Kampala, Uganda — Kenya Airways shares have been suspended from trading for an additional year from 5 January, according to a statement from the Nairobi Stock Exchange.
The airline was first taken off the stock exchange in 2020 following the government's plans to take full ownership of the carrier as the Covid-19 pandemic decimated the global aviation industry. But the shares will stay off the market pending a restructuring which the government now hopes will lead to a sale to private investors.
"The extension of suspension seeks to enable the company [to] complete its operational and corporate restructure process," the Nairobi Securities Exchange said in a statement on Wednesday.
The government started a restructuring process to get the carrier out of its dire financial straits ahead of a potential sale of the airline. In 2022, 16 routes were cut and aircraft lease deals have been renegotiated.
The airline, led by CEO Allan Kilavuka, plans to cut its fleet from 32 planes to 27 and further optimise its network to cut 12 loss-making routes.
Privatisation plans
Since taking office in September 2022, President William Ruto has dropped plans to increase the government's 48.9% stake in the company, 7.8% of which is owned by Air France-KLM, and the rest by private owners and banks.
Last month, Ruto said the government was ready to sell its entire stake in the airline as it was no longer willing to support the company. Kenya's National Treasury says it will spend $283m to support Kenya Airways in the financial year 2022/23, causing a significant strain on the state budget.
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"I'm willing to sell the whole of Kenya Airways Plc," Ruto told Bloomberg while meeting with top executives of US airline Delta Air during the US-Africa Leaders Summit held in Washington DC in December.
According to Africa Intelligence, Ruto recently formed a team aimed at meeting investors who are interested in taking over the government's stake.
"The government is looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, whatever form it takes," Ruto said.
"I'm not in the business of running an airline that just has a Kenyan flag, that's not my business," he said.
Although the company was the fifth busiest African airline in 2021, with almost 1.5m passengers carried throughout the year, revenues over the first six months of 2022 were just 20% of the corresponding pre-pandemic 2019 level.
The restructuring of the airline is part of a fiscal consolidation plan agreed with the IMF in December which unlocks $447.39m in support.
"Addressing vulnerabilities at Kenya Airways and Kenya Power and Lighting Company is urgent, along with strengthening the governance framework for state-owned corporations," said Antoinette Sayeh, deputy managing director of the Fund.
