Kenya’s President William Ruto will make a pitch to US investors this week to sell a controlling stake in the country’s national carrier Kenya Airways as a means of returning the struggling airline to profitability.
Kipchumba Murkomen, Kenya’s Transport Cabinet Secretary, stated on Wednesday that the search for strategic partners for Kenya Airways is at the top of President Ruto’s agenda for his trip to America.
This week, US President Joe Biden will host the US-Africa summit, where he will discuss the 2023 elections and democracy in Africa with about 50 African heads of state.
The White House announced on Tuesday that over 300 American and African companies will meet with heads of various delegations to discuss investments in critical sectors.
Strategic investor
Kenya will prefer a cash-rich foreign airline as a strategic investor in a plan that could provide aviation expertise to the national carrier while reducing its reliance on the National Treasury for operational funds.
“We are doing everything possible to ensure that we no longer subsidise the airline and that is why we are looking for a strategic partner,” said Mr Murkomen.
“Even on the President’s trip to the US, one of the topics for discussion is how to get a strategic partner for Kenya Airways,” the CS added.
The United States announced a $55 billion commitment to Africa over the next three years, with the White House adding that its plan to invest in Africa compares favorably to other countries.
Cut state shareholding
A deal on Kenya Airways would see the state reduce its shareholding from 48.9 percent to 38 percent and lenders who converted their debt to a 38 percent stake.
Air France-KLM owns a small stake in Kenya Airways, and it remains to be seen whether the multinational, which was previously the majority shareholder in KQ, will sell its remaining 7.76 percent stake.
Mr Murkomen believes the state is looking for a new equity investor who will inject capital and provide management expertise in the next stage of restructuring.
The Kenyan national carrier has received multi-billion shilling state bailouts as it recovers from a travel slump caused by Covid-19, which saw travel restrictions imposed to control the disease’s spread.
The new restructuring plan comes after the state abandoned its preferred long-term solution, which was based on nationalizing the airline.
The plan approved by Kenyan lawmakers in July 2019 would have resulted in the airline’s delisting from the Nairobi Securities Exchange.
A bill to allow for the nationalization of the airline, which had been proposed prior to the pandemic, is currently before Parliament.
