The Senate said unless drastic measures are taken to save the heavily-indebted carrier, it was likely to collapse soon.
Last year, KQ hired an adviser to help restructure its debt with the specific brief to renegotiate maturity periods of loans.
A profit warning issued in November 2014 means it is expected to report a loss greater than Sh4.3 billion for FY2014.
A select committee of the Senate has been set up to probe the woes affecting loss-making national carrier, Kenya Airways (KQ).
The Senate said unless drastic measures are taken to save the heavily-indebted carrier, it was likely to collapse soon.
The government, which holds a 29.8 per cent stake in the airline, has already stepped in to help by advancing a soft loan of Sh4.5 billion.
KQ made a net loss of Sh10.5 billion in the half-year ended September, reversing a net a profit of Sh384 million reported a year earlier.
The carrier’s earnings were affected by slow growth in passenger numbers in the wake of heavy investment in new aircraft.
It handled 2.1 million passengers over the period — an 8.2 per cent increase from 1.94 million last year.
The airline is yet to release its full year to March 2015 results, but a profit warning issued in November 2014 means it is expected to report a loss greater than Sh4.3 billion.
Last year, the airline hired a financial adviser to help restructure its debt with the specific brief to renegotiate maturity periods of loans to cut the short-term obligation strain on cash flows.
Members of the select committee that will investigate “the Pride of Africa” are Prof Anyang’ Nyong’o (Kisumu), Mutahi Kagwe (Nyeri), Peter Mositet (Kajiado), Prof Wilfred Lesan (Bomet), Billow Kerrow (Mandera), Daniel Karaba (Kirinyaga), Dr Boni Khalwale (Kakamega), Hassan Omar (Mombasa), Dr Agnes Zani (Nominated), James Orengo (Siaya) and Naisula Lesuuda (Nominated).
The team is expected to conduct its investigations on the challenges facing KQ within three months and make recommendations on how to turn it around.
The select committee will, among other things, investigate the leasing and buying of aircraft since 1996 and the role of off-shore companies in the investment affairs of KQ. The committee will also be expected to unmask individuals behind the alleged off-shore companies and their relationship with the management of Kenya Airways.
The team will look at the employment policies and practices of personnel including engineers, pilots, cabin crew and ground personnel.
Further, the committee chaired by Mr Nyong’o will establish reasons for delays and cancellation of flights, their frequencies and magnitude of losses.
Initiating debate on the motion for the establishment of the probe committee, Mr Nyong’o said Kenya Airways’ debt now stands at Sh18 billion. He said the carrier had lost its market within the region to competitors -- Ethiopia Airlines and Rwanda Air.
“We are looking at Kenya Airways fast resigning as the pride of Africa,” he said. “It is no longer the company that it was after the Sh6 billion bailout of 1996.”
The Senator said Parliament must not watch the demise of the airline without intervening.
“Why would we be building a beautiful and internationally acclaimed Jomo Kenyatta International Airport when KQ is dying? Will it be for Ethiopia airlines, Emirates or Etihad?” he asked.
Minority leader Moses Wetangula described KQ as limping airline.
“KQ is bleeding and the committee has a monumental job to find ways of resuscitating it,” said the Bungoma senator.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
