• Move by MPs to usher in drastic changes in KQ shareholding.
• Committee recommend existing staff be retained and their terms harmonized.
Kenya Airways will be nationalized after the National Assembly adopted a report recommending the airline be wholly owned by the state.
The report by the Transport committee chaired by David Pkosing was adopted after a question on its adoption was posed by Speaker Justin Muturi.
This followed an inquiry by the committee into a proposal by KQ to take over the management of Jomo Kenyatta International Airport for 33 years, which MPs opposed.
The takeover proposal was floated amid concerns KQ is losing its share of the African airspace which is currently dominated by Ethiopian Airlines.
However, it ran into challenges amid opposition by various quarters arguing that the move was a scheme to handover JKIA to private bidders.
The development is anticipated to usher in changes is the KQ shareholding structure where the government currently controls 48 per cent, KQ Lenders (38.1 per cent), KLM (7.8 per cent), minority shareholders (2.8 per cent) and KQ employees (2.4 per cent).
Following the passage of the report, Pkosing said the development now gives Kenya a chance to revitalize the aviation sector.
During debate, MPs raised concerns on who would meet KQ’s debt - largely owed to the lenders - proposing that same be met by those who have invested in KQ.
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.
In May, the National Treasury wrote-off a Sh24 billion loan it owed the lender, a move that came barely a month after the government secured a Sh20 billion to help KQ repay another loan it borrowed from African Export-Import Bank (Afrexim) two years ago.
Staff rationalization is likely to follow since some of the workers – like in the case of KLM - were seconded by the shareholders.
The Transport committee had recommended that the existing staff be retained and their terms of service harmonized.
Overall, currently KQ employs 14 expatriates out of 3,700 employees. Two staff from KLM hold senior positions.
The MPs also suggested formation of an Aviation Holding Company (AHC) adding that the entity be guaranteed tax exemptions for it to thrive.
It was further recommended that Kenya Airports Authority, JKIA, and KQ be made part of the KAHG.
“The import of the arrangement would be to enable them maxmise the revenue generated from such resources for the mutual benefit of the subsidiaries,” the report reads in part.
The implementation would, therefore, require legislation such as amendment to the EAC Customs Act to incorporate tax exemptions to KAHG.
The committee also recommended that KQ be exempted from paying airport fees, fuel and railways levies.