Ruto wants to sell all Kenya Airways stakes to US company, Delta Air
Ruto wants to sell all Kenya Airways government stakes (48.9 percent) to US company, Delta Air
Ruto wants to sell all Kenya Airways government stakes (48.9 percent) to US company, Delta Air.
During his visit to the United States, President William Ruto met with top Delta Air Lines officials and announced the government’s bid to sell its full 48.9% ownership in Kenya Airways.
The President held a meeting with executives from Delta Air Lines Inc., the largest US carrier by market value, last Thursday.
While Kenya seeks a cash-flush foreign airline as a strategic investor in the national carrier to contribute expertise and reduce its dependency on Treasury subsidies for operational funding, Ruto declined to share details of the conversations.
“I’m willing to sell the whole of Kenya Airways Plc,” Dr. Ruto told Bloomberg News on the sidelines of the US-Africa Leaders Summit in Washington DC on Friday. “I’m not in the business of running an airline that just has a Kenyan flag, that’s not my business.”
US President Joe Biden last week hosted the US-Africa summit and will discuss the 2023 elections and democracy in the continent with about 50 African Heads of State.
According to the White House on Tuesday, representatives from over 300 American and African businesses met with the heads of various delegations to discuss investments in important industries.
“Discussions with Delta are at a preliminary stage,” President Ruto said in the US.
“The government is looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, whatever form it takes,” he added.
Delta has previously shown interest in a piece of Kenya’s air traffic.
Four weekly direct flights between Nairobi and Atlanta through Dakar were set to commence in 2009, but the airline scrapped those plans after the US Transportation Security Administration (TSA) refused to approve the new route due to “noted security weaknesses in and around Nairobi.”
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This saw Kenya summon the then-US ambassador to explain the last-minute cancellation of new Delta Air Lines flights on security fears.
In 1995, the government sold a 26 percent stake in KQ to the Dutch airline KLM. In 1996, the government sold a further 22 percent ownership to local shareholders through an IPO on the Nairobi Stock Exchange.
The deal offered KLM seats on the KQ board, the right to appoint certain executives, in particular the CFO, and act as the technical partner for the national carrier.
KLM has reduced its stake from 26.7 percent after the conversion of State debt and bank loans to equity diluted the firm’s ownership to 7.76 percent.
The multinational had expressed its desire to exit KQ when the government opted to nationalize the airline.
In 2021, Kenya Airways agreed with Air France-KLM to end a code share for Africa-Europe routes.
The national carrier has received multi-billion shilling State bailouts amid delayed recovery from a travel slump following Covid-19.
The fresh restructuring plan comes after the State dropped the favored long-term solution that was anchored on the nationalization of the airline.
The plan approved by MPs in July 2019 would have led to the delisting of the airline from the Nairobi Securities Exchange (NSE).
A law to pave the way for the nationalization of the airline, which had been proposed before the pandemic, is before Parliament.
Kenya wanted to emulate countries such as Ethiopia, which run air transport assets — from airports to fuelling operations —under a single company, using funds from the more profitable parts to support others.
Under the model approved by MPs, Kenya Airways would become one of four subsidiaries in an aviation holding company.
The others would be Jomo Kenyatta International Airport, an aviation college, and the Kenya Airports Authority operating all other airports.
The airline, which has been surviving on State bailouts since the Covid-19 pandemic, reported an Sh9.8 billion loss in August — a better performance than the Sh11.48 billion loss it recorded in the same period a year earlier.
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