EDITORIAL

Nationalisation won't solve KQ's problems

In Summary

• Government already owns 49 percent of Kenya Airways.

• Ethiopian Airlines is the only profitable airline in Africa.

KQ plane at Moi Airport Mombasa
KQ plane at Moi Airport Mombasa
Image: FILE

On Tuesday the Transport Committee of the National Assembly recommended  Kenya Airways be renationalised. This could be disastrous.

After last year's restructuring, 49 percent of KQ is owned by government, 38 percent by  KQ Lenders Company, eight percent by Air France KLM, and five percent by small shareholders on the NSE.

Government would need to pay at least Sh11 billion to buy the shares that it does not own. Then it would need to pay around Sh21 billion to clear the loans dragging KQ down. Last year KQ lost Sh7.5 billion.  The airline could become a black hole for government if it took over.

 
 

It is very difficult to make money running an airline. Ethiopian Airlines is the only profitable airline in Africa but it is partly subsidised by its management of Addis Ababa airport. Earlier this year a proposal for KQ to take over running Jomo Kenyatta International Airport was rejected.

Nationalisation won't solve these deep structural problems. The present combination of private and public sector management has the best chance, one providing commercial discipline, the other financial strength.

Quote of the day: "Greatness comes from fear. Fear can either shut us down and we go home, or we fight through it." 

Lionel Richie
The American singer was born on  June 20, 1947