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Kenya Airways seeks strategic investor as State ends taxpayer bailouts
Kenya Airways CEO Allan Kilavuka before the Public Debt and Privatization Committee at the Continental House in Nairobi yesterday.
National flag carrier Kenya Airways says it has begun the process of finding a strategic equity investor who will pump in money and help the airline fund Project Kifaru, the airline’s turnaround project that kicked off in February last year.
This comes after the National Treasury indicated that it will not provide any capital injection in the ailing airline in the 2023/24 financial year.
Since the Covid-19 pandemic, the airline has relied heavily on the taxpayer to sustain its operations amid a downturn in business, with Treasury providing Sh20 billion and Sh30 billion in the 2021/22 and 2022/23 financial years.
According to the airline’s Chief Executive Officer Allan Kilavuka, preparations are underway for a roadshow, with the firm currently identifying a financial adviser to prepare an investment memorandum before it starts wooing potential investors.
“The task of funding the Kifaru project as originally conceived was deemed onerous and an alternative option to achieve the same objective was considered. This led to an agreement to seek a strategic equity partner to assist in the capitalisation of KQ,” Mr Kilavuka told the National Assembly’s Public Debt and Privatisation Committee.
In March 2023, KQ reported a full year loss of Sh38.3 billion for the period ended December 2022, double the loss reported a year earlier. The 2022 full year loss marked the tenth consecutive year that the airline has been in the red.
During the period under review, the airline’s performance was significantly impacted by the escalation of fuel prices due to the spillover effects of the Russia-Ukraine war. However, the airline reduced its operating losses by 17.6 per cent to Sh5.6 billion.
“The project aims to address debt, high fleet costs and other structural cost issues on a sustainable basis, which have not been addressed in previous restructuring plans. In addition, we will address the soft issues, particularly culture change within KQ, which is critical for sustainable transformation,” said Mr Kilavuka.
Kenya Airways says Project Kifaru plan will focus on fleet and network optimisation, collective bargaining, comprehensive capital restructuring, expanding partnerships across Africa and terminating two aircraft sub-leases.
In 2018, the airline proposed to own aviation assets through a privately initiated investment proposal that would concession Jomo Kenyatta International Airport to Kenya Airways through the formation of a special purpose vehicle that would operate, manage and develop the airport over a 30-year period. The consolidation was touted as a means of reducing inefficiencies and better positioning Kenya as an aviation hub in Africa.
