Kenya Airways (KQ) shares will resume trading on the Nairobi Securities Exchange this week after nearly four-and-a-half years of suspension, sources said, handing a relief to thousands of investors who have been unable to liquidate their portfolios when they wish to.
The Business Daily has established that the Capital Markets Authority (CMA) has opted not to renew the latest year-long suspension which lapsed on January 5, 2025.
This move comes on the back of the airline's first profit in a decade, with net earnings closing the half year ended June 2024 at Sh513 million.
KQ’s rebound to profitability was buoyed substantially by the government’s decision to take on its largest foreign currency debt, Sh88 billion owed to the US Exim Bank, and on-lending it to the airline in local currency and with longer tenure therefore granting the company breathing space from a finance costs perspective.
The lifting of the suspension also comes amid a legal tussle between the CMA and a KQ shareholder Mihr Samir Thakar who has filed a petition at the Capital Markets Tribunal challenging the January 4, 2024, year-long extension of the suspension of trading in the airline’s shares.
Among those expected to reap from the resumption of KQ shares trade at the Nairobi Securities Exchange (NSE) are the 75,000 retail investors holding a minority 2.8 percent stake in the company and scouting for avenues to liquidate.
The KQ share price stood at Sh3.83 at the time it was first suspended from trading in July 2020 following the tabling of the Kenya Aviation Management Bill of 2020 in the National Assembly, a proposal that sought to consolidate aviation assets in the country, including KQ and the Kenya Airports Authority, into one holding company.
Going this route would have translated into re-nationalisation of the airline and therefore de-listing it from the NSE.
The plan to consolidate aviation assets, however, collapsed as the government opted to pursue alternative routes to steer KQ back to sound financial footing. Among the options considered was a joint venture arrangement with South African Airways (SAA) in pursuit of a Pan-African airline.
The quest for a Pan-African airline came in the wake of aggressive inroads by competitors, including the acquisition of a 25.0 percent stake in South Africa’s regional carrier, Airlink, by Qatar Airways and Ethiopian Airlines’ acquisition of a 49.0 percent stake in Air Congo.
Whereas the conversation of a joint venture with SAA seems to have been relegated to the back burner, KQ maintains that it is still part of the airline’s long-term strategy.
“This is a long-term play. The most sustainable airline in Africa will be the one that adopts the Pan-African airline strategy. The plan is stalling because both KQ & SAA are going through their own restructuring. The only question we now have is at what point do we actually engage the joint venture,” KQ chief executive officer Allan Kilavuka, told the Business Daily in September on the back of the 2024 half-year earnings.
In the latest development to strengthen KQ’s financial position, the airline’s second-largest shareholder, KQ Lenders 2017 Ltd, has been offered a 6.5-year tenure Sh19.3 billion bond as part of the ongoing balance sheet restructuring aimed at further easing the debt load held by the company.
KQ Lenders 2017 Ltd, a consortium of banks comprising Equity Bank, KCB Group, Cooperative Bank, Diamond Trust Bank, NCBA Bank, I&M Bank, and Ecobank became the second largest shareholder in the airline in 2017 following the conversion of $167 million (Sh21.63 billion) debt to equity which gave the consortium at a 38.1 percent stake.
KQ is also reported to be in the final stages of onboarding a strategic investor who will pump in capital to aid in curing the debt headache as well as catalyse investment in fleet upgrades.
Whereas the management of KQ remains tight-lipped about the size of capital injection it is eyeing from the strategic investor, the Sh123.6 billion negative equity gives an indication of the scale of financing the airline requires to address the debt hole the airline is grappling with.
