In a continuous effort to sustain Kenya’s national carrier following the devastating effects of COVID-19, the African nation’s Treasury has wrapped up plans to pump Sh36.6bn into Kenya Airways, after approval by members of parliament. The current allocation brings government’s support to the airline to a whooping Sh56.6bn in less than a year.
In a bid to run air transport assets like other African nations the likes of Ethiopia, the Kenyan government intended a similar future for Kenya Airways, in which the national carrier would be one of four subsidiaries in a future aviation holding company – the other three being the Kenya Airports Authority, an aviation college and the Jomo Kenyatta International Airport. This way, funds could be pulled from the more profitable subsidiaries to fund the less profitable ones.
However, the nationalization plan was halted in favour of the aforementioned government bailout, which comes at a time when Kenya Airways has recovered more than half of the losses it recorded in 2021 – a recovery which was tactfully achieved via cutting costs by 3.6% (partly through plane-leasing contracts), as well as the airline achieving a Sh70.22bn growth in revenue following general resurgence of the aviation industry.
According to sources, without government bailout, the present growth recorded by the airline will be offset in the not-so-distant future, going by the current discomfort demonstrated by banks in lending to African carriers. As such, the bailout is very much vital since the airline still needs funds to pay utility bills, salaries, maintain its airplanes, etc.
Nevertheless, sources say the initial plan of nationalizing Kenya Airways endorsed by lawmakers in July 2019 is still on the table, as a bill to that effect is currently before Parliament.
