National Treasury Cabinet Secretary Ukur Yatani has spelt out the delicate restructuring of Kenya Airways as the government pushes to return it to sustainability.
“Kenya Airways will be required to trim its 32 network, rationalise frequencies of flights, operate a smaller fleet, and rationalise its staff complement. I will be proposing a budget allocation to meet the restructuring costs,” said Yatani yesterday while reading the 2022/23 budget statement.
KQ operates a fleet of 41 according to skyteam.com. These are majorly American built Boeing 787s –which includes the 787 Dreamliner that is key in connecting Nairobi to New York –and Embraer manufactured in Brazil that dominate the regional routes.
KQ has a total of 56 destinations with 46 in Africa and the rest overseas.
Such cuts mean loss of jobs and possibly some routes which do not have as much traffic but just bleed the airline.
Noting that the national carrier plays a vital role in the economic development of the country, the CS said the aviation industry has been harshly affected by the Covid-19 pandemic and KQ has not been exempted.
“The airline is facing severe cash-flow constraints following global lockdowns triggered by the COVID-19 pandemic. The Government as a major shareholder is supporting the restructuring of Kenya Airways to adapt to the challenges facing the aviation industry due to the adverse impact of Covid-19 pandemic,” he said.
During the address, Mr Yatani added the government has undertaken a comprehensive assessment of vulnerabilities in state owned enterprises.
“In particular, the in-depth financial evaluations of selected state-owned enterprises excluding Kenya Airways that face the largest financial and fiscal risks revealed a cumulative liquidity gap of Sh383 billion over the next five years.
This gap is expected to be covered by undertaking specific policy interventions to improve efficiencies, reduce costs and increase revenue,” he said.
The airline reported a loss of Sh15 billion for the year ending December 2021 which is an improvement from Sh36 billion in the previous year.
This improvement in financial position was due to resumption of flights after relaxation of travel guidelines over the Covid-19 pandemic.
The CS also said the government will continue supporting the restructuring of Kenya Power to increase efficiency while sustaining systematic reduction in tariffs to electricity users.
“The recent 15 per cent tariff reduction by the government has not only brought immediate relief to the consumers but also led to realisation of broad benefits including reductions of prices of goods by manufacturers,” he said.
The CS also announced a bailout for the cotton industry which he allocated Sh212.1 million for modernisation of cooperative cotton ginneries and Sh250 million to revitalise the industry.