Kenya Airways nationalisation plan encounters more hurdles

Kenya’s National Assembly Transport Committee has rejected the proposed composition of a powerful body, to be headed by President Uhuru Kenyatta, that would oversee the nationslisation of Kenya Airways (KQ, Nairobi Jomo Kenyatta) and manage the country’s airports under a new legal regime, reports Business Daily Africa. The committee has asked parliamentarians to amend sections of the National Aviation Management Bill of 2020 that is to create a National Civil Aviation Council (NCAC) and would prepare the flag carrier for nationalisation. The draft was to be debated in the National Assembly last week but was withdrawn from the businesses lined up for consideration during a special sitting on March 21. The parliamentarians were to have debated and voted on the bill for its progression to the next stage – the third reading or the amendment stage. The House rules provide that if a bill is lost at the debate stage, it can only be reintroduced after six months, reported Sunday Nation. This comes amid a push by lobby groups to exclude the President and the Commander of the Kenya Air Force from the future council. The lobbyists include the Kenya Airline Pilots Association (KAPLA) and The Law Society of Kenya, which have also asked the Parliament to drop the inclusion of Cabinet Secretaries for National Treasury and Planning; Transport, Infrastructure, Housing, Urban Development, and Public Works; and Interior and Co-ordination of National Government. Instead, they wanted to include a representative from the Kenya Civil Aviation Authority (KCAA), as well as representatives from environmental and meteorological services. They questioned why a civil aviation unit should be dominated by government and military top brass while lacking civil aviation industry representation. In terms of the draft law, the NCAC would oversee the yet-to-be-formed Kenya Aviation Corporation, which would be the new holding firm for the following subsidiaries: a nationalised Kenya Airways, the Kenya Airports Authority, and the Aviation Investment Corporation investment arm. Kenya’s Attorney-General Paul Kihara Kariuki has lobbied for the inclusion of President Kenyatta as chairperson of the council saying it would set an important precedent as the council would be responsible for drafting climate change policies for the Kenyan aviation industry. The National Aviation Management Bill was first tabled in July 2020, but its implementation was delayed to allow for more public participation after Members of Parliament objected on the grounds that the public had been given insufficient time to provide input. The government currently holds a 44.9% stake in Kenya Airways, whose joint venture with Air France-KLM – which has 7.12% – is set to expire in September 2021. As lawmakers debate the bill to nationalise the airline, the carrier has begun a three-month round of job cuts amid mounting losses due to the impact of the COVID-19 pandemic. As previously reported, the airline last week reported a pre-tax loss of KES36.57 billion shillings (USD333 million) for 2020, while requesting another KES10 billion (USD91 million) in government funding for debt repayments and working capital. Kenya’s National Treasury has already provided a KES28 billion (USD255 million) loan to the airline. To cut costs, Kenya Airways last year already downsized its workforce by 1,300 people, to about 3,200, while renegotiating aircraft leasing contracts. Partially privatised 24 years ago, Kenya Airways sank into debt in 2014 after a failed expansion drive, costly purchases of aircraft and a slump in travellers after a major terror attack.