Kenya Airways says it is fast-tracking South African Airways partnership

Kenya Airways and South African Airlines signed a Strategic Partnership Framework in South Africa last November, in a move that will see the two carriers eventually form a Pan-African carrier. PHOTO | FILE | NMG

By BRIAN NGUGI

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Troubled Kenya Airways says it is fast-tracking negotiations to launch common initiatives with South African Airways (SAA) with which it signed a pact last year to establish an African airline by 2023.

Kenya Airways Chairman Michael Joseph told the Business Daily while the pact is a long-term agreement, both airlines are in talks to jointly expedite the implementation of common business plans to gain a competitive edge over rivals.

“We are already talking about some initiatives we can implement sooner,” Mr Joseph said in an interview without disclosing the cited immediate common business plans.

The two carriers signed a Strategic Partnership Framework in South Africa last November, in a move that will see the two carriers eventually form a Pan-African carrier amid common longstanding financial woes exacerbated by the Covid-19 pandemic.

It is expected that the partnership will improve the financial viability of the two airlines. Customers will also benefit from more competitive price offerings for both passenger and cargo segments.

Both KQ and SAA have been loss-making for years.

“The pact has been signed but it will take some time to implement fully,” added Mr Joseph in the interview.

The Treasury plans to offer Kenya Airways a further Ksh146.9 billion ($1.2 billion) bailout amid delayed recovery from a travel slump following Covid-19 in financial support that will see the State drop the plan to nationalise the airline.

Kenya's Treasury Secretary Ukur Yatani said earlier the government will take over Ksh93.4 billion ($822 million) of national carrier Kenya Airways’ debt owed to multiple suppliers.

It will also give the airline Ksh53.4 billion ($469.9 million) in direct budget support in the fiscal year that ends in June 2022 as well as the subsequent one, making it the largest corporate bailout.

The bailout comes as the State dropped the favoured long-term solution for the ailing Kenya Airways that was anchored in the nationalisation of the airline—which was approved by lawmakers in July 2019 and would have led to the delisting of the airline from the Nairobi Securities Exchange (NSE).

KQ says the long recovery prospects and diminishing revenue in an environment of increased costs due to tight health and safety measures mean it will require a bailout to stay afloat.

The persistent underperformance of the airline has led to huge losses and loss of market share to rival firms.

“This cooperation aligns with Kenya Airways’ core purpose of contributing to the sustainable development of Africa and is based on mutual benefits,” Mr Joseph had said earlier when the pact was signed.

bnjoroge@ke.nationmedia.com