Kenya Airways (KQ) Group Chief Executive Allan Kilavuka told lawmakers that disbanding the airline and starting afresh was not the clear strategy for saving the national carrier.
While appearing in parliament on Tuesday, October 24, Kivaluka explained that disbanding the national carrier would mean losing all the bilateral agreements and other deals.
“Do you think KQ needs to be disbanded?” asked Charibari Chache MP Zaheer Jhanda.
Kilavuka responded that there is a choice to disband, but it has its pros and cons…
“There are very many ramifications of starting afresh. If we were to, we would lose all the bilateral air service agreements and we would have to renegotiate afresh.
Photo: KENYA AIRWAYS.
“We also have the loans, they would mature immediately.”
However, Kivaluka told MPs that Kenya Airways management was contemplating implementing Project Kifaru, a three-year plan that among other things seeks to monopolize its fleet to reduce the training and maintenance cost.
It is also seeking a strategic equity partner to inject funds to turn around the airline, with Kilavuka saying in the absence of an equity investor the airline will continue to struggle in its operation.
“Can we survive in the short term? Yes, we can survive but it will be a difficult survival.”
MPs were compelled to ask the question after Kivaluka told the house that Kenya Airways would make a Ksh32 billion lose due to the weaker shilling. That could double to Ksh64 billion in 2024.
“The depreciation of the Kenya Shilling against the US dollar has negatively impacted the airline’s financial standing,” Kilavuka said.
“For instance, the negative foreign exchange impact on KQ operations already booked in KQ books between January and September 30, 2023, is Ksh26.6 billion.
“Assuming that the US dollar to Kenya Shilling exchange rate is one dollar for Ksh151.86, by December 2023 KQ will have booked an additional negative forex impact estimated to be Ksh5.5 billion.
“In total, the negative forex impact on KQ operations in the 2023 financial year will be an estimated to Ksh32.1 billion.”
He thus pleaded for another government bailout to remain afloat.
