• But shareholders say they would lose years of investment.
• Airline owes seven banks more than Sh20 billion.
The National Assembly Transport committee has recommended nationalisation of Kenya Airways as a bold step to turning around the fortunes of the struggling national carrier.
Currently the airline is 48.9 per cent owned by the government, 38.1 per cent by KQ Lenders Company (which includes banks) while 7.8 per cent stake is held by Air France KLM. The remaining shares are privately owned.
If the report gets the nod of MPs, the government will move in and clear huge debts owed by the carrier and take it off private hands, making it one of the state corporations.
The debt-ridden Kenya Airways owes CBA group Sh3.1 billion, NIC bank Sh2.1 billion, Equity Bank Sh5.2 billion, National Bank Sh3.5 billion, Co-operative Bank Sh3.3 billion, KCB Sh2.1 billion and a similar amount to DTB.
The committee chaired by Pokot South MP David Pkosing at the same time recommended establishment of an aviation holding company with four wholly owned subsidiaries.
In the proposal, the Pkosing team wants a company incorporated to manage JKIA as an international hub, ground handling and catering services.
The committee also recommends revision of Kenya Airports Authority’s mandate to maintain at least one serviceable airstrip in each county for purposes of security, health and other emergencies.
The arrangement will also see creation of a centralized aviation college and Kenya Airways remaining a national carrier.
Upon nationalisation, the parliamentary committee has recommended that Kenya Airways be delisted from the Nairobi Securities Exchange where its share has been diminishing over the time.
On Tuesday, the KQ’s share dropped further by 2.34 per cent to close the day at Sh3.75 compared to Sh3.84 on Monday.
The proposed arrangement seeks to resolve perennial strikes by employees at KQ. The Pkosing-led committee wants the government to undertake a staff rationalisation programme once nationalisation is effected.
It will include harmonising the terms of service and remuneration under the aviation holding company and a review of the existing collective bargaining agreements.
The recommendation comes days after minority shareholders at KQ opposed such a move during the firm's 43rd annual general meeting, saying saying a similar initiative in 1990s was unfruitful.
‘’Kindly tell us if what we are hearing about nationalisation of Kenya Airways is true. We have been patiently waiting for the promised turnaround of this firm and subsequent benefits. Is nationalisation a solution?,’’ asked Daniel Kimotho, a shareholder.
Another shareholder wondered what magic nationalisation would do to turn around the airline's fortunes .
"The reason why this airline was privatised in 1995 was because it was collapsing under the state's watch. What happens to our years of investment and patience if the state succeeds in taking over? Please tell us," he said.