Members of Parliament Reject KQ Merger With KAA

By Soko Directory Team / Published February 22, 2019 | 11:16 am



Kenya Airways

Members of Parliament have put a halt on a proposed merger between Kenya Airways (KQ) and the Kenya Airports Authority (KAA).

Earlier this month, a parliamentary committee had summoned the KAA when it began investigating plans by KQ to take over the running of the Jomo Kenyatta International Airport (JKIA).

The conflict behind the merger started when a parliamentary committee chaired by Mvita MP Abdulswamad Nassir found that KAA boss, Isaac Awuondo, is the MD of Commercial Bank of Africa (CBA), which is seeking to merge with NIC bank. Kenya Airways owes the two banks 5 billion shillings. Mr. Nassir noted this as a pure conflict of interest.

Mr. Nassir directed Mr. Anderson to furnish the committee with a copy of the Cabinet meeting minutes that approved KQ’s taking over the running of JKIA, and a letter from the National Treasury on the advice it gave the airline.

The Public Investments Committee (PIC), which is also chaired by Mr. Nassir, said the proposed merger would render the profitable aviation regulator, KAA, bankrupt in a turn of events that now threatens to stall a process that was intended to hand the ailing airline a financial lifeline.

The Agreement

Over the last four years, Kenya Airways has accumulated ridiculous amounts of debts mainly due to the result of an ill-timed aircraft acquisition programme that went downhill.

As a result, the company, not able to service its debts, was staggering towards insolvency. Therefore, the merger of the operations of Kenya Airways offered the airline the best and most sustainable option of getting the carrier out of its financial woes.

Under the new arrangement, JKIA with estimated annual revenues of 7 billion shillings was to be owned and managed by a holding company that would, in turn, be 100 percent owned by Kenya Airways under a concession agreement that was to run for 30 years.

Suspension of the Merger

Mr. Nassir said the deal between the national carrier and the KAA raises a lot of questions than answers.

Documents presented in Parliament by Mr. Andersen show that the KAA board of directors was uneasy with the Privately Initiated Investment Proposal (PIIP) tabled by KQ with the backing of the Cabinet.

The KAA board has questioned the capacity of KQ to execute the merger through a special purpose vehicle (SPV), saying it will require careful assessment as part of due diligence.

The PIC then directed a halt on the deal pending the conclusion of its investigations.




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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