KQs Financial Future Uncertain as MPs Suspends its Plan to Takeover JKIA

Kenya Airways proposed merger with Kenya Airports Authority has today, 22^nd Feb 2019, been suspended by Members of Parliament which leaves KQ unsure of their financial standing in the coming days.

The Public Investments Committee (PIC) reported that this merger would weaken the aviation regulators KAA and render them bankrupt in the now slow process that was meant to aid the collapsing airline and offer a financial breakthrough.

A paper from Cabinet released in May 2018 had foreseen Kenya Airways failure and stated that it has one year to survive if the merger doesn’t go through

“This committee rules that no final transaction should proceed on this matter until this House concludes its investigations.

“We are directing the Auditor-General to move fast and undertake a forensic audit on this transaction. We will be writing to you to that effect,” this was said by  Mvita MP Abdulswamad Nassir who is also PIC Chairman when he was addressing KAA managing director Johnny Andersen. Documents tabled in Parliament by Mr Andersen show that the KAA board of directors was apprehensive of the Privately Initiated Investment Proposal (PIIP) tabled by KQ with the backing of the Cabinet.

The merger was to see Jomo Kenyatta International Airport pay 2.9 billion annually instead of the previous 7 billion to KAA sais the KAA board from confidential minutes of a meeting that was held to evaluate the deal.

“While comprehensive risk assessment of the proposed transaction will be concluded as part of the detailed due diligence, the Board should take note… if JKIA is concessioned out, the arrangement will deprive KAA significant resources given that the concession fee will not significantly cover the operational and CAPEX costs of the remaining airports, airstrips and head office,” the board minutes say.