By Capt Samuel Caulcrick
Nigeria’s aviation industry has unique challenges and opportunities that differ from those in Kenya. Despite these differences, there are valuable lessons to be learned from Kenya Airways’ experiences.
Kenya Airways’ ownership structure is a public-private partnership, with the Government of Kenya holding 48.9%, KQ Lenders Company 2017 Ltd owning 38.1%, KLM holding 7.8%, and private investors, including employees, owning 5.2%. This partnership has enabled the airline to access financing through a combination of debt and equity.
Kenya Airways’ financial reports reveal significant financing costs, driven largely by foreign exchange losses on dollar-denominated loans. The airline’s total operating costs increased by 30% from KSh 155 billion in 2022 to KSh, 201 billion in 2023, with KSh 33.56 billion related to financing costs. The airline’s balance sheet also shows significant liabilities, including finance lease liabilities and borrowings.
Nigeria’s aviation industry faces similar challenges, including currency volatility and high capital costs. To compete globally, Nigerian airlines must access competitive capital costs and maintain robust corporate governance to assure lenders and reduce capital costs.
This case study highlights the importance of stakeholders’ consensus in Nigeria’s aviation industry. By learning from Kenya Airways’ experiences and adapting to Nigeria’s unique context, stakeholders can work together to create a more competitive and sustainable aviation industry.”
I still believe that corporate governance, which gave the lenders to convert loans to equity, currency stability, and most importantly, the cost and security of capital brought Kenya Airways back to competitiveness.
Whether it is in Africa or anywhere else, the aviation market is in global competition, and the cost of capital and corporate governance are the key components.
