Kenya Airways has been pivotal in economic growth

A Kenya Airways plane on the runway at Jomo Kenyatta International Airport in Nairobi. PHOTO | FILE  NATION MEDIA GROUP

In Summary

• However, its past could come back to haunt the country with a Sh600 billion claim made by former employees of the defunct East African Airways Corporation (EAAC).

By CHARLES WOKABI
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The national carrier, Kenya Airways, has played an important role in making Kenya a regional economic powerhouse.

However, its past could come back to haunt the country with a Sh600 billion claim made by former employees of the defunct East African Airways Corporation (EAAC).

The airline is a breakaway of the East African Airways Corporation which closed shop following the collapse of the East Africa Community in 1977.

Following the airline’s dissolution, EAC member states negotiated an agreement for the division of assets and liabilities, which they signed in 1984.

It is the disbursement of these benefits however that has become the subject of a court case in which the former employees of EAAC are demanding more than Sh600 billion.

If the ruling, scheduled for Thursday, goes in favour of the employees, the country will be required to part with an amount equivalent to a third of this year’s national budget.

The EAAC collapsed on January 13, 1977 and all its workers were declared redundant on February 15, 1977. This led to the birth of Kenya’s national carrier, Kenya Airways, which was established in January 1977.

Since then, KQ has played a central role in Kenya’s economic evolution, connecting the country to the rest of Africa and the world.

Today, Kenya is the preferred gateway to Africa due to its deep integration with the rest of the world. This feat could not have been achieved without the role played by the national carrier.

A study released by Visa last week revealed that Nairobi is the most strategic city for multinationals eyeing the African market.

KQ flies to more African cities than any other airline on the continent while most of the international carriers make stopovers in Nairobi en route to other destinations in the region.

It is therefore incumbent upon the company’s management to ensure that the airline, which is currently grappling with financial challenges, does not follow the route of its predecessor, the East African Airways Corporation.

Runaway insecurity

In the half-year through September, the airline reported a loss of Sh10 billion. The airline blamed the poor performance on escalating insecurity in the country as well as the outbreak of Ebola in West Africa.

Haunted by the memories of the East African Airways, KQ’s shareholders at the annual general meeting told the company’s management to steer the airline to profitability.

KQ has now contracted financial advisers to help it get out of the current mess by restructuring its debt.

A treaty for the establishment of the EAC was signed in Arusha on November 30, 1999 and it was implemented on July 7, 2000 following the conclusion of the process of its ratification and deposit of the instruments of ratification with the secretary-general by all the three partner states.