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UPDATE 2-Kenya Airways bets on cargo as pandemic wipes out travel

(Recasts with CEO’s comments)

NAIROBI, March 23 (Reuters) - Kenya Airways is doubling down on cargo as it does not expect its passenger business to recover from the impact of the COVID-19 pandemic until 2024, its chief executive told Reuters on Tuesday.

The airline, whose joint venture with Air France KLM will expire this September, said its peak summer travel season was almost wiped out after Kenya closed its airspace and losses tripled last year to $333 million.

“We expect the passenger business to normalise by 2024. It is a volatile situation dependent on very many things,” Chief Executive Allan Kilavuka told Reuters after an investor briefing.

To blunt the impact, Kenya Airways plans to boost its share of the outbound cargo market to 35% by 2025 from 10%, he said.

“What we need is capacity,” Kilavuka said.

The airline is converting a second passenger Boeing 787 plane into a freighter to haul cargo from Europe, Asia and the Americas, having converted a similar plane earlier this year.

It plans to acquire two Boeing 737-300 freighters to fly cargo within Africa, once its bigger planes have brought freight to the continent.

There was an acute shortage of cargo planes in the market due to other airlines hopping on the freight bandwagon in the wake of the pandemic, Kilavuka said.

OPEN TO A MERGER

Kenya Airways, whose loss for 2020 tripled to 36.57 billion shillings ($333 million), has turned to the government for cash to help keep it going.

The government, which has a 48.9% stake in the airline, has budgeted 28 billion shillings in cash assistance, Kilavuka said, of which 6 billion had been disbursed by the end of last year.

But over time, African airlines, which are generally too small to compete effectively with big global carriers over the long term, will have to consolidate to stay afloat, he said.

“We can get by now but we will have to consolidate at some point,” the CEO said, citing international airline groups such as Delta Air Lines and British Airways owner IAG , which were all borne out of mergers.

Kenya Airways is in talks with several unidentified airlines for potential partnership talks after the end of the carrier’s joint venture with Air France KLM, Kilavuka said, adding that it was open to more joint ventures or even a merger in the future. ($1 = 109.7500 Kenyan shillings) (Reporting by Duncan Miriri; Editing by David Clarke)

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