Former Kenya Airways CEO Titus Naikuni when he appeared before a Senate committee in September. PHOTO | FILE
What you need to know:
The recommendations came after four months of probing into the affairs of the airline, during which the Senate committee was critical of the strategies pursued by the airline’s management team led by Titus Naikuni.
The Senate committee investigating troubled national carrier Kenya Airways has made the sacking of top managers of the airline a pre-condition for a possible bailout by taxpayers.
Treasury CS Henry Rotich and Transport Secretary James Macharia had told the legislators that the government would push for management changes and prosecution of those found to have acted fraudulently before releasing further bailout money to the airline.
Parliament has already approved a Sh4 billion bailout for KQ, but the carrier is said to be in need of tens of billions of shillings to get back on its feet.
The Senate probe brought former CEO Titus Naikuni under the spotlight over decisions made by his management team which have been blamed for the airline’s record after-tax loss of Sh25.7 billion in the year ended March 2015.
The final report of the Senate committee inquiring into the affairs of KQ and its subsidiaries recommends that shareholders, who include the government and Dutch carrier KLM, recapitalise the airline through a rights issue or sale of stake to new investors.
“The shareholders should provide a financial bailout in the form of equity under the following conditions — a reconstitution of the board of management by the major shareholders, restructuring and putting into place a management team with sufficient skills and experience in the aviation industry and with an ability to turn around and build the company, hire a new marketing director with proven international experience to turn around its ticketing system and ensure proper accounting of revenue from market sales,” said the committee in the report.
The recommendations came after four months of probing into the affairs of the airline, during which the committee was critical of the strategies pursued by the airline’s management team led by Mr Naikuni.
The management team was especially criticised for its handling of the Project Mawingu expansion plan which the committee said was pushed through against expert advice, the company’s fuel hedging policy and handling of its labour force that has affected flight operations.
“Our committee can conclusively state that the current situation bedeviling the national airline is a direct result of bad decisions made over time by individuals given the responsibility to steer the Company. In that regard, the committee is unanimous that those decision makers must be held to account for the sorry state of affairs in which the company now finds itself in,” said the report.
KQ returned a net loss of Sh11.95 billion for the six months to September 2015, following on from the record Sh25.7 billion full year loss recorded in March 2015.
The airline’s total negative equity position now stands at a huge Sh33.9 billion from Sh5.96 billon in September 2014, meaning that it will take a larger amount in bailout than previously stated just to balance its books.
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