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Kenya Government to 'defend' thier stake in Kenya Airways

Wednesday 8 June 2011

Trip Guide News

Information was received from usually well informed circles in Nairobi that the government will during the upcoming additional share issue by Kenya’s national airline be defending their 23 percent shareholding in the publicly listed and traded company and underwrite their share options in full.

Kenya Airways was privatized in 1996 and has since then not raised its capital, now however thought to be essential to provide the company with the financial resources and strength to finance and acquire additional aircraft and roll out its network expansion as internal strategy papers suggest it should.

Kenya Airways remains an example of a successful airline privatization and shares are now traded across the entire region with over 75.000 institutional and individual shareholders on the company register. KQ has largely posted profits since it was ‘sold’ but for the extremely difficult years during the global economic and financial crisis, when the world’s aviation industry sank into unprecedented depths of losses not seen since 9/11 had turned airline accounts into scarlet red reading material.

During privatization, incidentally spearheaded by British Airways Speedwing Consulting, KLM at the time emerged as the most potent bidder and subsequently acquired a 26 percent stake before taking ‘the Pride of Africa’ on an unprecedented journey of success.

However, the initial KLM management team and subsequent managers then chosen have since made way for a largely Kenyan team at the helm, presently headed by Dr. Titus Naikuni, who have done Kenya and Africa proud by continuing the success stories written by their predecessors since 1996 and being living evidence that privatization, when done smartly, can actually work and bring about huge benefits.

The Kenyan government’s decision to fully take up their share entitlement will cost them nearly 60 million US Dollars but is thought to be a strategic investment – incidentally a profitable one considering the financial returns through dividends – aimed to cement Nairobi’s regional superiority as THE leading East African aviation hub. As reported here in the past in related articles, Kenya Airways’ hub airport of Nairobi is currently undergoing expansion and modernization and it is understood from usually reliable sources that this will include a dedicated new terminal for Kenya Airways and their Sky Team alliance partners alongside a second runway, which will boost Nairobi’s standing as a fully functional twin runway airport and create capacity for more airlines to commence flights to Kenya. Primary targets here are carriers from the Far and South East but also from North America where commercial demands are now gaining the upper hand over obscure aviation safety issues past American administrations had with Kenyan airports.

Meanwhile though is the immediate financial future for Kenya Airways looking stronger than ever before and this correspondent in particular is always happy to walk on the red carpet when flying with ‘the Pride of Africa’ – taking me places.

Source: Wolfganghthome's Blog

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