Kenya Airways picks UK based firm for revival plans

Kenya Airways has picked a UK firm, Steer Group, for revival plans in the face of increasing financial crisis and reduced passenger numbers.

The UK-based firm took up the task in May and will be retained for at least three months. Kenya Airways has come up with revival strategies; short, medium, and long-term to actualize two main objectives o.

f the national carrier.

The first strategy is to navigate through the current suppressed market and the last implement strategies to make Kenya Airways business sustainable in the long term. 

Steer Group consultancy firm has been tasked to validate the strategies and recommend any additional strategy to help achieve the targets.

The International Monetary Fund set it as a condition in its Sh255 billion loan to the Kenyan government in March to craft a viable turnaround strategy for KQ. In the deal, Kenya pledged to review and reform the key State-Owned Enterprises to assure their viability.

The Enterprises are; Kenya Airways, Kenya Airports Authority, Kenya Railways, Kenya Power, Kenya Electricity Generating Company, Kenya Ports Authority, and three of the major public universities. To revive Kenya Airways, Kenya committed to hiring an independent firm to audit the operations and find the most economical way of restructuring the Airline.

The Airline’s net loss almost tripled to Sh36.2 billion in the year ending December 2020, in the wake of the economic recession of the Covid-19 pandemic; extending a series of losses.

Steer Group firm is expected to audit and propose viable options to steer Kenya Airways back to sound financial status.

The group will also have the mandate to advise on a supportive framework, structure, and operational setup to support the airline’s recovery. The Steer consultancy beat eight other firms in the race for the task. 

However, the KQ management hasn’t revealed the cost of the audit citing confidentiality. But in the IMF deal, the Ministry of Treasury revealed that Sh36 billion will be spent to bail out key parastatals that have sunk into financial crisis in face of the Covid-19 economic pandemic. These included KQ, Kenya Power, and several major universities after a sharp drop in their revenues.

The Airline has already taken an Sh11 billion loan from the government last year to fund its operations. The loan was taken in two tranches of Sh5 billion and Sh6 billion. According to the carrier’s latest report, the first loan was to facilitate E-190 aircraft fleet engine overhauls that were due last year 2020.

In another attempt to keep Kenya Airways from breakdown, the government is mulling to take over the airline to emulate the success of State-owned Ethiopian Airlines which is the biggest in sub-Saharan Africa.

The national carrier was privatized 24 years ago but sank into a debt crisis in 2014 after a failed expansion initiative. The costly purchase of aircraft and a slump in passengers after a terror attack hit the Airline.

The Kenya Aviation Management, Bill 2020 also seeks to nationalize the airline and make subsidiaries of a holding company to be named Kenya Aviation Investment Corporation.

The Bill went through the First Reading in the National Assembly but has since run into headwinds over allegations of low public participation

Also to be nationalized is Kenya Airports Authority. It will operate all the country’s airports including Jomo Kenyatta International Airport under an investment unit named Aviation Investment Corporation.

Also read,

Safaricom mulls writing off Sh1.5bn debt owed toTelkom and Airtel

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