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The Kenyan parliament on Tuesday voted in favor of the nationalization of the country's largest airline, Kenya Airways, to avoid growing debt.
The loss-making airline, which is 48.9% owned by the State and 7.8% by Air France-KLM, is struggling to regain profitability and growth.
An unsuccessful expansion attempt and a collapse of air traffic forced it to restructure a debt of $ 2 billion in 2017. The airline then offered to take over the management of Nairobi's main airport in order to to increase your income.
The Parliament's Transport Committee, however, rejected the plan, instead recommending the nationalization of the airline in a report discussed by the National Assembly on 18 June.
At a vote by vote Tuesday afternoon, the majority of lawmakers voted in favor of the report's acceptance.
Kenya Airways President Michael Joseph told Reuters the vote was "good news".
"Nationalization is what is needed to compete on an equal footing, it's not what we want, but what we need," he said, citing competitors as Ethiopian Airlines, which are run by the state and profitable.
Air France-KLM could not be immediately contacted to comment.
The government will now develop an implementation plan, with specific timelines, "said Esther Koimett, Principal Secretary, Ministry of Transportation.
"Parliament is our boss (…), we will obviously follow the recommendations of Parliament," she told Reuters.
Kenya is seeking to emulate countries like Ethiopia, which exploit air badets from airports to fuel the operations of a single company, using funds from the most profitable parts to support others, such as national airlines.
"The government is keen to adopt a consolidated vision of the country's air badets in order to ensure that they operate in a consistent and efficient manner to support the hub (from Nairobi to aviation)," he said. Koimett.
The report of the committee proposes that Kenya establish an aviation holding company with four subsidiaries, one of which will lead Kenya Airways. Another branch of the holding company would operate Nairobi's main international airport.
The committee's report also recommended the holding company to benefit from tax relief for a period to be determined and to exempt from the payment of excise duties on all commodities, including jet fuel.
Koimett dismissed concerns that nationalization could lead to further mismanagement. The Kenyan state-owned enterprise sector is riddled with corpses and near-failures caused by theft and poor management over the decades.
"Implementation is really the key … In the end, all of these things are really about making sure the right people are in the right places," she said.
($ 1 = 103.7000 Kenyan shillings)
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