Kenya Airways (KQ) largest shareholders including government of Kenya and KLM airliner have this Friday approved the Rights Issue plan for the company. KQ currently has approximately 76, 000 shareholders globally.
This will be done through raising the additional capital by way of a rights issue to finance the airline’s 10-year expansion plan.
The agreement upon the plan was reached during the 35th Annual General Meeting (AGM) held in Nairobi-Kenya paving way for KQ to acquire additional aircraft to drive its fleet and route expansion program as the company seeks to consolidate its presence on the African continent.
KQ Chairman Evanson Mwaniki said,“The Rights Issue is critical to growth and expansion plans of the airline. The Board believes that, for KQ to grow its fleet and route network, it’s necessary to raise additional capital.”
“We want to grow our presence in Africa and Asia and tap into key routes before our competitors. We cannot do so without additional aircraft and therefore need more capital considering that aircraft are expensive assets,” Mwaniki explained to shareholders.
He also announced that the government of Kenya and KLM, two key shareholders, had already confirmed that they will be taking up their rights once the process receives a regulatory nod.
KQ Managing Director and CEO, Dr. Titus Naikuni said the funds raised would be used to finance aircraft acquisition.
Shareholders also approved an increase in the authorized share capital of the Company from Ksh5 billion to Ksh10 billion to enable the company go ahead with the Rights Issue.
Local shareholders control 74% of the airline, and during the meeting, shareholders approved a first and final dividend of Sh1.50 for the financial year ended 31st March 2011.
In this regard while speaking to igihe.com in Nairobi, Naikuni challenged Rwandans to take part in buying KQ shares. “Rwandans should be part of the shareholders.”
The committee that convened after the general meeting in a closed session further approved a change to the company’s articles of association to include providing advanced training and education in relation to the aviation industry.
KQ has invested over Ksh2 billion in a simulator used to train local and foreign pilots at its Pride Center in Embakasi, Nairobi.
Responding to volatile fuel prices, Naikuni said the airline had put in place adequate measures to mitigate the rising cost of fuel through fuel and currency hedging. It’s a financial tool designed to minimize losses that may arise from sudden swings in the price of fuel in the international market.
He added that the KQ would invest more resources in training more pilots in line with the fleet expansion strategy.
Naikuni said the KQ-KLM partnership was mutually beneficial. “KLM has grown with us as an airline. We benefit from the strategic alliance with KLM by being able to fly our customers to destinations that we do not fly to directly such as North and South America.”
KQ management is currently negotiating to purchase 10 additional Embracer E190 aircraft to mainly service the African routes. KQ has also signed agreements with US-based Boeing Aircraft Manufacturing to deliver 24 new aircraft over the next five years. The first Boeing Dreamliner is expected to be delivered by fourth quarter of 2013.
Recently RwandAir, while launching its new aircraft Boeing 737-800 also announced U.S$60 million put aside by the government to acquire new aircrafts so as to boost its operations in the region and beyond.
KQ is therefore, facing a growing competition from rival regional carriers including: RwandAir, Fly540, Air Uganda, and Precision Air.
Precision Air, a Tanzania-based airliner also issued an Initial Public Offering on the Dar es Salaam Stock Exchange that started last Friday as it also sought to raise Shs44.6 billion (Tsh27 billion) capital to offset its fleet and expansion drive. The carrier offered 58,841,750 shares for sale at Shs785 (Tsh475) per share, with a minimum number of shares per application of 200 shares
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