President Uhuru Kenyatta’s plan to secure the loss-making Kenya Airways through a proposed legislation in the National Assembly is already facing opposition from sector players. Industry players, who have engaged the Transport Committee, have warned that the planned merger of KQ ( above) with profit-making Kenya Airports Authority (KAA) as subsidiaries to a holding company is a ‘suicide mission.’ In the plan, KQ and KAA would merge to form Kenya Aviation Corporation (KAC). Industry players have poked holes in the contentious National Aviation Management Bill, 2020, that seeks to make KQ a parastatal. The Bill, which is up for public participation, also proposes the formation of an Aviation Investment Corporation, which will own aviation schools, offer maintenance and repair services, flight catering and other ancillary services. It will have an initial share capital of Sh1 million. The President seeks to grow earnings from the sector to Sh200 billion and double passenger numbers to eight million in five years. He is proposed to chair the powerful National Civil Aviation Council. Critics question why the composition of the council is structured in almost a similar manner as the National Security Council with the President as the chairperson with membership that includes the Attorney General and Kenya Air Force Commander. Taking into account the fact that KQ is facing turbulence, recording losses over the years despite more than Sh100 billion government bailouts, the situation has been complicated further by the impact of the Covid-19 pandemic. “The proposed merger is about the balance sheet. It’s to offset KQ loans. Why kill two institutions, the bailout can be done without drawing resources from KAA kitty,” warned a legislator. The corporation – known as the group – will be run by a chief executive officer and its initial capital is proposed to be Sh7.5 billion. Likewise, KAA’s initial capital is set at Sh66 billion while that of the Investment Corporation – a special purpose vehicle – will be Sh1 million divided into 50,000 ordinary shares. Critics have faulted the move, questioning how an operator and regulator can be merged, as this will compromise the aviation sector and change the stakes for key stakeholders, including a consortium of local banks and sky team partners, Royal Dutch Airlines and Air France. Pilots had opposed the move citing skies safety and standards and being in breach of aviation protocols which go against international best practice. Ironically, KAA which […]
KQ bailout plan triggers outrage among sector players
