KAA casts doubts on plan to merge with Kenya Airways

The Kenya Airports Authority (KAA) has questioned the financial strength and technical capability of national carrier Kenya Airways to run the Jomo Kenyatta International Airport, coming just a day after the government backtracked on plans to merge the two entities.

KAA told Parliament Wednesday that a due diligence review of the airline’s investment proposal had identified significant gaps that need to be addressed as part of the negotiation.

“We are questioning KQ’s (it’s international code) financial strength, technical capabilities to run an airport and if the entire thing is legal. If we cannot be able to solve them (gaps) we cannot get a solution that will be good enough,” KAA managing director Jonny Andersen told the National Assembly’s Transport committee yesterday.

KQ’s plan includes the creation of a special purpose vehicle to operate, maintain and develop the crucial airport.

KAA said it is yet to give a formal response to KQ’s proposal even as both parties await word from the Treasury on whether negotiations should proceed.

Legislators also put KAA’s board on the spot for allowing its chairman, Issac Awuondo, to carry on the role despite declaring from the onset that there may be conflict of interest.

Mr Awuondo is the group managing director of Commercial Bank of Africa (CBA), one of the lenders that KQ owes over Sh5 billion.

The board was to ask Mr Awuondo to either step out, keep quiet or allow him to continue as chair.

“They (board) did not make known their decision but by virtue of them allowing me to sit through meetings, I assumed they settled for the last option,” he told MPs.