The long awaited launch of Kenya Airways share rights issue yesterday in Nairobi was graced by the presence of President Mwai Kibaki, who in his keynote address called this financial transaction the biggest ever in the history of Kenya and the Eastern and Central African region before soundly endorsing Kenya Airways plans to embark on a major expansion drive, the intended 250 million US Dollars are expected to co-finance. He went on to say that Kenya Airways was the fastest growing airline on the African continent, prompting KLMs CEO Peter Hartman to publicly throw KLM / Air Frances support into the public domain too: The decision by the government to take up [their] rights gave KLM [the] confidence to do the same.
The unequivocal support by President Kibaki, who threw the weight of his government behind Kenya Airways, resulted in an immediate result when shortly after the function the International Finance Corporation announced that it would fully subscribe to their 25 million US Dollar share rights, and in addition finance a further 80 million US Dollars in additional debt / loans to help The Pride of Africa accomplish their plans in doubling their fleet in the medium term before embarking on the next stage, which by 2020 would see the fleet size triple compared to the 34 aircraft now in operation.
This announcement follows the previous commitment of KLM / Air France, holding 26 percent of the shares, and the Government of Kenya, holding 23 percent of the shares, to fully take up their combined 49 percent as well as other institutional shareholders in the run up to the function, propelling the start up take up ahead of the sale commencing on Monday to over 70 percent already, leaving only 30 percent of the new shares on offer to be sold and that should be easy according to a staff member of Standard Investment Bank. Financial analysts and other bankers present at the function also expressed their confidence that they expected this share issue to be oversubscribed, in particular with key shareholders already expressing their confidence in the future of the airline by making public announcements in support.
Presently some 60 percent of all shares issued are owned by Kenyan institutional and individual investors and the company shares are cross listed on all three major East African stock exchanges in Nairobi, Kampala and Dar es Salaam. This is the first time Kenya Airways came to the capital market since its IPO in 1996, which was equally oversubscribed at the time.
While at the function it was also learned that KQ will increase their daily frequencies to Zanzibar with double daily flights on weekends, to meet growing demand for travel to the Spice Island. Within Kenya the airline will also commence daily flights to Eldoret, using one of their Embraer 170 aircraft, effectively then covering all four international airports namely Nairobi JKIA, Mombasa, Kisumu and from midyear onwards Eldoret. This will be the fifth domestic destination considering KQ is also flying daily to Malindi.
On the fleet development front a senior airline official confirmed that another Embraer 190 will join the fleet in May this year before from July onwards the delivery of 9 more E190 is expected in monthly intervals. 2013, according to the same official, will be the year of the B737-800 when 10 such aircraft on order are expected to be delivered to Kenya Airways, before in 2014 the big expansion drive with wide bodied aircraft commences, seeing the long awaited B787 Dreamliner and several more B777 boost Kenya Airways long haul capacity.
Big plans by The Pride of Africa and big news for the readers as I report live from Nairobi. Watch this space.