KQ can survive without taking over JKIA operations

Kenyans should be excused for harbouring the inaccurate and false impression that Kenya Airways (KQ) has suddenly found itself in a financial dementia whose only prescription for resuscitation is taking over the operations of Jomo Kenyatta International Airport (JKIA) from the Kenya Airports Authority (KAA).

What is being fed to the unsuspecting public by the proponents of the JKIA take-over by KQ is absolute lies.

What is being pushed out to the public as the rationale behind the Privately Initiated Investment Proposal by KQ is the false proposition that it is the sole miraculous and “God-sent idea” to resuscitate KQ. Nothing could be further from the truth.

In February 2017, an international consultancy firm, Seabury Group, contracted by KQ to advise the airline on a viable turnaround strategy made very plausible recommendations. Key among them was conversion of debts owed to local banks and the Government to equity, which was implemented in 2017 and resulted in spurring the airlines liquidity and cash-flows. Another recommendation was on how to engage the Unions, which KQ is yet to embrace.

KQ was also to engage the government on tax waivers on imported aircraft parts and other materials used for aircraft maintenance, as well as enactment of a law to ensure all Government employees and contractors utilised KQ for their travel.

Additionally, KQ was expected to proactively engage the Government to also waive taxes on jet fuel to save the airline more than Sh7 billion annually, an amount that is more than what KQ would generate out of running JKIA.

Turnaround expert

It is ironical that KQ pays Railway Maintenance Levy for its jet fuel, yet this levy goes to support a sector seen as a competitor. Of significant importance is that the take-over of JKIA was not one of the recommendations by Seabury.

We are convinced that this deal is driven by other motives in lieu of sound recommendations made by Seabury. Why would KAA be made to relinquish its most profitable business unit to save KQ, when there are other plausible options to achieve the same, if not better?

Over the last seven years KQ has continued to sink in losses even after engaging a foreign chief executive, who was said to be a turnaround expert, and more than a dozen other foreign “airline experts”. This team, led by KQ boss Sebastian Mikozs, has greatly failed the airline and it is time they exited if KQ is to survive complete collapse. The extraordinary hefty perks and unreasonably high “consultancy fees” paid out to this team make a mockery of an airline struggling to survive.

KQ has a rich reservoir of great talent of well skilled men and women able to run the airline, but majority who are dejected have found solace with Gulf carriers. More than 500 KQ employees have in the last five years left KQ for Middle Eastern airlines that offer better terms.

An airport

It is clear the overriding objective for KQ take-over of JKIA has to do with finances. The net effect of this transaction, if it ever goes through, is a financially diminished, empty and hollow KAA, unable to execute its mandate.

This raises the question; what value, financial or otherwise, would KQ bring into this transaction? KQ has neither the financial capacity nor the knowledge and experience to run and manage an airport. The Public Private Partnership Act envisages a situation where both parties to the partnership benefit. How then does it benefit KAA to cede its premier cash – cow to KQ in exchange for a concession fee less than one third of its current earnings?

Efforts towards recovery of KQ should therefore be conducted within the limits of the Constitution, statute and international conventions. Outright discrimination and exploitation of employees should never be tolerated in the guise of reviving the airline.

It is against Article 41 of the Constitution, Part 1 and Part 2 (a) on fair labour practice and fair remuneration as a right to every worker and International Labour Organisation convention 100 that affirms the principle of equal remuneration for men and women workers for work of equal value.

Article 41 Part 5 talks about the right of every trade union to engage in collective bargaining. KQ has failed to uphold these principles.

While most observers are focusing on the take-over proposal, a few are analysing the real dangers of employees losing jobs, not only at KAA, but also at KQ.

There is not a single occasion when the fortunes of the airline improved as a result of shedding of jobs or introducing exploitative work conditions. Clearly, the problems at KQ have nothing to do with employees.

Mr Ndiema is Secretary General of Kenya Aviation Workers Union.