The national carrier Kenya Airways has expressed optimism , and made a significant announcement regarding its strategic direction. The airline, under the leadership of CEO Allan Kilavuka, has unveiled plans to sell a substantial 49% stake to an equity investor before the end of the year.
In an interview with Citizen TV, the CEO said that numerous investors have expressed interest in the Kenyan carrier. He expressed hope that the capital infusion would help the airline become profitable again.
Should the new investor purchase every share the airline offered in the recapitalisation bid, the national government might lose its 48% majority ownership.
"We’re looking for an equity investor who can invest up to a maximum of 49%. The reason that the maximum is because the rules in Kenya don’t allow you to have an AOC or an airline operating certificate if you have more than 50% foreign ownership," Kilavuka explained.
The move will mean that the new investor automatically becomes the majority shareholder, altering the airline ownership from the current composition that has the government as the majority shareholder with a 48.90 percent stake, followed by KQ Lenders Company 2017 Limited at 38.09 per cent, Dutch airline KLM at 7.76 per cent, Kenya Airways employees at 2.44 per cent, while the remaining shares are spread across other 7 shareholders.
“It's not a one fits all; some will want more involvement, others will want less involvement. For us the ideal investor would be one that, of course, gives us the financial support we are looking for the capitalization we're looking for...one that would add value particularly technically, and complement our core business,” stated Kilavuka.
On Tuesday, March 26, KQ posted an operating profit of Ksh10.5 billion for the first time since 2017 for the year ended December 31, 2023, a turn-around from an operating loss of Ksh5.6 billion in 2022, a 287% growth.
Announced at the end of last month , Kenya Airways saw an operating profit of KShs 10.5 billion in 2023, marking a phenomenal 287% growth compared to the previous year.
Earlier this year, the National Treasury cleared more than half of Kenya Airways’ guaranteed debt with a fresh Ksh6.9 billion payment in the quarter that ended in December, meaning that the government exchequer offset Ksh53.7 billion out of a Ksh69.9 billion KQ debt it took over last year as part of a wider strategy to restructure the operations of the national carrier.
For the future of KQ, Kilavuka said the capital injection will help KQ strengthen its balance sheet through capital restructuring, ensure that the airline has adequate working capital for quick investment as well as ensure the airline expands and modernises to remain competitive.
Kenya Airways needs over KSh 197 billion to complete its restructuring process. Kilavuka added further that the state has stopped financing the carrier because of the Treasury's stretched fiscal position, forcing the company to look for a strategic investor who would finance the carrier.
Mentioning on leadership, Kenyan President William Ruto met with Delta Air officials during the US Summit in December 2022 to discuss Kenya Airways' stakes. Ruto's intentions are very clear as he said that he was not into running the flag bearer without making a profit.
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