The lawmakers said that the proposal to nationalise the entity, which comes with a raft of tax exemptions, will boost the airline’s competitiveness in a region where it has ceded market share to state-owned rivals.
Wednesday 19, June 2019
(Bloomberg) --Kenya’s parliamentary transport committee proposed the nationalisation of Kenya Airways after rejecting the airline’s proposal to allow it to manage the nation’s biggest airport.
According to a report tabled in the National Assembly, the committee proposed creating a holding company with four subsidiaries including the carrier and the Jomo Kenyatta International Airport.
The other two units will be the state’s Kenya Airports Authority and an aviation college.
Sub-Saharan Africa’s third-largest airline, which reported a KSH 5.95 billion ($59 million) full-year loss, has lost market share to regional rivals like Ethiopian Airlines and RwandaAir.
Kenya Airways is seeking ways to promote its base in Nairobi as a regional hub and return to profitability, even if that means it being nationalised.
The airline is 48.9 per cent owned by the Kenyan government and 7.8 per cent by Air France-KLM. A group of 11 lenders collectively own 38.1 per cent of the company after they converted their loans into equity in 2017.
The company’s workers and retail investors own the rest of the entity.
The plan would entail delisting Kenya Airways and buying out of other shareholders, the lawmakers. The entire House is required to adopt the report before the government can implement it.
The airline unsuccessfully proposed that the government allows it to participate in operating the nation’s biggest airport. The proposal required Kenya Airways to invest in the airport and keep part of the income from the facility.
After lawmakers and the airports authority rejected the proposal, the airline said it was open to a model like Emirates Airline and Ethiopian Airlines, which operate as units of state-owned holding companies.