This archive report was first published on 26 July 2019.
Kenya Airways, the country's national carrier, is set to be fully renationalized in 21 months, according to a lawmaker briefed on the transaction.
The airline, which was privatized 23 years ago but sank into debt and losses in 2014, will see the government buying out minority shareholders and converting bank-held shares into Treasury bonds.
Minority shareholders, who hold about 3% of shares, will be bought out for approximately 800 million shillings ($7.71 million), while a consortium of local lenders, who acquired 38% of the company's equity during the 2017 restructuring, could be paid through government debt, possibly 10-year Treasury bonds.
Kenya Airways will become one of four subsidiaries in an Aviation Holding Company, alongside Jomo Kenyatta International Airport, an aviation college, and Kenya Airports Authority, which will operate all the nation's other airports.
The Aviation Holding Company will have a healthier balance sheet than Kenya Airways alone, with the airline able to renegotiate its aircraft leases based on its reduced risk profile.
JKIA alone has annual revenues of Ksh12 billion ($115.6 million), half of which is profit, lawmakers said.
Government officials said the airline is vital to encourage investment and bring in tourists, but some critics argue that the government failed to manage the airline properly in the past.
