Officials linked to KQ’s woes will face law, says minister
Acting Transport Secretary James Macharia. PHOTO | FILE
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Mr Macharia told Parliament that past and current officials found engaging in fraudulent management of the airline will be punished.
Mr Macharia said that KQ’s misfortunes had been compounded by historical aspects, including a mismatch of its financial portfolio, fuel hedging losses and lack of proper forecast in its ambitious Project Mawingu.
KQ is banking on a government bailout after registering the huge loss, the biggest ever recorded in the country’s history. He said the government will “definitely” bail out KQ.
Acting Transport Secretary James Macharia Tuesday told MPs that any Kenya Airways officials responsible for the airline’s plunge into losses will face the law.
Mr Macharia told Parliament that past and current officials found engaging in fraudulent management of the airline will be punished.
Mr Macharia said he and his Treasury counterpart Henry Rotich have been engaging the KQ board to establish what led to the airline’s record loss of Sh25.7 billion.
“Both past and present officials found liable for mismanagement of the airline’s accounts at the end of the investigations will be sanctioned,” he said.
He made the remarks at the National Assembly’s Transport Committee and later at the Senate Joint Committee probing KQ’s poor performance.
Mr Macharia said that KQ’s misfortunes had been compounded by historical aspects, including a mismatch of its financial portfolio, fuel hedging losses and lack of proper forecast in its ambitious Project Mawingu.
Between last year and this year the airline registered revenue growth of 3.9 per cent, while fleet ownership costs went up by 107 per cent.
“What we had was flat revenue growth and high costs of assets that cannot be deployed for use, leading to a mis-match in the financial portfolio,” he said.
In 2011 KQ launched Project Mawingu as part of its strategic management plan to propel the airline into profitability. The 10-year strategy’s viability was however shaken by hostile market forces.
Mr Macharia said Project Mawingu’s projections did not work because the entire plan lacked fall-back provisions to act as its plan B.
“At the time, Project Mawingu looked very robust but what it did not say was what would happen if projections did not work,” he noted.
As part of its long-term plan to regain its financial standing, the airline is planning to sell four of its redundant aircraft.
Mr Macharia explained that disposing of the planes of the 777 model might take some time given that the sale is coming when airlines are struggling globally.
KQ is banking on a government bailout after registering the huge loss, the biggest ever recorded in the country’s history. He said the government will “definitely” bail out KQ.
“Bailing out does not imply giving out cash, rather we are considering long-term plans which are contingent with us getting the Sh20 billion loan from Afrexim bank in Egypt,” said Mr Macharia.
The CS defied advice by the National Assembly’s Transport Committee, chaired by Starehe MP Maina Kamanda, to ignore summons by the Senate’s joint Committee chaired by Kisumu Senator Anyang Nyong’o.
According to Mr Kamanda, the Senate had no mandate to investigate KQ’s affairs.
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