National Treasury Cabinet Secretary Ukur Yatani has explained the delicate restructuring of Kenya Airways as the government strives to make it sustainable.
“Kenya Airways will need to downsize its 32 network, streamline flight frequencies, operate a smaller fleet and streamline its workforce. I will propose a budget allocation to cover restructuring costs,” Yatani said yesterday as he read the 2022/23 budget statement.
KQ operates a fleet of 41 according to skyteam.com. It is mainly US-built Boeing 787s – including the 787 Dreamliner that is essential to connect Nairobi to New York – and Brazilian-made Embraers that dominate regional routes.
KQ has a total of 56 destinations with 46 in Africa and the rest abroad.
Such cuts mean lost jobs and maybe some routes that don’t have as much traffic but just bleed the airline.
Noting that the national carrier plays a vital role in the country’s economic development, CS said the aviation industry has been hit hard by the Covid-19 pandemic and KQ has not been exempted.
“The airline is facing severe cash constraints following global lockdowns triggered by the COVID-19 pandemic. The government, as a major shareholder, supports the restructuring of Kenya Airways to adapt to the challenges facing the aviation industry due to the negative impact of the Covid-19 pandemic,” he said. declared.
During his remarks, Mr. Yatani added that the government had undertaken a comprehensive assessment of the vulnerabilities of state-owned enterprises.
“In particular, in-depth financial assessments of selected state-owned companies, excluding Kenya Airways, which face the greatest financial and fiscal risks, revealed a cumulative liquidity shortfall of Sh383 billion over the five coming years.
This gap should be covered by undertaking specific policy interventions to improve efficiency, reduce costs and increase revenues,” he said.
The airline reported a loss of 15 billion shillings for the year ending December 2021, which was an improvement from 36 billion shillings the previous year.
This improvement in the financial situation is due to the resumption of flights after the relaxation of travel guidelines during the Covid-19 pandemic.
The SC also said that the government will continue to support the restructuring of Kenya Power to increase efficiency while maintaining a systematic reduction in tariffs for electricity users.
“The recent 15% tariff reduction by the government has not only brought immediate relief to consumers, but has also led to the realization of wide benefits including price reductions of goods by manufacturers,” he said. .
The SC also announced a rescue package for the cotton industry that it allocated 212.1 million shillings for the modernization of the cooperative cotton gins and 250 million shillings to revitalize the industry.