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KQ Tenders, Procurement on DCI Radar Amid Multi-Billion Losses



The procurement and tender processes of multi-billion loss making national carrier Kenya Airways (KQ) will face the spotlight of investigators from the Directorate of Criminal Investigations (DCI).

Local reports on September 3 claimed the DCI has written to the KQ senior management demanding that documents on the firm’s tender and procurement process for the financial period between 2017/8 and 2018/9 wants the airline to produce its procurement guidelines since the year 2015.

The probe by DCI investigators will focus on procurement of services for the maintenance, repair and overhaul of aircraft engines.

Procurement and budget plans, tender advertisement/request for proposal, list of prequalified suppliers and tender documents for potential bidders are also within the DCI’s radar as they investigate.

Information on individuals who make up KQ’s Procurement and Tender Committee for the same period being probed is also being sought by the sleuths.

Kenya Airways Multi-Billion Losses

Over the period of review in 2017/2018 and 2018/19, KQ made losses of Ksh6.3 billion and Ksh7.5 billion respectively.

The Ksh7.5 billion loss, being the most recent full year financials recorded, were attributed to increased costs as the company embarked on a flurry on investments aimed at lifting it from negative territory. The investments were headlined by operation of the hyped New York Route.

Heavy investing, as well as the return of two planes sublet to another airliner, were also deemed responsible for the hike in half year financials in 2019. Kenya Airways saw its losses more than double in HY, recording Ksh8.6 billion in the red compared to a half year loss of Ksh4 billion during the same period of review last year.

In 2017, the firm that is listed on the Nairobi Securities Exchange (NSE) decided to switch its financial reporting period from April 1 to March 31, allowing the carrier’s financials to now cover the period between January 1 to December 31.

Kenya Airways is still in transition and the 2018 financial statements cover a 12-month period from January 1, 2018 to December 31, while the financial statements for 2017 cover a nine-month period from April 1 to December 31, 2017.

Kenya Airways CEO Sebastian Mikosz to Leave Before Contract Ends

The period under review is also within the tenure of current CEO Mikosz, who was appointed in June 2017 and was set to run for three years but has signalled his intention to leave KQ before his contract comes to an end.

In a memo to staff, Mikosz said, “I have made the decision to shorten my contract term and I have decided to resign on personal grounds effective Dec. 31.”

The Kenya Airways CEO added, “It is my personal decision and I have discussed it with the board and my family. I believe that this is the ideal timing to begin the transition process to find someone who will continue with the turnaround initiatives we began three years ago.”

Despite helping to realize a downturn in losses (before he joined, KQ had made a Ksh10.2 billion and Ksh26 billion in the preceding two years,), Mikosz has come under pressure especially for hiring a host of expats in his strive towards recovery.

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