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Kenya’s Parliament Vote In Favor Of Proposal To Nationalize Kenya Airways

The Kenyan Parliament on Tuesday voted in favor of a proposal to nationalize the country’s main airline Kenya Airways in a bid to save it from mounting debts, reported Business Daily.

 The loss-making airline is 48.9 percent owned by the government and 7.8 percent held by Air France-KLM. It has been struggling to return to profitability and growth. A failed expansion drive and a slump in air travel forced the airline to restructure $2bn of debt in 2017.

The National Assembly unanimously voted to approve the recommendation by the Transport committee for the formation of an umbrella Aviation Holding Company to run Kenya’s aviation sector. The committee has recommended that the government establishes the holding company with four subsidiaries comprising the Kenya Airports Authority (KAA), Kenya Airways (KQ), the Jomo Kenyatta International Airport (JKIA) and a centralized Aviation Services College, which will run independently.

It also recommended the holding company be exempted from paying excise duties on all goods – including jet fuel – and given tax concessions for a time period to be determined later.

The proposal acceptance now means the government will have to pay off KQ debtors first to pave way for the nationalization of the national carrier. The troubled airline owes CBA Group Sh3.1 billion, Equity Bank Sh5.2 billion, National Bank Sh3.5 billion, Co-operative Bank Sh3.3 billion, DTB Bank Sh3.3 billion and KCB Group Sh2.1 billion.

In an interview with Reuters, Kenya Airways Chairman Michael Joseph said the vote was “great news” and that nationalization is “necessary to compete on a level playing field.”

“It is not what we want, but what we need,” he added.

Esther Koimett, the principal secretary at the ministry of transport, said the Kenyan government will now draw up an implementation plan, with clear timelines.

“The government is keen to take a consolidated view of aviation assets of the country in order to make sure they work in a coherent and efficient way to support the (Nairobi aviation) hub,” Koimett said.

Caroline Finnegan

A professionnal journalist for the past ten years, I cover global news and economic affairs for The Chief Observer.

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