The schedule of nationalizing Kenya Airways(KQ), has been pushed by over two months, owing to disruptive effects of COVID-19 pandemic on the global aviation business.
Parliament is expected to restart the debate on this pending matter sometime in August this year.
” The nationalization process has been delayed for close to two and a half months owing to the COVID-19 pandemic. We expect the national assembly to debate on this matter, probably around August this year,” said Michael Joseph, KQ Chairman of the Board of Directors.
He made these in a video press briefing after the conclusion of KQ’s 44th Annual General Meeting(AGM), which was conducted on an electronic platform on Friday, 26th June 2020.
While not disclosing the ongoing discussions on the subject, the airline promised to issue a detailed statement on this, at a later date.
“This is a delicate and complex process that also involves how to deal with the interests of minority shareholders in the airline. We are keen to ensure the airline remains a strategic asset for Kenya that can also contribute effectively to its GDP,” said Michael Joseph.
While KQ has already announced that it will resume international flights in July this year, it remains guarded on its route plan, including frequencies to various international destinations.
“The route plan is subject to board approvals. But selections of routes that we will fly into will be selective and involve extreme caution,” said Michael Joseph.
He said KQ is determined to ensure Kenya maintains its position as the leading business hub in Africa and commended the airline’s staff for holding it together during this period of unprecedented crisis involving pay cuts and duty leaves.
According to Allan Kilavuka, KQ Chief Executive, the airline is ready to resume international and local flights in July this year.
“We will be responsive to the market in terms of frequencies. Discussions of the route map is still at the approval stages within the board,” said Kivaluka.
While COVID-19 pandemic and subsequent disruptions on international flights have hit many airlines worldwide, KQ included, a fall in the price of international crude offers a silver lining for the industry.
“We are having favorable jet fuel prices on the international market and thus have no reason to hedge at the moment. This is because we are procuring fuel at favorable prices than what the board had projected,” said Hellen Muthoni Mathuka, KQ Chief Finance Officer, in response to The Kenyan Wallstreet.
While there is still anxiety over the medical safety of passengers and crew when KQ resumes its flights, CEO Kivaluka said passengers on its flights will not be required to adhere to the physical distancing requirement.
“Our aircraft are well ventilated with all necessary filters to prevent transmission of the virus. We will thus not require physical distancing on our flights,” said Kivaluka.
He added that the physical distancing measure will force the airline to fly at less than capacity, resulting in a hike in ticket prices of between 60%-100% if the health measure is implemented.
He said KQ has also put on halt any expansion into new routes for a period of two years. This is until its financial state improves.
KQ has also postponed the purchase of new aircraft until the demand for passenger travel and cargo traffic returns to normal levels.
“We are having excess assets at the moment and do not thus intend to acquire any new planes, probably until 2023,” said Kivaluka.
The airline is presently operating repatriation flights on the Nairobi London route with similar weekly flights to China. It is also doing cargo flights to the United Arab Emirates and Amsterdam where Kenyan vegetables and flowers are exported. The airline’s weekly cargo tonnage is estimated at 3,000 tonnes.
In the financial year ended 31st December 2019, KQ saw a 12.4% increase in revenue from KSh 114,185 Million in 2018 to KSh 128,317 Million.
The passenger numbers also grew to a record 5.1 Million in the same period, due to the carrier’s ambitious network expansion strategy.