Kenya Airways threatens to suspend operations

Kenya Airways (KQ) says continued failure to repatriate foreign currency will compel the airline to suspend its operations in Malawi.

In a statement yesterday, the airline said it has found it challenging to meet its operational costs and maintain the commercial viability of its operations in Malawi.

Reads the statement in part: “KQ has, throughout the year, actively engaged authorities to find a solution for the repatriation of significant amount of its blocked funds.

“Therefore, under current difficult circumstances, and to mitigate against further losses moving forward, KQ has been left with no other option, but to suspend its ticket sales in Malawi.”

The airline, which has been operating in Malawi since 1977, said it hoped for a win-win resolution with government on the repatriation of blocked funds to enable it to resume normal ticketing operations.

In an interview last week, KQ country manager Pauline Kariuki said while the airline is waiting on government for a possible solution, business had become difficult.

In an interview last week, Minister of Transport and Public Works Jacob Hara said he was aware of the development, but referred the matter to Treasury for comment.

His counterpart, Minister of Finance and Economic Affairs Sosten Gwengwe said the Reserve Bank of Malawi (RBM) is handling the matter.

However, RBM spokesperson Ralph Tseka is yet respond to our media enquiry.

In May this year, some sources in the airline business confided in Business News that some operators were seeking an audience with key economic agencies in the country such as RBM, ministries of Finance and Economic Affairs and Transport and Public Works while gauging the future of their respective businesses.

This followed persistent forex shortages on the market which they deemed was threatening operations in the airline business, creating uncertainty on the future of the industry.

This, the sources said, was proving difficult for most airline operators to convert local currency and transfer such currency into their foreign currency denominated accounts as stipulated in their respective bilateral agreements.

The 2022 Malawi Government Annual Economic Report shows that the air transport sector continues to suffer from the effects of the Covid-19 pandemic, highlighting that “aeronautical” revenue performance of 2020/21 financial year was 81 percent down from that of the pre-Covid-19 era.

The country’s economy is currently reeling from foreign exchange shortages, a development the Malawi Confederation of Chambers of Commerce and Industry said is affecting the importation of critical raw materials for industries.