Kenya Airways to be delisted from Nairobi Securities Exchange

KENYA – The Treasury has announced plans to buy out Air France-KLM, local banks and more than 80, 000 individual shareholders from Kenya Airways and delist the national carrier from the Nairobi Securities Exchange (NSE), reports Business Daily.

Transport Principal Secretary Esther Koimett told Parliament that the buyout plan comes after the House voted in July to nationalise Kenya Airways to save it from mounting debts.

The Transport ministry is working with the International Finance Corporation (IFC) to hire a technical expert to conduct a fresh valuation and buying price.

The loss-making airline is 48.9 percent government-owned, 38.1 percent (lenders), 7.8 percent (Air France-KLM), 2.4 percent (Kenya Airways employees) and 2.8 percent (small investors).

Ms Koimett said that the government targets to close the buyout by end of next year, 2020, setting the ground for its delisting from the NSE where Kenya Airways listed in 1996 through a privatisation plan.

The market valuation puts the lenders’ stake at KSh6 billion (US$60m), Air France-KLM at KSh1.23 billion (US$12.3m), Kenya Airways employees KSh380 million (US$3.8m) and small investors KSh443 million (US$4.43m).

KQ chairman Michael Joseph warned of financial duress for the national carrier if the buyout deals and the nationalisation plan are not completed in next six months.

“We need a decision because in the next six months we run the danger of considering alternative measures that are not pleasant,” Mr Joseph said.

Kenya wants to emulate countries like Ethiopia, which runs air transport assets – from airports to fuelling operations – under a single company, using funds from the more profitable parts to support others.

Under the model approved by Parliament, Kenya Airways will become one of four subsidiaries in an Aviation Holding Company.

The others will be Jomo Kenyatta International Airport (JKIA), the country’s biggest airport; an aviation college; and Kenya Airports Authority, which will operate all the nation’s other airports.

Kenya Airways could renegotiate its aircraft leases based on its reduced risk profile, he said, noting that the airline needs more than its 40 planes.

JKIA alone has annual revenues of KSh12 billion, half of which is profit, a parliamentary report shows. 

Nationalization will exempt Kenya Airways from taxes on engines, maintenance and fuel, allowing it to sell cheaper tickets, the report says.

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