Why experts want Kenya Airways sold to strategic investor

LOSSES: A section of Kenyans and analysts want the troubled Kenya Airways  engaged in strategic  partnership to save taxpayers billions of shillings the government uses to keep it in the skies.

They said in the past decade, the national carrier, commonly known by its international code KQ,  has continued to post huge losses, adding the government should stop bailing it out and seek a serious buyer.

They claimed that cartels in the airline together with individuals in the top echelons of government have formed a syndicate that has seen it lose more than Sh10 billion annually, adding that the airline should not merge with Kenya Airports Authority (KAA) which is financially healthy.

Aviation Bill

“The irony is that there’s an Aviation Bill currently in Parliament that wants to put the sick KQ and relatively healthy KAA in one isolation centre.

Our country is a sandbox of bad policies,” Mohammed Welihye, an economic policy adviser said yesterday.

Donald Kipkorir, a renowned commercial lawyer alleged that sustaining the airline was an economic terrorism, claiming that it is meant to benefit debt restructuring consultants.

They spoke as a new survey has found that African airlines are staring at bankruptcy if their liquidity crisis is not addressed urgently.

The survey by The Economic Commission for Africa (ECA) and the African Airlines Association (AFRAA) reveals that a number of airlines around the world are already insolvent.

In Africa, for instance, Air Mauritius has entered into administration. 

Dubbed Policy research paper Covid-19 and African airlines overcoming a liquidity crisis,” the report also observes that some carriers on the continent were already struggling prior to the spread of the pandemic.

Given the importance of air transport to economic development and job creation, many countries have bailed out their ailing carriers, the report says.

For example, the German government has provided a bailout package of 9 billion euros to Lufthansa. 

In the United States of America, the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act is a stimulus bill that includes a $61billion relief package for United States airlines.

Unlike in Africa, governments in other parts of the world have provided relief packages for their airlines, including direct support, loans and loan guarantees, issue of equity, and waving of rents, among others. 

In addition, the European Union Commission has put forward proposals that include relaxation of the air carrier licensing rules in the event of financial distress caused by Covid-19, and a simplification of the procedure regarding restriction of traffic rights.