Kenyan lawmakers on Tuesday voted to accept a Parliament Transport Committee plan to re-nationalize Kenya Airways. The proposal calls for a new holding company to manage the airline and the Kenyan Airports Authority with a view of rescuing the struggling flag carrier.
The management of Kenya Airways had proposed that the government assume control of its hub airport, the Nairobi Jomo Kenyatta International Airport, from the Kenyan Airports Authority. However, the government rejected that proposal and has turned its attention to re-nationalizing the airline.
The Transport Committee’s report recommends that a holding company get tax concessions for a pre-determined period and exemption from excise duties on all goods, including jet fuel, while the government assumes the airline’s bank debt totalling 20.5 billion Kenyan shillings ($195 million).
Kenya Airways, which ran under government control in the 1990s, now operates as a publicly traded company on the Nairobi Stock Exchange. The Kenyan government owns a stake of 48.9 percent, Air France-KLM a 7.8 percent share and private investors the remainder.
Outgoing Kenya Airways CEO Sebastian Mikosz has given a positive nod to the government’s decision. Mikosz told AIN that the parliament’s move to pull together all the national aviation assets represents a viable solution to the challenges facing the national carrier. He added, however, that the company’s prior turnaround strategy has begun to succeed.
Mikosz, who submitted his resignation letter in May, plans to leave the airline in December. Kenya Airways posted a $74.59 million net loss last year.