New investor: Kenya Airways to sell 49% of its shares, CEO Kilavuka announces

• Kenya Airways chief executive officer Allan Kilavuka hopes a new equity investor will revive the airline and make it profitable
• The new investor will become the airline’s primary shareholder, altering its current ownership structure where the government is the majority shareholder
• President William Ruto met with Delta Air officials during the US Summit and discussed Kenya Airways stakes

TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Kenya Airways, the country’s flag carrier, hopes to reach an agreement with an equity partner before the end of the year.

Allan Kilavuka, the airline’s chief executive officer (CEO), revealed that several investors have shown interest in the Kenyan carrier.

In an interview with Citizen TV, the CEO expressed hope that the capital infusion would help the airline become profitable again.

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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.

Who owns KQ?

The new investor will become the airline’s primary shareholder, altering its current ownership structure.

Currently, the government holds a 48.90% stake in the airline, followed by KQ Lenders Company 2017 Limited at 38.09%, Kenya Airways employees at 2.44%, and Dutch airline KLM at 7.76%.

The remaining shares are divided among the remaining seven shareholders.

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Why gov’t wants to sell KQ

KQ requires over KSh 197 billion to complete its restructuring process.

Kilavuka revealed that the state stopped financing the carrier because of the Treasury’s stretched fiscal position, forcing the company to shop for a strategic investor who would complement the airline.

President William Ruto met with Delta Air officials during the US Summit in December 2022 to discuss Kenya Airways’ stakes.

Ruto said he was not into running an airline that carries the Kenyan flag without making a profit.

Kenya Airways’s loss

Kenya Airways’ loss dropped to KSh 23 billion in the year ended December 2023.

The development marked a significant improvement for the airline, which has been grappling with financial challenges exacerbated by the COVID-19 pandemic and other operational hurdles.

During the year under review, Kenya Airways reported an operating profit of KSh 10.5 billion.

Source: TUKO.co.ke