An Inside Look into the planned New Kenya Airways structure

3 min read

By Jacktone Lawi

The Government intends to establish Kenya Aviation Corporation, an entity that it will use to take over operations of Kenya Airways.This comes even as the National carrier was delisted from the Nairobi Securities Exchange (NSE).

The delisting therefore means that the next chapter of the Kenya Airways (KQ) journey may now be well crafted.Suspension of KQs shares from trading effectively denies the airline any fund from investors.

Chairman Michael Joseph says that the bill to form KAC arose out of an investment proposal by KQ in which it had sought to take over management of its main base, the Jomo Kenyatta International Airport, from the Kenya Airports Authority.The bill creates a Kenya Aviation Corporation that will promote the development of the aviation sector and advise the government.

It will have subsidiaries including an Aviation Investment Corporation, an Aviation Corporation Fund, National Aviation Council, a new Kenya Airports Authority, and a new Kenya Airways, that replaces Kenya Airways PLC which was delisted from the Nairobi Securities Exchange.

The government shall acquire 100 per cent of Kenya Airways, its assets, liabilities, rights, legal cases, licenses, and employees. It is expected that minority shareholders, who were already diluted in a restructuring in 2017 will be bought out for a sum of about Sh800 million,

The draft law (National Aviation Management Bill, 2020), which has already been tabled in parliament, intends to establish this corporation as a holding company for Kenya Airways and Kenya Airports Authority (KAA).

Kenya Airways, as one of the entities under this state corporation, will carry on business as carriers of air passengers, cargo, mail and goods in Kenya and elsewhere. The airline will perform its functions as directed by the Kenya Aviation Corporation Board and will have an initial share capital of KSh7.5 billion.

The Kenya Aviation Corporation will have its affairs managed by a Board of Directors consisting of the Chairperson appointed by the President.

Others on the board include the Attorney-General or their representative, Cabinet Secretary in charge of National Treasury Planning, the Principal Secretary of the Transport Ministry, the Chief Executive Officer; the Managing Directors of Kenya Airways and the Kenya Airports Authority; and four independent non—executive Board members appointed by the Cabinet Secretary.

The Chairperson and the Independent Non— Executive Board Members shall hold office for a period of three years and shall be eligible for re-appointment for one further term of three years.

Nationalization of financially-crippled KQ has been running behind schedule, owing to disruptive effects of COVID-19 on the global aviation business.

The State divested from the loss-making KQ more that two decades ago. It, however, retains a 48.9% stake with 7.8% controlled by French aviation firm, KLM.


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