Kenya is keen to sell stake in its national airline
Kenya Airways, Africa’s third largest airline, could soon have its entire stake sold to interested buyers, according to the President of Kenya. Government officials hope to form a profitable partnership to keep the airline in business.
Initial plans to sell or nationalize the carrier were reportedly discontinued last month, according to Airways Magazine, but it appears those plans are back on the table. The news comes as the flag carrier struggled to turn a profit in 10 years and failed to repay its loan, forcing the Kenyan government to become responsible.
Kenya’s newly elected President, William Ruto, spoke about his proposal for the loss-making carrier in an interview at the US-Africa Leaders Summit in Washington, DC, on Friday.
“I’m willing to sell the whole [of Kenya Airways],” said Ruto in a Bloomberg report. “I’m not in the business of running an airline that just has a Kenyan flag, that’s not my business.”
On Thursday, Ruto reportedly met with Peter Carter, the Executive Vice President of External Affairs at Delta Air Lines.
“Discussions with Delta are at a preliminary stage,” he said.
Although Ruto declined to provide further details on his meeting with Delta, the airline is the largest in the US by company revenue. Additionally, both airlines are part of the SkyTeam alliance.
Ruto also mentioned that the Kenyan government is willing to partner with anyone that could increase Kenya Airways’ profitability.
“Looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, whatever form it takes,” he noted. “If you have someone who wants to buy the whole airline, please, I’d like to have a conversation with them.”
The Kenyan government owns 48.9% of the carrier, and the Air France–KLM group, holds a 7.76% stake. According to Bloomberg, a group of lenders who swapped their debt for equity in the company control 38.09%.
In October, the airline defaulted on a loan taken out in 2017 of $841.6 million intended to cover the cost of seven aircraft and one engine. Since the Kenyan government backed the loan from the US Exim Bank, it became responsible for paying $525 million.
A combination of fluctuating fuel prices and the recent COVID-19 pandemic has contributed to Kenya Airways’ streak of losses. According to Business Daily Africa, this year marked the ninth consecutive half-year loss for the airline, with 2012 being the last time it turned a profit.
Last month, Ruto implemented a restructuring plan to divide the airline into cargo, passenger, and ground handling units, with each division responsible for its own operation and expenditures.
According to Airways Magazine, the plan also included the commencement of a separate charter service. Simple Flying has reached out to Kenya Airways for comment but has not heard back.
Also occurring last month, the airline made headlines when at least 10,000 passengers were left stranded after a pilot strike led to the cancellation of several flights.
