Lawmakers voted to have the loss-making national carrier, burdened with a mountain of debt and stiff competition from regional rivals renationalized with the hope of turning around its fortunes.
Under the model approved by lawmakers, Kenya Airways which is 48.9 percent government-owned and 7.8percent held by Air France-KLM, will become one of four subsidiaries in an Aviation Holding Company which will include Jomo Kenyatta International Airport, the country’s biggest airport, an aviation college, and Kenya Airports Authority, which will operate all the nation’s other airports.
But some experts believe renationalize will magnify the airline’s problems, opening it up to political interference without a clear strategic direction. Kenya Airways chairman Michael Joseph said that renationalization can be a success if the airline is run in a commercial way with a team of professionals, to avoid a situation where the nationalized airline is reduced to a department of government with a board of directors loaded by friends of politicians.
Appearing before JKL on Citizen TV hosted by Jeff Koinange, Michael Joseph, together with KQ CEO Sebastian Mikosz, expressed their frustration towards the governments’ deaf ears toward their propositions to put KQ back on the map.
“We did not want to take over KAA. We wanted an equal partnership between JKIA and KQ. We did not want to be nationalized but it is what we needed to be competitive. We need to understand why we are trying to combine the airline and the airport so that they can leverage each other. As it is, the airport is not in good condition. It is embarrassing because we are not making the necessary improvements,” said Michael.
He said it is frustrating that Kenya is not moving fast enough, due to inherited legacy issues including debt. That for KQ to compete at the same level as its competitors, they need to have the same structures and finances and to lower their cost they need government intervention.
” I consider it my duty to do this job. It is tempting to quit but I am determined to make KQ a success. On my wish list, I would need 450 million dollars to turnaround KQ. A better balance sheet can aid in replacing aging aircraft,” he mentioned.
As part of Kenya Airways’ network expansion strategy steered towards growing its market share, increasing revenues and financial turnaround, the national carrier recently introduced new routes, including direct flights to the US that has been a success.
According to Sebastian, having more aircraft flying has increased the number of passengers, which means they can do more without adding more assets. However, Kenya’s neighbors are reviving their airlines and KQ cannot afford to underestimate the growth of its competitors.
“If we are not careful, East Africa’s gateway will move from Nairobi to Kigali. That KQ will grind to a halt is not a possibility we can even contemplate. KQ is a national asset. We cannot allow that to happen. But if we do not intervene and come up with solutions, that is a possibility that we may be looking at,” Michael Joseph insisted.