State wants bigger say in running of Kenya Airways

Government is considering buying a bigger stake at the national carrier, Kenya Airways, to give it more say in the running of the airline.

In what is seen as a reversal of the government policy on privatisation, Transport Cabinet Secretary Michael Kamau and his principal secretary Mr Nduva Muli told a Parliamentary committee yesterday that it was time to change the shareholding structure of the Kenya Airways.

“The time has come for us to review the shareholding of Kenya Airways. The European carriers will not add any value, they are collapsing,” Mr Muli told the Senate’s Committee on Energy and Transport.

Currently government holds the single largest stake in Kenya Airways at 29.8 per cent, followed by Dutch based KLM, which has a 26.73 per cent.

It is this stake held by KLM that the government seems to target by saying the European carriers are not adding value to the Kenya Airways.

The current structure gives KLM a big say in the appointment of top managers, limiting state control on the airline.

Mr Kamau said the new structure will boost efficiency and improve the fleet of the airline.

The National Intelligence Service (NIS), Mr Kamau added, should guide the government on partnerships that the national carrier should enter.

“Is there any strategic thinking going on in government? Is the NIS thinking about linking with airlines that are dying and where the government should put its money?” posed Mr Kamau.

In the financial year ending March, the airline recorded a Sh7.8 billion loss after tax, a significant drop from the Sh1.6 billion profit posted in 2012.

The company, which is listed at the Nairobi Securities Exchange, closed Tuesday's trading at Sh9.90 a share, closer to its 12-month low of Sh9.70.

Bigger stake

Kericho senator Charles Keter said the government should consider buying more shares in the airline.

“There’s a need to consider acquisition of a bigger stake in the Kenya Airways so that it can effectively compete with Ethiopia airlines,” Mr Keter said.

Mr Otieno Kajwang’ (Homabay) sought to know what the government has done to make the national carrier compete effectively in the tight aviation industry.

“Have we ever put any money into Kenya Airways? Ethiopia is investing in their airline,” Mr Kajwang said adding that the airline is not being given the attention it deserves.

Mr Kamau, the Cabinet Secretary, told the senators at the meeting in Nairobi’s Kenyatta International Conference Centre, that the “government has not been very helpful” in helping the national carrier compete.

Even in the face of problems, Mr Kamau added, the government did not intervene to help the national carrier.

For instance, Mr Kamau said, Kenya Airways has been forced to park some of its planes in Kisumu, Mombasa, Kilimanjaro and Entebbe, because there is no space at the Jomo Kenyatta International Airport.

“We were carrying more passengers than Ethiopian airlines. They have brought their dreamliners which are a dream to us,” said Mr Kamau.

Ethiopia Airlines was playing second fiddle to Kenya Airways a few years back in the number of passengers, but it dislodged Kenya following heavy investment in the airline, said the Cabinet Secretary.

He added that Ethiopia’s economy is successful mainly because of the investment in infrastructure, and there was no reason why Kenya should not emulate.

“We are the top cargo airport in Africa. Why is it taking five days to clear cargo? It is because of the cartels and we will deal with them,” said Mr Kamau.

He said the Treasury ought to remove bottlenecks to the Public-Private Partnerships, and ensure that entrepreneurs get business.