Kenya Airways #ticker:KQ stock jumped 11 per cent higher last week after the announcement that the airline will launch direct flights to the US later this year.
The gains last week saw KQ’s market cap rise by Sh9.7 billion to Sh98.3 billion.
KQ, as the airline is known by its international code, announced last Wednesday that it would start daily flights between Nairobi and New York in October, with tickets already on sale.
The airline’s stock closed Friday at Sh17.30 a share, up from Sh15.60 at the beginning of the week.
The gains were mainly recorded on Thursday and Friday, indicating that they were as a result of the corporate announcement, which promises to have a positive impact on the struggling airline’s revenue.
“Kenya Airways joined the day’s top gainers on the news of the expected direct flights to the US.
“The airline’s management anticipates its daily direct flights to the United States that it launches for the first time in October to boost annual revenue by 10 per cent from 2019,” said Kingdom Securities in a market brief.
KQ operates a hub at the Jomo Kenyatta International Airport that is strategically placed between the Middle East and African countries, which it hopes will feed the US route.
The gains at the end for last week halted a three-week slide on the counter, which was cooling off from the steep jump seen in mid-November inspired by the successful completion of a balance sheet restructuring plan by the government and a consortium of local banks, who swapped debt for equity.
The renewed gains of the share is welcome news for thousands of retail shareholders whose holding in the company was cut by a factor of four in the debt swap deal.
These shareholders effectively need the stock to hit at least Sh21 to break even and return their value in the company to the level it was at before the deal.
The deal meant that an additional 4.2 billion shares in the airline were issued to the creditors taking the number of issued shares to 5.68 billion, resulting in a huge rise in the airline’s market capitalisation.