June 18, 2019 / 4:14 PM / a month ago

UPDATE 1-Lawmakers propose nationalising loss-making Kenya Airways

(Adds details, background)

NAIROBI, June 18 (Reuters) - A Kenyan parliamentary committee on Tuesday recommended nationalising Kenya Airways as part of an effort to turn around the loss-making airline.

The transport, public works and housing committee also proposed setting up of an aviation holding company with four subsidiaries, one of which would run Kenya Airways, which is 48.9% owned by the state and 7.8% by Air France-KLM.

Under the proposals, which still need to be debated and voted on by parliament, another arm of the holding company would operate Nairobi’s main international airport

The cabinet backed a plan last year to hand over management of Nairobi’s profitable Jomo Kenyatta International Airport to Kenya Airways to boost the airline’s balance sheet and help it buy new planes. The plan was later shelved.

“The committee recommends ... that Kenya Airways be nationalised,” the committee’s report said, adding the proposals were based on the airline’s “current financial status”.

Kenya Airways, which restructured $2 billion of debt last year, wants to expand its business to boost earnings from catering, fuel distribution, cargo and maintenance. It is planning to open up new routes in a bid to become profitable.

The airline reported revenue of 114.45 billion shillings ($1.13 billion) for the year to Dec. 31, up from 106.17 billion a year earlier, while narrowing its pretax loss for the period to 7.59 billion shillings from 9.44 billion.

The committee’s report also recommended that the aviation holding company be given tax concessions for a period to be determined and that it be exempted from paying excise duty on all goods, including jet fuel. (Reporting by George Obulutsa, Omar Mohammed and John Ndiso; Editing by Kevin Liffey and Edmund Blair)

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