Kenya Airways rules out termination of JV with KLM

Kenya Airways rules out termination of JV with KLM

Kenya Airways’ board is set to hold a meeting with Dutch carrier KLM to review the 20 year old joint venture agreement between the two airlines.

The review comes amidst growing concern that the partnership has been skewed in favor of KLM with Kenya Airways suffering from the deal.

Kenya Airways newly appointed Chairman Michael Joseph says there is need to better understand the deal with the prospect of renegotiating terms to ensure the national carrier is positioned get back to profitability.

He however ruled out a renegotiation of the deal, pending its full assessment.

“We are first studying the joint venture then start having discussions with KLM, not renegotiating yet. I want to fully understand the joint venture first then have a frank discussion with KLM, see where we can fix these things and help direct that negotiation,” Mr Joseph said.

Kenya Airways entered into the joint venture deal with KLM, which owns a 26.7 percent stake, in 1996 in a bid to get access to international routes and leverage on KLM’s vast experience in the aviation sector.

Over the years the landscape has changed, necessitating the need to also evaluate the revenue sharing deal between the two airlines.

Despite calls from politicians and the airline’s pilots union, the former Safaricom boss however ruled out termination of the agreement, stressing KLM remained a crucial partner for Kenya Airways.

“I have heard these statements that we should get out of the joint venture with KLM but for the life of me I don’t k now why. I have not seen a real burning issue as to what is wrong with the joint venture that we should get out of it,” he said.

Mr Joseph is expected to meet with KLM executives in the next two weeks, seeking clarity as how best to improve the alliance.

Transport Cabinet Secretary James Macharia last week said the evaluation of the joint venture agreement would focus on whether ties between the two airlines were commercially viable.

“As times change there may be need to review some of things because whereas in 1996 KQ required a partner with international networks, it was looking forward to rebrand itself. But now given the motions it has gone through, there may be possible a case for those documents and agreements to be reviewed,” Mr Macharia said.