President Ruto will seek strategic foreign investors to buy a controlling stake in Kenya Airways (KQ) during his current trip to the United States, Transport Cabinet Secretary Kipchumba Murkomen has said.
Murkomen said this is part of the Kenya Kwanza administration’s plan to turn around the loss-making airline’s fortunes and return it to profitability.
Ruto is among over 50 African heads of state attending the three-day US-African Leaders’ Summit, which is being hosted by American President Joe Biden in Washington, DC.
The summit offers an opportunity for African leaders to shape the continent’s partnership with the US in trade, the economy, security and political relations, among other areas.
More than 300 American and African companies will meet with heads of different delegations to talk about investments in critical sectors, the White House said Tuesday.
CS Murkomen said they prefer a cash-rich foreign airline as a strategic investor in a plan that could offer Kenya Airways aviation expertise and cut its reliance on Treasury for operational cash.
“We are doing everything possible to ensure that we no longer subsidise the airline and that is why we are looking for a strategic partner,” Murkomen said as quoted by Nation.
“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.”
Such a move would see the government’s 48.9 percent stake in the airline reduce and also cut the ownership of 10 lenders who converted their debt to a 38 percent stake. Other shareholders include Air France-KLM (7.8 percent), employees (2.4 percent), and others at 2.8 percent.
The government has been pushing for a restructuring of the airline on the back of a multi-billion-shilling bailout plan where the struggling airline is required to reduce its network, operate a smaller fleet and possibly reduce its workforce.
Kenya Airways has focused on restructuring its fleet, including selling aircraft and sub-leasing to other airlines in an attempt to return to profitability. Its fleet size dropped to 39 in 2017 from a high of 52 in 2015, before rising to 43 in 2021.
KQ is also renegotiating aircraft lease contracts with lessors as part of a string of austerity measures to reduce operating costs. It has also increased focus on the cargo business and has already converted two passenger aircraft to cargo freighters to increase capacity.
The airline narrowed its half-year loss to Sh9.88 billion ($82.33 million) in the six months ending June from Sh11.48 billion ($95.66 million) in the same period in 2021.
