Kenya Airways Sees Profit From Proposed Airport Deal by 2022

(Bloomberg) -- Kenya Airways Plc. said it will be profitable within four years if the government approves its proposal to replace the airports authority as operator of the East African nation’s aviation hub.

Sub-Saharan Africa’s third-biggest carrier by passenger traffic will see net income as revenue surges to $2 billion in 2022, according to an emailed statement by the carrier. That compares with revenue of 110.8 billion shillings ($1.1 billion) and a record loss of 26.2 billion shillings in the 12 months through March 2016.

Company officials were in Kenya’s parliament Tuesday to discuss their proposal to create a unit to operate Jomo Kenyatta International Airport in Nairobi under a three-decade concession. Kenya Airports Authority, the current operator, will receive annual fees under the deal.

The airports agency will separately appear before lawmakers Wednesday to explain how the proposed joint venture would affect it.

“The proposed business model where the national aviation hub is run under the same group structure with the national airline has proven successful in other countries,” Kenya Airways said in the statement, citing Ethiopia and the United Arab Emirates, whose airlines it has lost market share to. “It is the most efficient way of using national assets to work for the country,” it said.

READ: Kenya Airways Sees 56% Traffic Surge If Allowed to Run Airport

The airline said that it’s less competitive partly because it pays fees to the airports authority and the government, which its rivals don’t at their hubs. It warned that if its performance further deteriorates, it will affect operations of the airports agency that derives most of its revenue from the carrier.

The proposed venture is aimed at achieving “profitability, and in the long run, ability to generate profit before tax and dividends for its shareholders,” it said in the statement.

Kenya Airways is 48.9 percent owned by the Kenyan government.

To contact the reporter on this story: Bella Genga in Nairobi at bgenga2@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net, David Malingha, Michael Gunn

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