Kenya Airways (KQ) has ventured into alternative sources of capital as the government ends taxpayer-funded bailouts. The state is the largest shareholder of Kenya Airways, owning 48.9% of KQ. The National Treasury has indicated that there will be no capital injection for the ailing parastatal in the 2023–2024 financial year.
This is after the government injected more than Ksh 56.0 million into the airline in the 2021–2022 financial year, which didn’t translate into returns. The airline had suffered consistent losses for the past ten years, since 2012, when it made its last net profit of Ksh 1.66 billion. The airline recorded a net loss of Ksh 38.3 billion in 2022, more than double the Ksh 15.8 billion recorded in 2021.
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The performance in 2022 was impacted negatively, primarily by increased fuel prices resulting from the Russia-Ukraine war, which increased the operating costs.
The company hopes to get a strategic investor to assist in the market capitalization and funding of its Kifaru Project, the airline’s turnaround project that kicked off in February 2022. The airline’s CEO, Mr Allan Kilavuka, stated that the project aims to address the accumulated debt, high operations costs, and the company’s culture change within Kenya Airways for sustainable transformation.
The project will also focus on fleet and network optimization, capital restructuring, and expanding African networks and markets. The company hopes to get on its feet and start making profits by 2024.
The airline continues pursuing its strategic partnership with South African Airways, set for 2024. Both companies hope to increase passenger traffic, cargo opportunities, and general trade by taking advantage of strengths in South Africa, Kenya, and around the globe.
COMESA is set to treat the deal as a merger due to the effect of competition in the region.
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