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HomeWealthGov’t Seeking Foreign Investor To Buy Controlling Stake In KQ

Gov’t Seeking Foreign Investor To Buy Controlling Stake In KQ

New details have indicated that Kenya Airways (KQ) will seek a foreign investor to buy a controlling stake in the airline in a bid to make profits.

Treasury Principal Secretary nominee Chris Kiptoo noted that the government will count on the investor to inject capital into the national carrier and provide management expertise.

The move is expected to offer KQ aviation expertise and reduce its reliance to the government for money to run the airline.

“It is time to relook the national carrier and ensure that it continues to operate without government support. We need to bring in a strategic investor,” Kiptoo said.

If the plan goes through, this means that the government will reduce its shareholding from 48.9 percent to a 38 percent stake.

At the same time, Air France-KLM which owns a small stake in KQ will sell its remaining 7.76 percent stake.

In 1995, KQ sold 26 percent stake to KLM and sold a further 22 percent stake to local shareholders through an initial public offering in 1996.

However, KLM is seeking to sell its remaining stake in KQ after the government opted to nationalise the airline.

Elsewhere, the government wants KQ to be split into various subsidiaries in a State-backed restructuring plan in a bid to return the airline to profitability.

According to Roads, Transport and Public Works CS Kipchumba Murkomen, the reforms will lead to the breaking of airline along its main business lines of cargo and passenger.

The CS noted that that Nairobi is the leading cargo destination in the region yet KQ controls only 10 percent of cargo market share.

“We need to separate cargo from passenger services so that KQ benefits from the business. We intend to create subsidiaries in KQ. We need to have a passenger airline, cargo airline and charter airline

“We might also need KQ to have other businesses on the side like drone services and surveying services as one way of raising revenue,” Murkomen said.

The airline’s main business lines; cargo, passenger and handling are all in losses of KSh 4.5 billion, KSh 1.74 billion and KSh 166 million respectively.