Kenya’s parliament voted on Tuesday to nationalize the country’s main airline Kenya Airways to save it from mounting debts.
The loss-making airline, 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. The airline later proposed taking over the running of Nairobi’s main airport to boost its revenue.
Parliament’s transport committee, however, rejected that plan, recommending instead the nationalization of the airline in a report debated by the national assembly on June 18.
In a voice vote taken on Tuesday afternoon, the majority of lawmakers in the chamber voted to accept the report.
Kenya Airways Chairman Michael Joseph told Reuters the vote was “great news.”
“Nationalization is what is necessary to compete on a level playing field. It is not what we want, but what we need,” he said, referring to competitors such as Ethiopian Airlines which are state-run and profitable.
Air France-KLM could not immediately be reached for comment.
The government will now draw up an implementation plan, with clear timelines, said Esther Koimett, the principal secretary at the ministry of transport.
“Parliament is our boss … we will obviously take the recommendations of parliament,” she told Reuters.
Kenya is seeking to emulate countries like Ethiopia which run air transport assets from airports to fueling operations under a single company, using funds from the more profitable parts to support others, such as national airlines.
“The government is keen to take a consolidated view of aviation assets of the country in order to make sure they work in a coherent and efficient way to support the (Nairobi aviation) hub,” Koimett said.
The committee’s report proposes that Kenya set up an aviation holding company with four subsidiaries, one of which would run Kenya Airways. Another arm of the holding company would operate Nairobi’s main international airport.
The committee’s report also recommended the holding company be given tax concessions for a period to be determined and that it be exempted from paying excise duty on all goods, including jet fuel.
Koimett dismissed concerns that nationalization could lead to further mismanagement. Kenya’s state-owned enterprises sector is riddled with corporate corpses and near failures caused by theft and poor management over the decades.
“Implementation is really the key thing … Ultimately all these things have to do really with ensuring that we get the right people in the right places,” she said.
($1 = 103.7000 Kenyan shillings)
- ASEPA calls for the removal of GJA President, Affail Monney
- Don’t reduce our schools to ideological and religious fighting grounds – Akufo-Addo tells religious leaders
- NSMQ 2021: Mfantsipim destroys Adisadel, University Practice and Assin State College to win Central Regional Championship
- Akufo-Addo and his NPP government are reducing Ghana to a police state – Haruna Iddrisu
- We have not failed humanity by building prison infrastructure – Church of Pentecost
- GPL wrap: Kotoko extend gap at top after Olympics surrender lead
- Citi FM journalist gained access to National Security premises under false pretence – Chief Director
- Heavy downpour renders Damongo residents homeless
- Francis Xavier-Sosu: Eid-ul-Fitr reflections – Human rights and security implications, the case of Wesley Girls’ and the Methodist Church
- Education Minister engages stakeholders of Christian Mission Schools over Wesley Girls’ brouhaha
Enimil Ashon: #Fix our values; everything else will get fixed
Davido set to host his debut Twitter Space
Israel intensifies attacks in Gaza as conflict enters fifth day
OccupyGhana calls for independent body of inquiry to investigate Caleb Kudah’s assault allegations
Nigerian army denies Boko Haram Eid donation reports
Caleb Kudah didn’t breach Code of Ethics – GJA General Secretary
2 jailed 26 years over attempted robbery
Dzata Cement denies claims of selling product GH¢30 per bag
Citi FM journalist gained access to National Security premises under false pretences – Chief Director
Council of States donates to inpatients of Bole Hospital
Top scientists question the need for Covid-19 booster shots
Akufo-Addo visits France, Belgium and South Africa as part of post-Covid-19 engagements
Today’s front pages: Friday, May 14, 2021
NSMQ2021: Perfect ‘salah’ gift as Tamale SHS wins maiden Northern Zonal Championship
Coach Paa Kwasi Fabin names 27-man Black Meteors squad to face Japan