Kenya's new cabinet secretary nominee for transport and roads, Davis Chirchir, has suggested the government increase its current 48.9% stake in Kenya Airways to 80%, given its KES600 billion shilling (USD4.6 billion) cumulative support to the airline since 2017.
Chirchir appeared before the National Assembly's Committee on Appointments on August 1 during a four-day vetting process as part of a broader assessment of 20 nominees put forward by President William Ruto for various cabinet positions.
He also suggested that Kenya Airways should bring in a partner airline to build a supportive airline network, using successful global hotel networks as an example. He believed this would assist the airline in overcoming its challenges and support key sectors like tourism and the exports of perishable goods, boosting foreign currency inflows.
Chirchir also believes that Kenya Airways' fleet of thirteen E190s is unsuitable for carrying large amounts of luggage, making it less competitive in the East African market. As a result, passengers often chose other airlines for their needs, which undermines Kenya Airways' market position, he argued.
Pointing to the carrier's operating profit of KES10.5 billion (USD81.1 million) for the year ending December 31, 2023, he said the government should analyse the airline's successful strategies, build on them, and cut unnecessary costs. He underscored that Kenya Airways is a valuable investment that the government is committed to supporting and promoting.
Still, he said, reforms at Kenya Airways must begin with improved communication and employee ownership. He believes the airline needs to address internal issues and reassess its negotiated labour terms.
Kenya Airways CEO Allan Kilavuka previously told ch-aviation the airline intends to progressively replace its Embraer fleet, starting with two later this year. He said the airline is trying to simplify its fleet with bigger-capacity aircraft to accommodate more belly cargo amid Nairobi Jomo Kenyatta's hot-and-high conditions, which limit payload. Kilavuka said the airline plans to dry-lease two B737s and one B787 this year to meet capacity demands. It currently damp-leases an A330-300 from Hi Fly Malta (3L, Malta International). By September, the airline aims to decide on an all-Boeing or all-Airbus fleet renewal.
Kenya Airways' revenue rose by 53% to nearly KES178 billion (USD1.36 billion) in 2023, driven by a 43% increase in passenger numbers and reduced fleet costs. However, overheads increased by 22% due to higher employee costs and foreign currency losses, totalling KES24 billion (USD183 million). The airline faces problems with dollar-based obligations and forex losses, exacerbated by difficulties in repatriating revenue from countries with low foreign exchange reserves.
