Kenya Airways trading is still suspended, this time until January 5, 2024. This is due to the airline being nonprofitable and more time needed - according to a Nairobi Securities Exchange statement – for an, “Operational and corporate restructure process.”

Short history of Kenya Airways’ financial troubles

Kenya Airways has had financial troubles for some time. Back in March 2020, the airline lacked cash reserves.

In the mid-2010s, the airline was barely able to operate, with massive financial losses since 2013 and a pilot shortage back in 2019. The Kenyan government at the time had to step in and ended up owning 48.9% of Kenya Airways. There was even a $225 million loan to help keep Kenya Airways financially flying, and the airline management was lobbying hard in 2019 to nationalize Kenya Airways.

Read about the history of Kenya Airways

The COVID-19 pandemic and subsequent Government of Kenya ban on international flights forced Kenya Airways to seek additional government assistance. This was especially impactful for the carrier, as international flights make up 92% of the airline’s sales. iivoting to air cargo and pay cuts were insufficient to keep the airline afloat.

Furthermore, the African Competition Forum (ACF) found that Kenya Airways was the most expensive African airline by ticket price in October 2021. This assessment of Kenya Airways was based on the highest average passenger price per kilometer (APPK) for all its national, regional, and international routes.

The airline also claims that $28 million of revenue is due from Nigeria, Malawi, and Ethiopia. Efforts to collect have been difficult.

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There was also a pilot strike in November 2022. Although a court injunction attempted to halt the labor activity, the strikes forced cancellations of flights, with over 10,000 confused and frustrated passengers stranded at Nairobi's Jomo Kenyatta International Airport.

Overall, Kenya Airways has structural financial problems that are difficult to resolve. The airline hopes to break even in 2024, but given the pre-existing and new headwinds the carrier is facing, even that could be taken with some skepticism.

The Kenyan President wants to divest from Kenya Airways

Kenya’s President, William Ruto, has voiced a public desire to divest Kenyan government funds from Kenya Airways. Already $283 million is committed to the airline in 2023. President Ruto is quoted in Bloomberg as saying,

I'm not in the business of running an airline that just has a Kenyan flag, that's not my business.

As such President Ruto is, “Looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, whatever form it takes.” This search has included reaching out to Delta Air Lines.

According to a January 4 FlightGlobal report, deals have been renegotiated with lessors, the Kenyan government took over $827 million of Kenya Airways debt, and, “the Kenyan government would provide $473 million … to clear overdue payment obligations and cover the upfront costs of restructuring.”

Nonetheless, the International Monetary Fund, when extending credit to Kenya, did include in their December 19, 2022 statement an urging that “addressing vulnerabilities” plus “strengthening the governance framework for state-owned corporations” is urgent.

What is your assessment? Please share with civility in the comments.

Sources: Dec. 17, 2022 Bloomberg; Jan. 4, 2023 FlightGlobal

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  Kenya Airways

  IATA/ICAO Code:

  KQ/KQA

  Airline Type:

  Full Service Carrier

  Hub(s):

  Jomo Kenyatta International Airport

  Year Founded:

  1977

  Alliance:

  SkyTeam

  CEO:

  Allan Kilavuka

  Country:

  Kenya