Michael Joseph, the KQ chairman noted in a statement shared by the USE that the airline has been in discussions with the government of Kenya. The talks led to the National Aviation Management Bill 2020. Kenya Airways (File photo) AVIATION
It’s known as the pride of Africa, but Kenya Airways (KQ) financial performance is nothing short of shameful. The Uganda Securities Exchange (USE) has issued a cautionary notice over trading KQ shares.
Michael Joseph, the KQ chairman noted in a statement shared by the USE that the airline has been in discussions with the government of Kenya. The talks led to the National Aviation Management Bill 2020.
The bill sets out the legal framework for the nationalization of Kenya’s national flyer. As is the norm, whenever a firm is nationalized, the private shareholders receive compensation for their shares.
KQ’s stock was already suspended from trading on the Nairobi Securities Exchange for three months starting July 3 to pave way for the government takeover.
"The nationalisation (completion of which would be subject to all applicable legal and regulatory approvals) may, once confirmed in greater detail, have a material effect on the price of KQ’s securities. Accordingly, shareholders and investors are advised to exercise caution when dealing in KQ’s securities until a further announcement is made," Joseph said in a statement.
Nationalisation would save KQ from bankruptcy and collapse. The airline is grappling with a negative working capital hole of $391.5m (sh1.5 trillion) after net losses for the year 2019 widened to $129.7m (sh481.2b) from $75.8m (UGX281b) in 2018.
Allan Kilavuka, KQ’s Chief Executive Officer, noted in a leaked memo that the airline has started a three-month round of job cuts which will continue through to 30th September as the carrier is projecting a 50% blow in demand for their services this year.
Staff costs rose in 2019 to $158m (sh586.2b) as total operating costs hit $1.3b (UGX4.8 trillion) – nearly as large as Uganda’s entire works and transport budget.
The Kenyan government is creating a special purpose vehicle—Aviation Holding Company (AHC) with four subsidiaries—Kenya Airways, Kenya Airports Authority (KAA), Jomo Kenyatta International Airport (JKIA) and a centralized Aviation Services College— in the hope of running the sector profitably.
