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Kenya Airways chairman says deal with KLM set for renegotiation

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Kenya Airways chairman Michael Joseph (right) and Group MD Mbuvi Ngunze during a media briefing on November 4, 2016. PHOTO | SALATON NJAU

Summary

  • Kenya Airways chairman Michael Joseph will meet KLM’s chief executive in two weeks to discuss ways of amending the clauses which disproportionately favour KQ’s partner of 16 years.

Kenya Airways will in a fortnight renegotiate its long-standing joint venture agreement with major shareholder KLM, the national carrier’s new chairman Michael Joseph has said.

The former Safaricom chief executive said he is flying to the Netherlands to meet KLM’s chief executive in two weeks to discuss ways of amending the clauses which disproportionately favour KQ’s partner of 16 years.

KLM, which owns slightly more than a quarter of KQ, entered into the agreement in 2001. The two carriers fly about a million passengers to 43 destinations every year, generating approximately $500 million in revenue.

Mr Joseph said KLM’s chief executive Pieter Elbers had expressed willingness to amend the pact which has remained a well guarded secret for years, fuelling speculation about its content.

“I understand that in the agreement there are some things which need to be corrected since they are more in favour of KLM than they are in KQ,” said Mr Joseph.

“I will read the contract this weekend but I have already spoken to KLM about it and they are willing to renegotiate the agreement. I will spend some days with their CEO in Amsterdam to discuss this in two weeks.”

Mr Joseph, however, maintained that the partnership is important to KQ since it “brings a lot of passengers to us” and will therefore not be struck out.

READ: Ngunze in Kenya Airways to stay, says Michael Joseph

He was speaking during a press conference in Nairobi to discuss his strategy as the airline’s new chairman.

Mr Joseph, who expressed optimism in KQ’s future, added that the national carrier’s board will act on the findings of the Deloitte audit report after a meeting scheduled for November 24.

The draft report, which was leaked to the media, exposed massive corruption at the cash-strapped airline. The audit points accusing fingers at top managers, some of who have since left the company.

Mr Joseph said KQ’s management was compiling a response to the audit which will be submitted to the firm’s board, through the audit and risk committee, for action.

“Auditors write everything they are told. We now have to see what in the report is factual and what is not,” he said.

“The management has been given an opportunity to respond. After our board meeting we shall take care of the people found culpable as well as plug gaps to ensure this does not happen again in the future.”