Kenya Airways will back nationalisation to survive - chairman

Kenya Airways Chairman Michael Joseph during the 43rd Annual General Meeting at Pride Center off Airport North Road in Nairobi, Kenya, on June 10, 2019. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

In Summary

• The cabinet backed a plan last year to hand over management of the profitable Jomo Kenyatta International Airport (JKIA) in Nairobi to Kenya Airways in a bid to strengthen its balance sheet and allow it to buy new planes and open new routes.
• But parliament’s transport committee, which does not want the airline to run the airport, rejected that plan.

By REUTERS
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Kenya Airways will support the government if it decides that nationalising the airline is critical for its future, Chairman Michael Joseph said on Tuesday.

Reports on Al Jazeera indicated that the airline is willing to operate under a state-owned holding company.

The loss-making carrier, which is 48.9% government-owned and 7.8% held by Air France-KLM, has been struggling to return to profitability and growth. A failed expansion drive and a slump in air travel forced it to restructure $2 billion of debt in 2017 to save the business.

The cabinet backed a plan last year to hand over management of the profitable Jomo Kenyatta International Airport (JKIA) in Nairobi to Kenya Airways in a bid to strengthen its balance sheet and allow it to buy new planes and open new routes.

But parliament’s transport committee, which does not want the airline to run the airport, rejected that plan.

The committee was preparing alternative recommendations to revive the carrier, including potential nationalisation, Joseph told Reuters in an interview.

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“They are proposing some kind of aviation holding company where KQ (Kenya Airways) would sit in as 100% owned by the state,” he said.

“If this is in the best interest of the airline in order to put us on a level playing field with competing airlines, and if it allows us to grow the JKIA hub in the best interest of Kenya, then this is what we should do.”

James Macharia, Kenya’s minister of transport, did not respond to requests for comment.

Kenya Airways, which has 41 planes, wants to increase the fleet and open new routes to compete more effectively with carriers like Ethiopian Airlines and Emirates.

Ethiopian Airlines operates more than 100 planes and it has turned Addis Ababa into an aviation and travel hub for the continent over the past decade.

With a pre-tax loss of 7.59 billion shillings ($74.89 million) last year, Kenya Airways required some state intervention to put it back on a growth footing, Joseph said.

“We don’t want KQ to be nationalised, but if this is the right way to go and in the interest of both KQ and the aviation industry in Kenya, then I would say this is the right way to go,” he said.

- Additional reporting by Al Jazeera.