Kenya Airways on Friday launched 250 million U.S. dollars rights issue to raise funds to increase its fleet and expand the air route network to link Nairobi to all African countries and the rest of the world.
The national carrier is seeking to raise the money the Nairobi Securities Exchange (NSE) to fund its expansion plans that will see it more than double the number of its aeroplanes to 115 in the next ten years.
The company said it will also take bank loans to finance the ten-year expansion plan that will cost 3.6 billion dollars when completed.
The rights issue has already attracted 49 per cent subscription after the Kenya government that owns 23 per cent of the company and the KLM that owns 26 percent of the company said they will take all their rights.
President Mwai Kibaki who launched the fund raising process said the expansion besides improving inter-connectivity will allow flexibility in movement of both cargo and passengers.
Kenya Airways plans to double its fleet numbers from the current 34 planes to 68 through the expansion plan.
"Efficient aviation infrastructure facilitates internal and external trade through the quick movement of passengers and cargo.
"The government is committed towards making investments in air transport infrastructure across the country," he said during the launch of the Kenya Airways Rights issue in Nairobi.
The president challenged Kenyan airports authority to hasten expansion of Jomo Kenyatta International new passenger terminal Unit 4 to enhance the national carrier’s capacity to meet increased traffic demands.
Kibaki urged Kenyan airports authority to involve other private sector players under Private Public partnerships to fast-track expansion of all airports and related infrastructure.
Transport Minister Amos Kimunya expressed government’s commitment to implement policies geared towards the realization of a well regulated air transport sector.
In order to consolidate Jomo Kenyatta International Airport’s position as regional hub of choice for airlines operating in the continent, Kimunya said the government was not only expanding and modernizing infrastructure in the airport but was also seeking to acquire Category One status to facilitate direct flights from Nairobi to the United States.
He affirmed that the government supported the national carrier’ s rights issue to ensure the undertaking is not only successful but also guarantee expansion of the airline attainment and even surpassing of the company’s targets.
The Chairman of the Kenya Airways Board Evanson Mwaniki said the airline had made Africa its strategic focus owing to growing trade between Africa and the rest of the world.
During the event, Kibaki challenged investors to take a greater business and social advantages to reap benefits from the millions of travelers who transit through the country annually.
"Today, Kenya Airways remains the fastest growing airline on the African continent and is pursuing an ambitious network expansion strategy to link all African countries with the world," Kibaki said.
"Through this, Kenya Airways has made Nairobi, a regional air transport hub allowing for quick connections to most African cities," he said.
He noted with appreciation that through well chosen alliances and partnerships, Kenya Airways has dominated the African continent skies with the airline’s convenient regional and international connections becoming the lifeline for travelers from Africa and the rest of the world.
Kibaki affirmed that for Kenya Airways to achieve its ambitious growth plan, the national carrier needed to mobilize significant financial resources both in the form of debt and equity to invest in new planes and other facilities.
"The rights issue we are launching today will be East Africa’s largest Rights Issue. Kenya Airways is our national flag carrier airline.
"To retain this status, Kenyans have to continue to own more than 50 percent of the airline’s shares," he said.
Saying the government and other Kenyan investors ownership of about 60 percent of Kenya Airways shares offers them the priority to buy 886 million of the 1,477 million shares on offer, Kibaki emphasized that it was imperative for the Kenyan investors to take up the new shares offered to them.
"The government of Kenya and KLM have committed to take up their full entitlement in the Rights Issue.
"I hope that you will join us in investing in Kenya Airways and help turn its renewed dreams into reality," he said.
Kenya Airways Group CEO Dr. Titus Naikuni said since it was privatized, Kenya Airways has been a successful airline and managed to grow its revenue to one billion dollars.
"We are seeking to raise funds to finance acquisition of aircraft that will join our fleet in 2014. So far, we have had positive reaction from the market," said Naikuni.
Royal Dutch KLM CEO Peter Hartman thanked the government for supporting the rights issue.
"The decision by the government to take up rights gave KLM confidence to do the same," he said.
Source: http://www.coastweek.com
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