Etiqueta: Kenya Airways

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Kenya Airways eyes new unit to manage JKIA for 30 years

Kenya Airways has proposed the formation of a subsidiary dedicated to managing operations at the Jomo Kenyatta International Airport (JKIA) for a concession period of 30 years.

KQ’s plan, contained in its Privately Initiated Investment Proposal (PIIP), includes the creation a special purpose vehicle (SPV) — a unit of a company which is shielded from the parent firm’s financial risk — to operate, maintain and develop JKIA.

“It (SPV) is set up under the conditions set out in Section 59 of the public-private partnership (PPP) Act,” said Jonny Andersen, KAA managing director.

The PIIP is required to satisfy defined criteria, follow statutory steps and obtain approvals from the relevant regulators.

“The board of directors and management of the KAA, therefore, appointed transaction advisers to advise on the PIIP including carrying out comprehensive due diligence and evaluation of the PIIP. MMC Africa Law has been picked as transactional advisers,” he said Wednesday.

Concerns raised
According to Mr Andersen, the board and management of KAA will consider the proposal on the basis of the guidelines within the PPP Act, which incorporates public participation.

The series of events for stakeholders will be hosted in Kisumu, Eldoret, Mombasa, Wajir, Lodwar and Nairobi beginning Wednesday and will run through to mid-February.

“As one of our most valued stakeholders, it is mandatory and important that we get the views and feedback of all relevant stakeholders in the proposals made by KQ in the PIIP,” said Mr Andersen.

He added that due diligence on the state of the KAA and on that of the national carrier was underway as well as evaluation of KQ’s proposal.

Source: Daily Nation

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Kenya Airways will operate Nairobi Jomo Kenyatta International Airport (NJKIA)

The Kenyan Cabinet is reported to have approved a proposal to permit Kenya Airways to operate the country’s principal gateway and hub, Nairobi Jomo Kenyatta International Airport (NJKIA). Kenya Airways is expected to establish a holding company to operate NJKIA under the terms of a 30-year concession contract with the Kenya Airports Authority (KAA) with all NJKIA personnel being employed by the holding company.

The objective is to allow both the airport and the airline to better compete with Gulf airlines and the aggressive Ethiopian Airlines on a level playing field.

To avoid lengthy legal issues, the decision is to be effected through a concession with Kenya Airways designated as the private party and Kenya Airports Authority as the contracting authority. Under the new arrangement, NJKIA – currently under the sole management of the State-owned KAA, and with estimated annual revenues of KES7 billion (USD70 million) – is to be owned and managed by a holding company that will, in turn, be 100% owned by Kenya Airways under the concession agreement.

KAA will receive concession fees from Kenya Airways but will face the loss of approximately 90% of its revenues, which were generated by the airport. KAA will, though, continue running the country’s remaining airports but their contribution to its financial coffers is paltry in comparison.

These two large State-controlled institutions are being brought together under one roof in an effort to consolidate State assets in the aviation industry; effectively copying the model practised by Middle East carriers where airlines and airports are in common ownership.

Source: The Blue Swan Daily