Kenya Airways responds to DP Gachagua on claim of making losses due to ‘State capture’

National carrier Kenya Airways says it is under no State capture and its contracts are above board.

This is in response to claims made by Deputy President Rigathi Gachagua during an interview on Citizen TV on Sunday on Citizen TV.

DP Gachagua, during the interview, claimed that the reason behind KQ’s loss making streak was because of bad contracts that they had allegedly entered into to benefit a few individuals in what he termed as State capture.

“We have had discussions with Kenya Airways and they have the highest fares on the continent and their planes are always full but they make losses. We are trying to deal with that State capture so that we can bring down the cost of the operations of the airline so that they can make profits,” he stated.

However, KQ through its Chairman Michael Joseph has disputed the claims noting that the contracts by the airline are purely commercial business arrangements meant to benefit the airline.

Joseph also explained that the national carrier had entered into lease agreements with renowned international companies that manage hundreds of aircraft leased to different international airlines globally.

In his statement, Joseph outlines the number of aircrafts that are operated by KQ under two different models. These include Long-term Leases with an option to purchase the aircraft at the end of the agreement, and Operating Leases where the lessor and lessee agree to a plan for a set period of time in exchange for regular payments.

Joseph also dismissed claims that they were paying above market rate fees for services offered to the airline stating that the costs are within the prevailing market rates at the time of negotiating the transactions.

He also said that KQ Board and Management have been engaging with the lessors to reduce the overall costs of aircraft lease rentals.

On ownership of the airline, Joseph said KQ is a publicly listed company with the Government of Kenya as the majority shareholder.

The government owns 48.9% of the carrier, followed by KQ lenders which are banks that converted KQ’s debt into shares in 2017 at 38.1%. Dutch carrier KLM has 7.8%, minority shareholders have 2.8% and employees of the airline hold 2.4%.

KQ, Joseph expressed confident, will turn around its fortunes by 2024 as all the strategies they implemented to turn around the airline are starting to bear fruit.