Kenya won’t nationalize its airline after all
After a multi-year saga that has swung back and forth, it appears that Kenya Airways won’t be the subject of a nationalization process after all. The news comes after the country’s government dropped the plans in favor of other ways of protecting what it has already loaned to the national airline. As such, Kenya Airways will remain only partially state-owned.
Full nationalization is now off the cards
Flag carrier airlines represent their country on an international level. As such, it is common for them to be state-owned enterprises. Kenya Airways was also heading this way, with the nation’s government already responsible for holding 48.9% of its shares.
However, after years of talks, the Kenyan government has decided not to go ahead with its plans to fully nationalize the national airline. Amid attempts at a post-pandemic recovery, Bloomberg reports that it will instead look to safeguard the hundreds of millions of dollars that it is already having to support the carrier with. The International Monetary Fund stated:
“The authorities do not intend to nationalize the carrier, and are considering appropriate mechanisms to protect the exchequer’s financial interests during the restructuring process.”
A multi-year saga
One of the reasons that the idea of Kenya Airways becoming a fully nationalized airline has swung back and forth is because it has had to contend with the coronavirus pandemic. As Simple Flying reported at the time, plans to make the flag carrier a fully state-owned enterprise were first drawn up in 2019, following the resignation of its former CEO.
Of course, at the time these plans were laid, neither the airline nor the government knew what was in store for the aviation industry the following year. The onset of the ongoing coronavirus pandemic in March 2020 forced airlines to slam on the brakes, and, even today, many are struggling with an unpredictable market due to changing restrictions.
As such, Kenya Airways had to put the nationalization plans on the back burner while it shifted its attention to merely keeping the airline alive. This has required significant state aid, with Bloomberg reporting that the carrier already owes the government $750 million.
A difficult few months in Kenya
The latter half of 2021 has represented a difficult period not just for Kenya Airways, but indeed aviation in the country as a whole. Indeed, in September, it came under fire for having much more expensive PCR tests than other African nations. This was compounded by the fact that, at the time, just 1.6% of Kenyans were fully vaccinated against COVID-19.
Kenya Airways itself has also recently been in hot water regarding operational matters. Last month, the airline came into conflict with its pilots’ union after it adjusted schedules on the Nairobi-Guangzhou route. The quicker flight times cut costs due to requiring less flight crew, but the union asserted that the plans were illegal and could increase fatigue. It will be hoping for a smoother start to 2022, when it will remain only partially nationalized.
