Kenya gov’t backs taking over unprofitable Kenya Airways

Kenya’s government is in favor of a proposal by lawmakers to nationalize Kenya Airways Plc., after they rejected the airline’s bid to run the nation’s biggest airport.

Sub-Saharan Africa’s 3rd-largest airline, which reported a Ksh5.95 billion shillings (US$59 million) full-year loss, has lost market share to regional rivals like Ethiopian Airlines and RwandAir. Kenya Airways is seeking ways to promote its base in the East African nation’s capital, Nairobi, as a regional hub and return to profitability, even if that means it being nationalized.

The Kenyan government already owns 48.9 percent of the airline.

The parliamentary transport committee proposed creating a government-owned holding company with 4 subsidiaries including the carrier and the Jomo Kenyatta International Airport, according to a report tabled in parliament on Tuesday. The other 2 units are the state’s Kenya Airports Authority and an aviation college. The National Assembly is required to adopt the committee’s report before the government can implement it.

“We support that proposal,” Transport Cabinet Secretary James Macharia said in a text message. “It is part of the overall plan.”

Source: Bloomberg News