Africa: Kenya Airways withdraws from JKIA takeover plan

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Kenya Airways has formally withdrawn the Privately Initiated Investment Proposal seeking to take over the management of the Jomo Kenyatta International Airport JKIA.

The national carrier also said it has withdrawn the PIIP from consideration of Kenya Airports Authority (KAA), the Public-Private Partnership Committee (PPP) Committee of the National Treasury, and any other institutions of the government which were involved in the process.
The decision was agreed on during the quarterly meeting of the Board of Directors held on August 27, 2019.

Group CEO Sebastian Mikosz in a statement on Tuesday said the move came after the proposal to own KAA catalysed discourse about the future of Kenya’s civil aviation.

He said KQ initially submitted the PIIP for formal consideration by KAA and the PPP Committee on October 5, 2018.

“The Departmental Committee on Transport, Public Works and Housing of the National Assembly collected views from Kenyans and institutions in the aviation sector and submitted a report to parliament on June 17, 2019,” he said in the statement.

The proposal was adopted by the National Assembly on July 23, 2019.
In its recommendations, the August house recommended the establishment of an aviation holding company to consolidate the country’s aviation assets including the nationalisation of KQ.

“KQ’s Board and Management believe that the PIIP has catalysed important discourse about the future of Kenya’s civil aviation, which is now being led by the Government of Kenya,” Mikosz said.

He said the national carrier looks forward to continued collaboration with all involved stakeholders of the process.

In April this year, Kenya Airports Authority rejected the proposal by KQ to take over the management of JKIA through the PIIP.

The agency held that as much as it wants a better and vibrant airport, the proposal as structured disadvantages it.

KAA chairman Isaac Awuondo and outgoing MD Jonny Andersen told MPs on the Transport committee they would present their preferred management model.
Anderson then poked holes in the plan, christened ‘Project Simba’, saying the airline has no technical capacity to run the airport, owing to its financial incapacities and lack of staff skilled in airport operations.

The MD said the proposal does not give KAA value for money in the face of the Sh5 billion debt the concessionaire owes the authority.

But Mikosz maintained that consolidation of aviation assets has worked in countries such as Tanzania, Ethiopia, Dubai and that only South Africa, Kenya, and Mauritius are yet to take that direction, hence their troubles.

The 30-year take over deal was dealt yet another blow when the immediate former Auditor General Edward Ouko warned that if KQ took over the day-to-day operations at JKIA the move would deprive Kenya Airports Authority a significant amount of revenue.

Ouko said there was no evidence of KAA management and the board being involved in the Cabinet memo tabled in the May 29, 2018 meeting.

JKIA accounts for 83 per cent of KAA’s income, hence it may not have enough money to maintain the other airports under its jurisdiction.
Furthermore, the audit reveals that KQ owes KAA Sh3.8 billion as of December 2018.

KAA reported earnings amounting to Sh16.9 billion and a surplus of Sh5.4 billion after tax in 2017/18 financial year.


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