Kenya Airways Seeks Strategic Equity Partner to Raise Up to $1.5 Billion for Recapitalization
Kenya Airways is actively engaging with various airlines to secure a strategic equity partnership, aiming to raise between $1 billion and $1.5 billion. This capital injection is vital for the flag carrier to exit its negative equity position, repay debts, and support future growth, as outlined by CEO Allan Kilavuka in discussions with the China Global Television Network (CGTN).
Facing fiscal limitations on government support, the Nairobi-based airline is casting a wide net for a partner that can complement its operations without specific geographical preferences. “We’re looking for an airline that is going to complement us, an airline that understands the industry well. We have no specific preferences in terms of origin or the partners, but we’re talking to a wide range of them,” Kilavuka stated, emphasizing the importance of alignment in network, fleet, and growth strategies.
The search for a suitable partner is expected to conclude by the end of 2024, according to Business Day Africa. Kenya Airways, a member of the Skyteam alliance, counts Air France-KLM among its shareholders, holding a 7.12% stake following a privatization effort.
Despite traditionally relying on the Kenyan National Treasury for financial backing, the airline has not received direct state support in the past year due to budgetary constraints. However, Kilavuka acknowledged the government’s strategic view of the airline and its encouragement of cost optimization efforts. This comes as Kenya Airways posted its first operating profit in six years for the fiscal year ending December 31, 2023, highlighting a significant turnaround in its financial performance.
The airline’s strategic move involves fleet optimization, including the addition of four B737-800s and the gradual replacement of its Embraer E190 fleet. Kilavuka highlighted the necessity of simplifying the fleet and acquiring higher-capacity aircraft to address limitations posed by the current Embraer models, particularly in terms of luggage capacity.
Furthermore, Kilavuka reiterated his commitment to establishing a pan-African airline alliance, with Kenya Airways and South African Airways as key players, despite delays caused by SAA’s privatization challenges. This alliance aims to overcome the fragmentation within the African aviation market, fostering scale and efficiency across the continent.
As Kenya Airways navigates these strategic initiatives, its pursuit of a robust equity partnership and fleet optimization strategy underscores the airline’s commitment to long-term growth and competitiveness in the global aviation industry.