Kenya Airways bosses face the sack in Treasury’s turnaround strategy
What you need to know:
- Treasury Cabinet Secretary Henry Rotich Tuesday told a Senate team inquiring into the troubles gripping the airline that the plan was at an advanced stage.
- The restructuring will also address the investment flaws reported in the controversial Mawingu project that aimed at acquiring modern Dreamliners to boost the existing fleet.
- Mr Rotich also said they had questioned some of the decisions made by the board of directors including Mawingu and why it was not changed to adopt to the prevailing challenges.
The board of Kenya Airways and the top management will be sent home in a drastic plan to return the national airline on the path to profits. Also on the chopping board is the long running agreement with Dutch airline, KLM, which is set for a review.
The government is a major shareholder in the airline, and is preparing a “turnaround plan” for the carrier that has been in the red over the last three years.
Treasury Cabinet Secretary Henry Rotich Tuesday told a Senate team inquiring into the troubles gripping the airline that the plan was at an advanced stage.
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Other than the expected dismissal of the top brass, the government will also propose new pricing, an overhaul in the plan to buy new aircraft and also re-look into the partnerships signed by the airline.
Kenya Airways has often been criticised for its high ticket prices compared to its rivals such as Ethiopian and Emirates airlines. Mr Rotich said that the turnaround plan would address the issue of ticket pricing.
The restructuring will also address the investment flaws reported in the controversial Mawingu project that aimed at acquiring modern Dreamliners to boost the existing fleet.
Since the inquiry began, Project Mawingu has been cited as flying the company into massive losses.
MAJOR CHANGES
“We have demanded major changes in the management. I have had a series meetings with the board to demand the changes. We have made it clear that the restructuring must happen. It is important not to be emotional and ask them to leave now but first we must know the cause of the loss,” the CS told the Senate select committee chaired by Kisumu Senator Anyang Nyong’o at Parliament Buildings.
Although the board is expected to make changes in the top management, it is itself not safe as the CS said the government was not happy with some of its investment decisions.
Mr Rotich also said they had questioned some of the decisions made by the board of directors including Mawingu and why it was not changed to adopt to the prevailing challenges.
Mr Rotich said restructuring was a long-term plan, adding that they had quizzed the top management in order to stop further losses.
Kenya Airways suffered Sh25.7 billion loss in the last financial year.
Prof Nyong’o said there were key decision makers in the company who should respond to the problems facing the airline.
“The chairman of the board, the chief executive officer, chief operating officer and chief finance officer must give reasons for the loss. These are the key people who must explain the losses,” said Prof Nyong’o.
The minister said the government was seeking the support of other key shareholders in preparing the plan that is expected to revive the carrier that brands itself as the ‘Pride of Africa’.
