From the recent speculations running rife regarding our national carrier, Kenya Airways, it is quite obvious of its intentions to merge with the Kenya Airports Authority (KAA) and manage the Jomo Kenyatta International Airport(JKIA) as a plan to make the limping airline great again.
Through a proposal document dubbed “Project Simba”, the project—which makes an interesting reading—envisages the formation of a special purpose vehicle (SPV) dedicated to operating, managing and developing JKIA for a minimum of 30 years.
First of all, financial losses in Kenya Airways is not a new term, tracing back to when the top airline’s shareholder, the Kenyan government, and 11 local lenders converted the bulk of their debts into shares, thus relieving cash flow pressure, as over $2 billion was restructured making the airline enter into a debt-equity swap deal with its lenders.
Under the debt swap deal, the local banks agreed to convert the debts owed by KQ into equity; thereby positioning them as the largest shareholder at the carrier with a stake of 38.1 percent, even as the government controlled about 48.9 percent. This is the interestingly peculiar position that the airline finds itself in.
KQ has not recorded any consistent flow of profits for quite a while now. Its stream of losses has made stakeholders and Kenyans in particular, question the adequacy of the system of checks and balances on its corporate governance and management structure. It has overtime, clearly exposed serious flaws; some well-known while others are still new. In tracing these flaws, the key themes emerge.
Kenyans have little confidence in the airline’s management board and its decision-making, thus the politics and speculations around this project.
The government has recognised the weakness in the airline exposed by its financial track records and other corporate failures, but its responses also fail to inspire any confidence, as politicians have not helped but politicise the project.
However, the move by the government to intervene and assist must be predicated on a strong strategic investment engagement, but more importantly to accommodate all KAA workers.
As it stands, going by the peripheral issues raised by the workers, the proposal and the implementation process looks weak and this could very well compromise the ultimate goal of this deal.
The goal through a public-private partnership (PPP) deal will see KQ (as the private party) take over all the staff and operations of the State-owned authority as the contracting party thereby expanding its services and operations to include ground handling, warehousing, and cargo as well as catering.
Like any employee of a target company during an acquisition or a merging proposal, the fears of the KAA workers are justified. Some fear losing their jobs thus are strongly opposing the proposal.
KQ should step forward and clearly explain to everyone, all stakeholders included, what this proposal or project means as well as its consequences, if any, to the employees both at Kenya Airways and KAA.
This way, engagements on this matter would be from a well-informed perspective devoid of grayness.
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