In Summary
  • The government privatised KQ in 1997 after it became dead stock in its books.
  • For a country whose citizens lack basic necessities such as food, binge funding of KQ should be the last thought
  • Placing KAA under KQ cannot remotely catapult JKIA into the region’s aviation hub.

The government’s proposal to concession the Kenya Airports Authority (KAA) to Kenya Airways should be outrightly rejected by Parliament; it is a crude attempt at sugar-coating a fraudulent plan to skim public resources.

KQ is a private liability company incorporated under the Companies Act and listed on the Nairobi Securities Exchange as well as in Uganda and Tanzania. That it flies the national flag belies its status.

BALANCE SHEET

Before it recently capitalised its huge debt to window-dress KQ’s balance sheet, the government had a mere 22 per cent shareholding in it. In 2016, it pumped in Sh4.2 billion to keep it a float as other shareholders such as KLM, which owned 26 per cent, simply shrugged it off.

There is nothing strategic about having a ‘national airline’; many powerful countries, such as the US, Japan, Brazil, Canada, Nigeria, Algeria, Ghana and Zambia, have not lost their pride for not having one.

The government privatised KQ in 1997 after it became dead stock in its books. It capitalised its debt in 2017, raising its stake in the airline to 48.9 per cent. It now plans to delist it from NSE and ‘re-nationalise’ it, a proposal even a former board rejected in 2015, saying, “We were there and did not make money until after privatisation.”

INSOLVENT

KQ is technically insolvent. It’s kept afloat through government guarantees of up to $750 million (Sh75 billion), funding and misplaced largesse, including giving it all state travel business.

For a country whose citizens lack basic necessities such as food, water or healthcare, binge funding of KQ should be the last thought.

The company’s business strategy and operational ethics are appallingly pitiful. Even as it blames its poor performance on its competitors, the Senate’s “Report of the Select Committee on the Inquiry into the Affairs of Kenya Airways Limited and its Subsidiaries 2015” observed that KQ management did not understand “the environment and market they were operating in so as to maintain a competitive edge”.

STRATEGIC DECISIONS

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