Kenya Airways to sell up to 49 per cent of its shares in equity deal

The national carrier Kenya Airways has expressed optimism that it could seal a deal with an equity investor before the end of the year.

According to the airline's CEO Allan Kilavuka, numerous investors have expressed interest in the Kenyan carrier.

Speaking to Citizen TV in an exclusive interview, the CEO was optimistic that the capital injection could turn the tide for the airline returning it profitability.

The  national government could lose its majority stake of 48 per cent should the new investor buy out all the shares offered by the airline in the recapitalisation deal.

“We’re looking for an equity investor that can invest up to a maximum of 49 per cent...that’s the maximum. 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 per cent foreign ownership,” said Kilavuka.

He Kilavuka further said the airline anticipates that the investor will be foreign, therefore necessitating the cap at 49 per cent to ensure business continuity.

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.

To move the airline into the future, 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.