Kenya Airways is close to winning approval to run the country’s main airport in Nairobi.
Chairman Michael Joseph said the loss-making airline proposed forming a special purpose vehicle with state-run Kenya Airports Authority (KAA) allowing the airline to run Jomo Kenyatta International Airport for a minimum of 30 years.
Kenya Airways, which is owned 48.9 percent by the government and 7.8 percent by Air France/KLM, had $2 billion of debt restructured by the government and shareholders last year and it is planning new routes as it tries to recover from years of losses.
The plan to run Jomo Kenyatta airport is vital for the national flag carrier’s survival as it has faced limited choices after last year’s financial restructuring, Joseph said.
“All our competitors are state-owned, state-controlled, state subsidised and managed for the benefit of the airline. We are the odd one out,” he told Reuters.
The carrier also faces stiff competition from state-backed carriers, including Gulf-based Qatar and Emirates.
Joseph said the cabinet discussed the proposal and gave the “go-ahead” last week. Transport Minister James Macharia declined to comment when asked by Reuters if the proposal had been approved by the cabinet.
The plan to change Kenya Airways’ model, which will require parliamentary approval, will be finalised some time this year, Joseph said.
The Jomo Kenyatta airport is owned by the KAA, which has run it until now.
Kenya Airways said the proposal would enable the carrier to grow its fleet from 32 to 55 and start flying to 20 new international destinations by 2022. That will allow it to carry nearly 7 million passengers, up from about 4 million now.
The company will invest in parallel in the airport facilities to enable it to handle more than 11 million passengers annually by 2022, up from 7.4 million now.
Aviation analysts said Nairobi’s international airport is a cash cow for KAA and it offered potential to grow.
KAA said it gets revenue of 13.5 billion shillings ($133.93 million) from the Jomo Kenyatta airport per year, including 3 billion from non-aviation services like leasing of space to restaurants, without commenting further.
Kenya Airways sunk into losses in 2013 after costly purchases of aircraft coincided with a slump in tourism and business travel to Kenya after a spate of attacks by Somalia-based Islamist militants.
