Gov’t to Buyout Troubled Kenya Airways

The national government is set to buyout the loss-making Kenya Airways (KQ).

This was revealed by Transport Principal Secretary Esther Koimett while appearing before a Parliament committee on Thursday

The government will purchase shares held by Air France-KLM, local commercial banks and over 80,000 individuals.

KQ is 48.9 percent State-owned, 38.1 percent (lenders), 7.8 percent (Air France-KLM), 2.4 percent (Kenya Airways employees) and 2.8 percent (individual investors).

“You have to ensure that everybody gets their dues. That is why you have to do a valuation. Once you know how much it will cost you and have the process under the law… it is a matter of getting the shareholders themselves to pass the necessary resolutions to facilitate the payouts within the law,” PS Koimett told Parliament on Thursday.

The buyout is expected to be completed by the end of 2020, paving way for the delisting of Kenya Airways from the Nairobi Stocks Exchange (NSE) where it was listed in 1996 through a privatization plan.

KQ shares have plunged 81 percent at Nairobi bourse to Sh2.72 each, placing the carrier’s value at Sh15.45 billion.

KQ Chairman Michael Joseph warned of financial duress for the airline if the buyout deal and the nationalization plan are not concluded in the 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,” Joseph told MPs.

Kenya is borrowing the idea of running air transport assets under a single company from countries such as Ethiopia.

Under the model that got the approval of Parliament, KQ will become one of four subsidiaries in an Aviation Holding Company.

The other three are Jomo Kenyatta International Airport (JKIA), Kenya Airports Authority (KAA) and Kenya Civil Aviation Authority (KCAA).