Kenya Airways is leaning towards favouring a major airline considering acquiring a stake in the Nairobi-based carrier, which could inject at least $1 billion into the company, according to knowledgeable sources.

Multiple global airlines boasting robust financial capabilities are eyeing a stake in Kenya’s flagship carrier, which is racing against time to secure a new investor before year-end.

In 2022, during a meeting with Delta Airlines’ management in the US, Kenya’s President William Ruto signaled Kenya’s willingness to divest its entire 48.9 percent stake in the national carrier. Delta Inc is the largest US carrier by market value.

Business Day Africa has learned that numerous investors other than airlines have also expressed interest in acquiring a stake in Kenya Airways, but the carrier showing a preference for a foreign airline.

“We have received a number of expressions of interest from several entities including airlines, but we mainly think that it would be an airline that will get preference,” disclosed a source familiar with the matter.

This publication understands that Kenya Airways is seeking a financially robust foreign airline as a strategic investor in its national carrier, aiming to leverage expertise and reduce reliance on Treasury funding for operational needs.

The airline is seeking a minimum injection of $1 billion to extricate itself from negative equity, which currently plagues it. Its total liabilities swelled from Ksh108 billion in 2022 to Ksh136 billion, primarily attributed to persistent losses.

The airline plunged into insolvency in 2018 following an ambitious expansion drive that left it saddled with millions of dollars in debt.

With the Kenyan government owning a 48.9 percent stake and Air France-KLM holding 7.8 percent, private owners and bankers control the remaining shares.

To facilitate the recapitalisation effort, Kenya Airways has extended invitations to external investors, including current stakeholders interested in boosting their holdings.

Dubbed “Kifaru 2,” this initiative aims to infuse fresh capital into the airline’s operations. The airline has actively been working to restructure its balance sheet, leveraging recent improved performance, which included reporting a Ksh10.5 billion operating profit in 2023—its first in seven years.

gandae@businessdayafrica.org