Kenya Airways boss maintains Ethiopian Airlines prosperity due to government funding

- Mikosz said the reason why other airlines in the region are doing better than KQ is because they are fully funded by government

- He argued KQ had the highest structure of costs in the region and that KQ also pays dividends to stakeholders unlike its rivals

- The CEO cautioned KQ would continue to lag behind airlines like Ethiopian and Rwandair in the next five years

- His claims that the Ethiopian is financed by the government had, however, been refuted by the Ethiopian's Group CEO

- According to the Ethiopian boss, Tewolde GebreMariam, the airline receives zero funds from the government

Kenya Airways (KQ) CEO, Sebastian Mikosz, has challenged the government to invest more in the country's aviation sector arguing the reason why other flag carriers in the region are doing better than KQ is because they enjoy strong support from the government.

The KQ boss gave the examples of state-owned Ethiopian Airlines and Rwandair as the two most prosperous and promising national carriers in the region's aviation industry.

Kenya Airways CEO Sebastian Mikosz on Tuesday, April 9, told Parliament KQ had lost about 4% market share whereas Ethiopian and Rwandair continued to gain. Photo: The Standard. Source: UGC

Mikosz who was appearing before the National Assembly's Transport and Public Works Committee on Tuesday to defend the proposed takeover of Jomo Kenyatta International Airport (JKIA) said KQ will still be lagging behind the Ethiopian and Rwandair in the next five years because the two rivals enjoy government subsidies.

“Kenya Airways currently has the highest structure of costs in the region. Rwandair and Ethiopian are fully funded by their governments.

Ethiopian has created Africa's largest fleet, and Rwandair has increased its capacity to 100 aircrafts, whereas KQ still has 40 aircrafts,” Mikosz told the committee, adding that KQ is also required to pay dividend to shareholders unlike its competitors.

Interestingly, the 100% state-owned Ethiopian's Group CEO, Tewolde GebreMariam, is on record refuting reports and claims that the airline, which is currently the largest flag carrier in Africa, is successful because of government's financial backing.

“The airline is supported by itself. Yes, it is owned by the government, but it is fully managed by professionals. No single cent comes from the government. No sovereign guarantees.

We don’t need it, anyone can verify this from our annual report which is a public information," said GebreMariam in an exclusive interview with TUKO.co.ke.

GebreMariam has worked with Ethiopian Airlines for about 34 years. He served in different capacities and ascended the career ladder to become Group CEO. Photo: Edwin Ochieng'/TUKO. Source: Original

GebreMariam added Ethiopian Airlines was being audited by a number of internal and external auditors who can confirm that there is no single cent injected in it by the government.

"It is a baseless allegation and fabricated excuses made by some airlines to justify their internal weaknesses,” he said.

During his tenure as the GCEO, airline’s annual revenue grew from KSh 100 billion (US$ 1 billion) in 2010/11 FY to near KSh 400 billion (US$ 4 billion) in 2017/18 FY.

The number of passengers had increased from three million to a record 11 million whereas freight tonnage had shot up to 400,339 tons from 225,897 tons in 2010/11.

The airline currently serves 118 international and 21 domestic destinations operating the newest and youngest fleet in the industry.

Ethiopian Airlines, a Star Alliance member, in 2018 surpassed Dubai as the main gateway for long-haul travel to and from Africa.

GebreMariam emphasised the airline's growth was realised without any financial backing from the government of Ethiopia as many have been made to believe.

"Government ownership has never been a determining factor for growth. Ownership could only be a success or failure factor if the owning government makes political interference on business decisions. But I can only talk about Ethiopian Airlines and I cannot talk on behalf of other airlines,” he said.

One could argue if state ownership could bring about growth, then it would have worked for SAA, or KQ which also used to be owned by the government before it slashed its majority shares to 48.9% in a public-private partnership (PPP) arrangement, perhaps with the hope that change of ownership could help fly the loss-making flag carrier back to its former glory.

Neither SAA nor KQ has made profit in the past seven consecutive years.