Kenya Airways Ltd.’s proposed $600 million bailout may increase the African country’s holding in the carrier while diluting the 27 percent stake held by Air France-KLM, a senior government official said.
Kenya and the Paris-based airline are the two biggest shareholders in Kenya Airways, which posted a record full-year loss at the end of last month. The government is reviewing its partnership with Air France-KLM and may increase its 30 percent holding if a capital injection dilutes the other principal shareholder, Treasury Secretary Henry Rotich said in an interview Wednesday on Citizen TV, a Nairobi-based broadcaster.
The airline needs about $600 million for the business to recover, Rotich said. Kenya Airways, sub-Saharan Africa’s third-largest carrier, said July 30 it will borrow $200 million and sell assets after posting a full-year loss of 25.7 billion shillings ($254 million), the biggest in the nation’s corporate history.[pro_ad_display_adzone id=”70560″]
Air France-KLM spokeswoman Ulli Gendrot said the company has no comment.
A bailout would include a mixture of debt and equity and depend on a turnaround strategy expected to be presented by the airline’s management shortly, Rotich said. The recent financial results will make it difficult for the carrier to access long-term debt, he said.
The Kenyan Treasury agreed to a 4.2 billion shillings bailout for Kenya Airways earlier this year, the Nairobi-based Business Daily newspaper reported May 28.
The airline hired African Export-Import Bank to help raise long-term capital and refinance the business, Chief Executive Officer Mbuvi Ngunze told reporters July 30. It expects to raise a further $100 million from the sale of land in the city and seven of its 52 aircraft, Chief Financial Officer Alex Mbugua said at the time.
Kenya Airways shares rose 3.9 percent to 5.30 shillings by the close in Nairobi, paring the decline this year to 39 percent.(Bloomberg)