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KQ must take over JKIA or face total collapse in a financial crunch

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By JAMES ANYANZWA
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By NJIRAINI MUCHIRA
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After being on the job for nearly two years, Sebastian Mikosz, the Polish aviation turnaround expert that the Kenyan government hired to save its national carrier, Kenya Airways, from total collapse, is beginning to come to terms with certain realities. That to do his job he has to be candid. Very candid.

At a press briefing on Wednesday, Mr Mikosz told journalists that to get out of the deep hole that the airline fell into seven years ago, the government will have to push through the controversial plan to have the carrier take over management of the Jomo Kenyatta International Airport.

That nothing short of the takeover will save the airline, East Africa’s oldest, from total collapse. Not even his well-known turnaround credentials.

Mr Mikosz, who spoke amid rising opposition to Kenya Airways’ takeover of JKIA’s operations, said if nothing changes, the carrier will, in a span of five years, diminish to the level of its low cost subsidiary Jambojet and lose its prestigious tag of the Pride of Africa.

“There is actually no way KQ can be profitable in its current state. I don’t know how to do that,” Mr Mikosz said.

KQ’s takeover of JKIA has been proposed under Project Simba, a turnaround blueprint that seeks to save it from collapse and anchor the country’s aviation industry as a key pillar of the economy through continued investment in key infrastructure.

Mr Mikosz, whose two-year contract expires this May, hit out at opponents of the takeover plan as lacking in vision and failing to see what is at stake.

He did not spare the airline’s pilots whom he accused of stalling the recovery with their demands for hefty pay.

“The pilots are overpaid and the workforce bloated, bleeding the airline to death,” he said even as he criticised the government’s failure to protect the carrier from unfair competition.

And in a signal that his term at KQ may not go beyond two years, Mr Mikosz said his frustration with the status quo has reached a point where he is contemplating leaving.

KQ’s minority shareholders also came under heavy criticism for demanding that the carrier pays a dividend when it is technically insolvent.

In Mr Makosz’s view, KQ should be delisted from the Nairobi Securities Exchange to facilitate a quieter turnaround away from the noise of minority shareholders.

That KQ should not be reduced to paying dividends but should be anchored as the engine that drives productive sectors such as horticulture and tourism, which make significant contributions to the gross domestic product growth.

“In neighbouring Ethiopia, the aviation industry has set a benchmark of delivering seven per cent impact on GDP,” he said.

Mr Mikosz took a swipe at his predecessors Titus Naikuni and Mbuvi Ngunze, for bringing KQ to its current predicament.

He said the airline’s slide from a profitable and leading airline in Africa to a dying carrier is attributable to the badly thought-out and executed Project Mawingu that did not take competition into consideration.

“Problems were compounded in 2017 when the airline was forced into a bad restructuring programme that put taxpayers in a precarious situation, exposing them to paying creditors a staggering $750 million in case the airline went bust. Taxpayers have the obligation under the terms of a sovereign guarantee that the National Treasury offered the airline’s creditors.

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The plan also left the Kenyan government with a 46.53 per cent stake in the national carrier while a group of 10 local banks that converted a total of Ksh23 billion ($230 million) debt into equity have a 35.69 per cent stake.

Dutch airline KLM owns the remaining 13 per cent.

“KQ’s takeover of JKIA is one of the recovery options but if it does not go through the other option is to shrink KQ to Jambojet status, an option that means I will not renew my contract when it expires,” said Mr Mikosz, who was appointed in June 2017.

KQ wholly owns African Cargo Handling Ltd and Jambojet, a low-cost carrier that was started in 2013.

Last October, the liner submitted a privately-initiated investment proposal to the Kenya Airports Authority, the entity that runs all airports and airstrips in Kenya, seeking a 30-year concession to manage and develop JKIA under agreed terms—including payment of an annual concession fee.

KQ has set the annual concession fee at $28 million in 2019, and wants to gradually increase it to $35 million in 2028.

Critics have argued that there is no reason KAA should accept proposal that will deliver revenues way below the $66 million needed to run non-JKIA operations every year.

The proposal has in recent weeks met significant opposition, including from Members of Parliament ostensibly because it appears trapped in a conflict of interest with banks that KQ is indebted to.

Mr Mikosz reckons that KQ’s survival is tied to the proposed concession deal with the KAA.

“All our competitors are subsidised and operate in a consolidated model with airports and a number of service companies,” he said, adding that the perception created that KQ is merging with KAA is wrong because the deal is structured as a concession agreement in which the airline will only take over aviation-related assets in a long term lease while other JKIA properties, including land remain under KAA.

Opposition to the deal has partly centred on what many see as a possible conflict of interest arising from its association with President Uhuru Kenyatta’s family business.

Kenya Airways owes Commercial Bank of Africa—which is majority owned by the Kenyatta family and has recently struck a merger deal with NIC Bank—more than Ksh4 billion ($40 million).

Some critics have dismissed the proposed takeover of JKIA as ”a grand debt recovery plan” but Mr Mikosz insists that Project Simba, whose overriding theme is to open new revenue streams for KQ, is what is needed to reposition Kenya’s premier airport as an aviation hub.

The Project Simba proposal is crafted on a public private partnership model.

In its current state KQ cannot compete with the likes of Ethiopian Airlines, Emirates, Qatar and Etihad that are 100 per cent state-owned and subsidised and are executing aggressive growth strategies with a focus on volume and market share.

Mr Mikosz said that apart from pushing through the JKIA deal, Kenya will also have to protect its national carrier by limiting the number of airlines flying into Nairobi, a strategy Ethiopia and has adopted and which has been instrumental in the growth of its airline.

Kenya has licensed 22 foreign carriers to fly into JKIA compared with five that are allowed into Ethiopia’s Bole International Airport.

“I am shocked when I see the government allowing more airlines to fly into JKIA,” said Mr Mikosz, adding that the Ethiopian government has denied Kenya Airways a licence to any other part of the country outside Addis Ababa.

The limitation has seen Bole Airport handle 12.9 million passengers annually, the majority of them flying Ethiopian Airlines, while KQ must share the 7.2 million passengers using JKIA with numerous airlines.

Mr Mikosz says KQ taking over the management of JKIA should help revamp the airport’s infrastructure and increase the traffic to 11 million passengers per year by 2022 and 30 million by 2049.

More critically, it will ensure that the aviation industry becomes a national treasure that creates an additional 30,000 jobs in airlines and related businesses. The JKIA deal, which was to have been completed by March 31, is however now hanging in the balance.

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Public officers above 58 years and with pre-existing conditions told to work from home: The Standard

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Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.

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However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
SEE ALSO: Thinking inside the cardboard box for post-lockdown work stations
Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
SEE ALSO: Working from home could be blessing in disguise for persons with disabilities
Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.

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Uhuru convenes summit to review rising Covid-19 cases: The Standard

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President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
SEE ALSO: Sakaja resigns from Covid-19 Senate committee, in court tomorrow

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Drastic life changes affecting mental health

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Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.

KBC Radio_KICD Timetable

Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.

Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.

The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.

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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.

In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020.  It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.

A study by Dr. Habil Otanga,  a Lecturer at the University of Nairobi, Department of Psychology says  that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.

The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.

KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.

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Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.

As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.

“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”

Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.

“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.

Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.

“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”

Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.

“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.

Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.

Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.

She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.

Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.

“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added

Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.

“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and  also engage in   reading that would  help expand their knowledge.

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