The Kenya airways (KQ) troubles are going on and on. Kenya airways (KQ) troubles started a long time ago. The transport committee of the National Assembly recommending Kenya Airways to be state property. The renationalisation could be disastrous.
The Kenyan government currently owns 39 % of the shares and if it needs to own the rest it needs to pay off a huge sum of money. It also needs to pay off the bills KQ owes. Last year Kenya Airways underwent restructuring and the government would risk the airline falling as the pride of Africa if it took over.
It is very difficult for an airline to make money. The only airline making profit in Africa is the Ethiopian airline since it is receives subsidies from its management. KQ proposal to take over the running of Jomo Kenyatta International airport was rejected.
The combination of the private and public sector has the best chance of providing commercial discipline and financial strength. Nationalisation will not solve these structural problems.
Chairman’s word
Kenya airways chairman Michael Joseph says the airline would need up to $450 million to get operations back to profitability. He said cash injection would steer the airline away from the nationalization process while providing enough resources to grow and improve KQ’s operations. He said that if the state was not careful, East Africa’s gateway will move from Nairobi to Kigali. The move will be disastrous to Nairobi as a capital city and to the airline itself.
loss
Kenya airways have reported a loss of almost 8.6 million in six months up to June 30th. The operating cost of the airline seen to increase from 53.2 billion to 61.5 billion. Fuel costs also increased due to increased flying.
Debt
Kenya Airways owes several banks money including CBA group, NIC banks, Equity Bank, National Bank, Cooperative Bank, KCB, and DTB. KQ received an award where it was recognized for its remarkable contribution to intra-Africa connectivity through opening up the highest number of intra African routes within Africa.
The renationalisation process is a move by the government. The government move counts on to save jobs and create more opportunities in the aviation industry. KQ is sending home 182 pilots with more than 400 crew facing job losses. It will be a massive layoff.