KQ rejects master’s degree push for its boss in nationalisation Bill

Kenya Airways #ticker:KQ has rejected the requirement in a bill on the nationalisation of the airline that demands its chief executive officer must have a minimum of a master’s degree.

The national carrier has lobbied Parliament to amend the clause in the proposed law to a minimum of a Bachelor’s degree.

The airline believes the requirement will narrow its talent pool as the airline struggles for a turnaround after six years of losses when the carrier has been led by four CEOs.

“The Bill should be amended to provide for a minimum qualification of a bachelor’s degree for qualification for appointment as a Chief Executive Officer with possession of a Master’s degree as an added advantage rather than a minimum qualification,” Allan Kilavuka, KQ’s chief executive said in a presentation to Parliament.

The Kenya Aviation Management, Bill 2020, sets the minimum requirement for those seeking the corner office at KQ, Kenya Airports Authority (KAA) and the yet to be formed Kenya Aviation Investment Corporation to be at least a master’s degree from a university recognised in Kenya or its equivalent in a relevant field.

Mr Kilavuka, who was appointed Kenya Airways CEO in January, lists on his LinkedIn that he holds a post-graduate certificate in Psychology.

Kenya Airways has had four CEOs in six years, including Titus Naikuni who retired in December 2014, Mbuvi Ngunze who was replaced in June 2017 by Sebastian Mikosz.

Mr Mikosz resigned effective December.

Most firms listed on the Nairobi bourse have not placed a premium on post-graduate qualifications when hiring CEOs like State-owned companies that now boast a number chief executives with a PhD.

The National Assembly committee had recommended to MPs to delete the higher academic threshold set in the Bill before the Speaker ruled that the proposed law be subjected to public participation afresh.

The legal hitch look set to further delay the plan to nationalise the loss-making Kenya Airways as regional competitors seeking to carve out market share pour cash into their national carriers.

“That clause 13 of the Bill be amended in paragraph (a) by deleting the word “master’s” and substituting therefor the word “Bachelor’s,” the committee said in a report on the consideration of the Bill.

The committee justified the lowering of education qualification for the next KQ boss arguing that “common practice requires a bachelor’s degree, with possession of a master’s degree as an added advantage rather than a minimum qualification.”

Lawmakers on September 9 stopped debate on the bill because it lacked the input of Kenyans and other stakeholders in line with the Constitution.

The government had a target of completing the State takeover of Kenya Airways by end of October, hoping to emulate the success of State-owned Ethiopian Airlines, sub-Saharan Africa’s biggest airline.

Kenya Airways was privatised 24 years ago but sank into debt and losses in 2014 after a failed expansion drive, costly purchase of aircraft and a slump in travellers after a major terror attack.

In August, it saw its first-half loss nearly double from a year earlier to Sh14.36 billion, on months of suspended air travel due to Covid-19.

Countries like Tanzania and Rwanda are investing heavily in their national carriers, threatening Kenya Airways’ market share.

Ethiopian Airlines runs air transport assets, including airports and fuelling operations, under a single company. Funds from the profitable parts support the others.

This is the model Kenya is seeking to emulate, and in July tabled the Bill to guide the nationalisation of the national carrier, which is 48.9 percent State-owned, 7.8 percent held by Air France-KLM, and 38 percent owned by local lenders.

Under the Bill, Kenya Airways will become one of three subsidiaries in an aviation holding company. The others will be Kenya Airports Authority, which will operate all the country’s airports, including Jomo Kenyatta International Airport (JKIA) in Nairobi, under an investment arm dubbed Aviation Investment Corporation.

The State is keen on a long-term solution anchored in nationalisation of Kenya Airways, arguing that the carrier’s financial troubles went beyond the Covid-related woes.

The Nairobi Securities Exchange in July suspended trading of the airline’s shares for three months due to the transactions.

A consortium of local lenders, who acquired 38 percent of the company’s equity during the 2017 restructuring, could be paid through government debt, possibly in 10-year Treasury bonds.

Air-France KLM, which had the option of selling its stake to the government and staying on as a technical partner for the airline, exited.

Kenya has reached an agreement with Air-France KLM on the offer price, which will be a premium on the carrier’s prevailing trading price at the Nairobi bourse.

The same KLM offer price will be used to acquire the minority shareholders, who hold about 2.8 percent of the shares currently valued at Sh397 million.