October 12, 2016 / 3:52 PM / in a year

Kenya to restructure national carrier in a month: tourism minister

An elephant walks out of a swamp in front of tourists in Amboseli National park, Kenya, August 8, 2015. Picture taken August 8, 2015. REUTERS/Goran Tomasevic/File Photo

NAIROBI (Reuters) - Restructuring loss-making carrier Kenya Airways will take a month, the government said on Wednesday, appealing to pilots to withdraw a strike notice and join discussions.

Tourism Minister Najib Balala, who sits in a cabinet sub-committee tasked with reviving the partly state-owned airline, said a pilots’ strike would further harm the airline.

Visitor numbers and earnings have sagged, after peaking in 2011, hurt by security worries stoked by Somali Islamist group al Shabaab’s attacks inside Kenya, in retaliation for the involvement of Kenyan troops in the conflict in Somalia.

“By going on strike (pilots) are going to bring down the airline. It is not fair,” Balala told Reuters in an interview. Pilots complain of poor management.

The airline is reducing the size of its fleet, selling non-core assets like land and cutting jobs to recover from the losses it incurred after tourism slumped. It has also said previously it requires fresh capital of 70 billion shillings ($700 million).

The pilots’ union called the strike to press for the firing of the carrier’s Chief Executive Mbuvi Ngunze and the chair of its board, Dennis Awori. They say they lack confidence in the pair’s ability to drive its recovery.

The minister said restructuring Kenya Airways, in which the government has a 29.8 percent stake and Air France KLM holds 27 percent, would be completed in a month. He did not give details.

Tourists walk along the beach as fishermen paddle their boat near the shores of the Indian Ocean in the Kenyan coastal city of Mombasa, January 18, 2016. REUTERS/Joseph Okanga

Ngunze said in September the airline was talking with three or four foreign parties about a potential investment in the airline.

It ferries 12,000 passengers a day, many of them tourists, supporting a sector that contributes 14 percent of gross domestic product. Tea, horticulture and remittances from Kenyans living abroad are the other main sources of foreign exchange.

Tourist arrivals rose 15 percent in the first six months of 2016. Balala said he expected growth to surpass 20 percent by the end of 2016, heading toward a government target of 1.7 million visitors this year.

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Tourist earnings are projected to jump to 100 billion shillings this year from 84.6 billion shillings last year, thanks to more holidaymakers from the United States, which overtook Britain as the leading source of visitors this year.

Kenya hosted a World Trade Organisation conference in December and aims to attract further events to encourage visitors and investment in tourism.

Hilton, Marriott and Radisson Blu are among several international chains building new hotels in Nairobi.

Balala said these would increase bed capacity in the capital by a third from the current 10,000-12,000.

“We expect between now and 2019 we should have 4,000 new beds,” he said.

Editing by Edmund Blair/Ruth Pitchford

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