Towards a split of Kenya Airways into several subsidiaries
For almost ten years, Kenya Airways (KQ) has been operating at a loss, surviving only thanks to multiple financial infusions from the state. Elected President of Kenya last August, William Ruto has proposed a new strategy to make the Kenyan parastatal airline profitable.
Kenya Airways should be split into several subsidiaries. "We need a dedicated passenger airline, a cargo division, and a charter division. We may also create other businesses around KQ, such as drone services and surveying services, with a view to increasing the company's revenue," revealed the cabinet secretary for roads, transport and works, Kipchumba Murkomen, on 19 October 2022, in Parliament.
According to him, the strategy prescribed by the new President, William Ruto, is aimed at making the parastatal profitable. The group's current subsidiaries include Kenya Airfreight Handling Limited, Kencargo Airlines International Limited, Jambojet Limited, African Cargo Handling Limited and Fahari Aviation Limited (launched in 2021 and dedicated to technological innovations).
In 2021, the carrier recorded its ninth consecutive year of losses. The last time it made a profit was in 2012 (Sh1.66 billion). Nevertheless, its financial situation is gradually improving. Indeed, Kenya Airways made an operating loss of Sh6.8 billion in 2021, compared to Sh27.1 billion the previous year; a 75% improvement.
Since the closure of the borders of almost all countries in the world in March 2020, in a bid to curb the spread of Covid-19, Kenya Airways, which operates about 40 aircraft with over 3,500 employees, has been surviving on multiple bailouts from the state. With a view to making the airline profitable by 2024, the former regime, led by President Uhuru Kenyatta, initially considered renationalising it. But after more than two years of dithering and parliamentary procedures, it finally changed its mind.
The new administration remains aligned with the latter strategy. "We don't want to cross the 50% threshold, because we want KQ to remain a private company," Murkomen said.