Blog Archive

Tuesday, August 15, 2006

Kenya Airways & Kenya Times - World of Difference!

Kenya Times had started gaining, albeit slowly, my respect as a credible news source.... but this recent article gives me great pause!

The IDIOTS are back... This is a poorly researched & merely sensationalist article... The Times Reporter doesn't even identify himself lest he never finds a job with another credible media outlet.

I have Italicised comments/observations made by Kenya Times.

A DEAL that the Kenya government made with the Royal Dutch Airlines (KLM) over the privatisation of Kenya Airways ten years ago has rendered it irrelevant over the management of the multi-billion shillings airline that is touted as the Pride of Africa, we can reveal.

First, "reveal" what? There is NO secret that KLM has always had the RIGHT to appoint the MD & FD. I had mentioned this aspect in my blog on July 30 2006. So why couldn't KT "reveal" this "important" info 10 years earlier?

Second, after the EAPCC fiasco among others, I am GLAD that KLM has the RIGHT to appoint the MD & FD.

Third, the government (kibz' buddies) tried to get on the KQ board but were rebuffed in 2003.

Board matters at the Kenya Airways, it has emerged, have since remained a preserve of KLM which acquired KQ with Kenya having very limited say over the day to day running of the airline including the appointment of its Managing Director, Finance Director and Technical Director.

That is great news that the government does not have day-to-day responsibilities! They make enough of a mess with less important matters!

“You should be talking about the benefits that the airline brings to the country and not who owns it. What does that help you?” Naikuni asked.

Naikuni is RIGHT. The government owns 23% while Kenyan individuals & firms own huge chunks e.g. Paul Wanderi Ndugu 15 Million shares, etc.

KQ has made Nairobi the hub for East & Central Africa thus bringing in airport taxes/revenue as well as paying corporate taxes while spawning a industry based around supplying KQ's needs e.g. food, water, blankets, maintenance.

KQ's direct flights to UK, Amsterdam &, soon, Paris has expanded the market for Kenyan goods esp horticultural products. Don't forget the all important tourist trade that relies on KQ to bring the tourists to Kenya!

Before the transfer, the Kenya Government, which then owned KQ, was forced to pay all the airline’s debts amounting to about US dollars 80 million.

Why would KLM want to absorb KQ's debts? The government lost nothing coz KLM invested $26 Million to refinance KQ, then the government 51% of KQ to the public thus bringing in more cash. The $26 Million paid by KLM reinforces the value of KQ at $100 Million.

In any case, the "debt" was a result of MISMANAGEMENT by the kanu government. kanu OWNS Kenya Times!

And Kenya Airways could soon lose the tag and privileges associated with the national carrier prestige, following the change in ownership structure. According to the International Civil Aviation Organisation (ICAO) regulations, a national air carrier enjoying international traffic rights of a member state must among other things, be either positively controlled by that state or its people

I have no idea if KT's assertion is valid BUT ICOA hasn't withdrawn it for 10 years & it is highly unlikely that ICAO will start now esp in the era of liberalisation.

Surprisingly, KQ has never publicly published articles 17 and 53 to enable shareholders know the identity of ownership of the airline. This in essence, makes it unlawful for the company to be listed at the Nairobi Stock Exchange (NSE).

What listed firms publicly publish all their articles annually? In any event, shareholders have a right to view the documents. KQ may have published the articles as part of the prospectus.

When contacted yesterday, NSE chairman Jimnah Mbaru expressed shock and promised to investigate the issue. “These are issues that we have never considered, but we are going to look into them,” he told Kenya Times.

What exactly is he shocked about? The NSE should be concerned about insider trading as alleged in Uchumi & Ea Cables.

This explains why the government of Kenya took full responsibility, when a Kenya Airways jet crashed off the Coast of Gabon.

KQ has never had a jet crash off Gabon's coast.

Some of the clauses included in the Memorandum and Articles of Association were outrightly in favour of KLM, which still carts away a huge chunk of the airline’s profit.

KLM gets the same (stingy) dividend per share as the rest of the shareholders! KLM INVESTED their money not donated it so they expect a return! The government might not invest with a profit motive but not the private sector!

Following the sacking of the long serving company secretary L.G.Kamau, details are emerging that all is not well at the airline afterall.

Kamau resigned/retired/sacked a while ago as part of a major cost cutting process instituted soon after Titus Naikuni became CEO! So why would these "issues" be coming up now?


Anonymous said...

exactly my sentiments

coldtusker said...

Wow... anon... I wasn't even done putting my final editing touches & you had already posted a comment!

Please re-read & add to my vitriol coz in a sense I wish to ignore the story BUT unless refuted the falsehoods become fact!

In my July 30 blog entry I mention the fact that KLM has the RIGHT to appoint the MD & FD... Did a mere blogger "beat" a media house to the punch?

gathinga said...

Funny. I havent read Kenya Times since i was in high school and its the only papaer out school bought (you know which school) But alas, where are theyse guys taking us!!. Big shame i must say... someone wants to instill some populism!!

coldtusker said...

@Gathinga - It's BS. I like the Naikuni quote...

BTW, which school?

ALL public schools had to buy KT. Our shule was perennially short of funds & Nation+Standard stopped deliveries lakini KT was "free"...

gathinga said...

then i guess its not my school alone. regarding this story, was there any reaction from kq in the press? personally i havent seen any

scuderia said...

I haven't read the article, but what I pick up is the prospect that "the pride of Africa is not African at all!"

On the one hand, no big deal. Business is about making money, not about conscience and ethics. If a Dutch company can fake Kenyanness to increase sales from naive "patriotic" passengers, that's their gain. East African Breweries does it even better: "one country, one beer." Hell yeah, which country?! Guiness PLC's home country??? It's a free market anyway. What is to stop a Kenyan business from going to Ethiopia, say, and selling its products using Ethiopia's runners???

On the other hand, I do feel cheated and worried. Kenyans, are we business-challenged? Kenya Airways -> Dutch, EABL -> UK, etc. That's why Uchumi worries. These are the last vestiges of our pride.

You seem to be emotional against Kenya Times, which is itself an example of the kind of poor business management that bedevils Kenya.

scuderia said...


I haven't read the article, but what I pick up is the prospect that "the pride of Africa is not African at all!"

coldtusker said...

My dear Scuderia - Pride does not fill the stomach!

Kenyans own more of KQ than KLM (26%).

23% by Treasury, 3% by Paul Wanderi Ndungu, 8% by the Khetsi Dharamshi Family. Apollo Insurance. These are among the top ten. There are others as well...

Most employees are Kenyan. They hire the best to help them expand & deal with different languages & cultures e.g. Madarin crewmembers for their China flights.

coldtusker said...

I really enjoyed Naikuni's jibe about KR when prodded about KLM's 26% ownership!

Kenya Railways is 100% owned by the government of Kenya.

KQ - Profitable since KLM provided management in 1996
KR - Unprofitable since I was a toto!

KQ - Gets you Nbi-Msa in 1 hour
KR - You are lucky if they can get you there safe & sound in 8 hours

KQ - Carries 2.4 Million passengers annually & growing!
KR - Ha ha ha... can't even get accurate info!

KQ - Market Value is KShs 50 Billion+
KR - Probably negative coz of debt & pension obligations

KQ -Bright future
KR - Dark (unless privatised)

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