Ruto seeks strategic investor to turn around loss-making Kenya Airways
Offloading the government’s 48.9 percent controlling stake in Kenya Airways (KQ) is on the cards as President William Ruto seeks a strategic investor for the national carrier during his tour in Washington, US.
Speaking on Tuesday this week, Transport Cabinet Secretary Kipchumba Murkomen said the government was keen to diverge from underwriting KQ, even as the airline nears a decade without breaking even.
“We are doing everything possible to ensure that we no longer subsidize the airline and that is why we are looking for a strategic partner.
“Even on the President’s trip to the US, one of the topics for discussion is how to get a strategic partner for Kenya Airways,” said Mr Murkomen.
Dr Ruto, along with 49 presidents from across the continent is in Washington to attend the US-Africa Summit, but his stakeholders’ engagement schedule included hunting for a strategic investor for loss making KQ.
“We are dedicated to working on a restructuring plan that will make Kenya Airways exploit its full potential and turn it into a profitable venture,” Dr Ruto said when he met top officials of Delta, one of the major airlines of the United States.
The balkinggovernment is balking at the prospect of bearing KQ’s financial sustenance indefinitely, with the fatigue setting in more quickly after repayment of the carrier’s debt from US’s Exim Bank started last month.
In late November, the government was shoved into guarantors duties by paying Kes2.8 billion as part of KQ’s $841.6 million defaulted loan, which the government guaranteed a total of $525 million.
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“During the first quarter, the National Treasury guarantee to KQ was called as a result of loan repayment defaults. Following the default, KQ sought the government’s intervention and the Cabinet gave approvals for the government to pay the loan arrears on behalf of KQ and novate the loan balance to the government.
“The arrears of Kes2.8 billion was therefore paid in the first quarter of the financial year 2022/23,” said the Treasury.
KQ has been stuck in a loss-making spell for much of the last decade, but the covid crisis worsened the carrier’s financial woes as world travel ground to a halt to curb the virus spread.
In the half–year ended June, Kenya Airways posted Kes9.8 billion in losses while also faltering in global airlines ranking from position 79 last year, to 81st position this year.