Kenya Airways to launch rights issue on Friday

By John Oyuke

Kenya Airways (KQ) Sh20.7 billion-share rights issue is set to be launched to tomorrow as the national carrier plans to raise additional capital for expansion.

Proceeds from the rights issue are projected to fund implementation of an ambitious 10-year expansion plan dubbed Project Mawingu.

The project would see the airline increase its destinations from 56 to 115 by 2021.

According to the rights issue timetable, members who are not KQ shareholders can buy shares, which would be on offer at the Nairobi Securities Exchange (NSE) between April 2 and 18.

Airline expansion

The date for investors to qualify for the rights was set for March 19, while the offer would run from March 30 to April 27.

KQ Chief Executive Office Titus Naikuni and Group Financial Director Alex Mbugua told investors mid this month that the airline plans to buy new planes with funds raised from the cash call.

Mbugua said the Kenya Government with a 23 per cent stake, and Air France/KLM with 26 per cent shareholding have committed to take up their rights securing 49 per cent or Sh10.1 billion.

"The Government and KLM have signed irrevocable letters of allotment (to take up the shares)," he said. In addition to the Government, and locals hold 22.14 per cent, local institutions 15.12 per cent, and foreign individuals 0.72 per cent.

New route

Meanwhile, the national carrier plans to commence flights to New Delhi starting May 15, marking the route Kenya Airways’ 57th global destination and second in the India sub-continent.

The launch of the new route would provide seamless travel and accessibility to travellers from Africa to India and vice versa.

"New Delhi is the second city after Mumbai that we will be flying to India, we intend to open four more destinations in the sub-continent as part of our 10 year expansion strategy," Naikuni said in a statement.

He noted that the destination has great business prospects as New Delhi is one of the largest cities in India, and the most preferred city in terms of information technology, investments, and healthcare and government relations.

According to industry forecasts, traffic flows between sub-Saharan Africa and India are expected to grow at a rate of 7.1 per cent per annum over the next decade while the country is Kenya’s sixth largest trading partner.