not timely.“We have toyed with a lot of options…one was to nationalise but we realised it was not timely as it would bring some serious challenges,” he said.He pointed out the KQ loans which the government has guaranteed, arguing that nationalisation would have brought the additional challenges of debt repayment.“We thus chose to come up with a revival plan, reform the cost centres, restructure, reduce the number of routes, especially those that are not profitable,” the CS said.Yatani said the exchequer will continue to inject resources into the airline over a period of time to retain its strategic role in the country’s economy.“We inject resources and will continue to do that. We have not put little but substantial resources over a period […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply