After 24 years, Kenya’s National airline will cease being privatized after The National Aviation Management Bill 2020 was tabled in the National Assembly in a bid to guide the sale of Kenya Airways (KQ) to the State.
The Bill will also set the stage for buying out of minority shareholders at a premium and converting shares held by banks into Treasury bonds.
The state wants to take back full control of the national carrier by October.
KQ has been sinking into losses since 2014, the airline is currently 48.9pc government-owned and 7.8pc is held by Air France-KLM, which had the option of selling its stake to the government and has opted to exit and remain as a technical partner for the airline.
Treasury Secretary Ukur Yatani has said the government is ready to complete the transactions once Parliament passes the Bill. “A lot of work has been done in the background including striking an agreement with KLM and talks are advanced with banks on the conversion of their equity to bonds.”
The government has reached an agreement with Air-France KLM on the offer price, it will be a premium on the carrier’s prevailing trading price. The minority shareholders, who hold about 2.8pc of the shares currently valued at Sh397 million will also be bought out at the same price.
“We have already developed a formula for valuing the shares owned by the minority shareholders,” Solomon Kitungu, the Principal Secretary at the Ministry of Transport says.
“We cannot make it public before we share with CMA (Capital Markets Authority) because Kenya Airways is a listed firm.”
Under the National Aviation Management Bill 2020, Kenya Airways will become one of three subsidiaries in an Aviation Holding Company together with the Kenya Airports Authority.
Nationalization is expected to exempt Kenya Airways from taxes on engines, maintenance, and fuel, allowing it to sell cheaper tickets, Mr. David Pkosing, the chairman of parliament’s transport committee says.
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