Kenya Airways-Kenya Airport Authority merger faces opposition, union strike looms

The Kenyan government’s proposed merger between Kenya Airways (KQ) and the agency that manages all the country’s airports, Kenya Airport Authority, is meeting opposition from within the government and from the Kenya Aviation Worker’s Union (KAWU).

Under the proposed public-private partnership, Kenya Airways will take over all the staff and operations of the KAA, which will allow the carrier to expand its range of services to include ground handling, maintenance, catering, warehousing and cargo. In the agreement, Kenya Airways also plans to form a special purpose vehicle (SPV) at Nairobi’s Jomo Kenyatta International Airport (NBO) to manage, operate and develop the airport for a period of 30 years. The government is also considering supporting the joint venture by exempting it from certain taxes and allowing it to retain several levies, while also establishing an economic zone around NBO. Kenya’s government owns a majority stake in the carrier.

The Kenyan State House crafted the merger last June, following Kenya Airways’ request for help from the government after posting a loss of US$60.4 million in 2017, according to The East African. The move is intended to turn around the carrier’s financial situation and help it compete with other state-backed rivals, such as Ethiopian Airlines and Dubai-based Emirates Group. It also strengthens Kenya’s aviation industry regionally against Ethiopia and Rwanda, which is building a new airport in Bugesera.

The Cabinet approved the merger in June 2018, but other members in parliament consider the merger to present a potential conflict of interest given its association with President Uhuru Kenyatta’s family business.

Kenya Airways owes $40 million to the Commercial Bank of Africa (CBA), which is majority-owned by Kenyatta’s family. Thus, critics have likened the proposal to a debt recovery plan and condemned it, saying that a loss-making private entity cannot be allowed to take over a public entity that is making profit, according to The Africa Report. Sentiments on the issue are further exacerbated by the fact that President Kenyatta appointed CBA group executive, Isaac Awuondo, to chair the KAA board of directors.

KAWU also protested the merger, saying that it will result in loss of revenue and jobs at NBO and demanded the removal of KAA chief executive, Johnny Andersen, and chairman of the board, Isaac Awuondo, and their KQ counterparts. The labor union announced today that all its members will go on strike for seven days beginning March 6, 2019, should their demands against the merger not be met.

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