The Government of Kenya increased its stake in Kenya Airways PLC to 48.9 percent from 29.8 percent and 11 commercial banks forming KQ lenders company acquiring 38.1 percent, Air France and KLM 7.8 percent and other shareholders 5.2 percent.
“The government of Kenya shall acquire effective control in Kenya Airways and it shall make an application to the Capital Markets Authority for exemption from the take-over requirements in compliance with the Take-overs regulations,” Treasury Secretary Henry Rotich.
“As part of the financial and capital optimisation plan, the Government will convert its loans into equity. In addition, it has provided contingent guarantees amounting to USD750 million to the operating asset lessors and lenders,” said Rotich during a media briefing on Monday. “The support given by the Government is in no way a Government bailout. The Government expects a return on its investment, once the airline returns to profitability,” he added.
According to Michael Joseph, KQ Board Chairman, a key financial, strategic and operational aspects of the Optimisation Plan is “Repositioning Kenya Airways for longer-term growth from a financial and operational perspective and the validation of the future viability of the airline through an inter-conditional and consensual commitment by all of its key stakeholders and placing the Company on a path to financial stability and operational efficiency.”
Initially, the airline’s main shareholders were the Kenyan government, with 29 per cent; Air France-KLM (26 per cent), and the International Finance Corporation (9.7 per cent).
The carrier recorded an improvement in its loss per share to Kshs 6.8 from Kshs 17.5 in Financial Year 2016 results driven by a 12.4 percent decline in operating costs to Kshs 105.4 bn from Kshs 120.3 bn in FY’2016, despite a drop in top-line revenue by 8.5 percent to Kshs 106.3 bn from Kshs 116.2 bn in FY’2016.
KQ made an operating profit of Kshs 897.0 mn but this was depleted by other costs that amounted to Kshs 11.1 bn.
The carrier has continued its business turnaround strategy “Operation Pride”, which focuses on three key objectives: closing the profitability gap through revenue enhancement and cost containment, improving the business model and enhancing partnerships, and restructuring the capital of the company.