This archive report was first published on 1 December 2019.
December 1, 2019, marked a crucial moment for Kenya Airways as its CEO, Sebastian Mikosz, called for the government to nationalise the airline swiftly. This move aims to counter the growing market share of regional competitors who are heavily investing in their national carriers.
Lawmakers voted in July to re-nationalise the loss-making airline, hoping to emulate the success of state-owned Ethiopian Airlines, sub-Saharan Africa's biggest airline. The airline is currently 48.9% state-owned, 7.8% held by Air France-KLM, and 38% owned by local lenders.
Kenya Airways was privatised over 20 years ago but sank into debt and losses in 2014 after a failed expansion drive and a slump in travellers following a major terror attack. In August, the airline saw its first-half pre-tax loss more than double from a year earlier to Sh8.56 billion.
Outgoing Chief Executive Sebastian Mikosz stated that the government will likely appoint a nationalisation advisor by the end of the year, and the process should be completed next year. He emphasized the importance of having the nationalisation done speedily, with an answer about the airline's future structure within the next five years.
Kenya Airways flies to 51 destinations globally, 43 of which are in Africa, according to the airline's website. Countries like Tanzania and Rwanda are investing heavily in their national carriers, threatening Kenya Airways' market share. Mikosz disputed analysts' view that a government takeover would not return the airline to profitability, citing the success of state-owned Ethiopian Airlines.
He also highlighted the need for Kenya Airways to retain its commercial flexibility and avoid some of the limitations imposed on other state-owned companies, such as regulations requiring public tendering. The airline must exploit the lack of connectivity on the continent and a growing Asian market to win back market share from competitors like Emirates and Turkish Airlines.
