KQ shares trading halt extended as airline courts South African Airways
The suspension of trading of Kenya Airways (KQ) shares at the Nairobi Securities Exchange (NSE) has been extended for a year even as the push to tie up the national carrier with ailing South African Airways gathers pace.
South African Airways (SAA) and struggling Kenya Airways are preparing to enter into a formal partnership that will give rise to a new Pan-African airline.
KQ shares were first suspended from trading on the bourse in July 2020 after the MPs started reviewing the law that will pave the way for the government to take back full control of the airline.
“The company’s operational and corporate restructure is still ongoing and the government is expected to give a clear direction on its buy-out or bail-out,” noted NSE in a statement to the public.
The airlines’ deal was confirmed by President Uhuru Kenyatta during his New Year’s speech to the country.
“To boost tourism, trade, as well as social engagement, and to bolster continental integration, our national carrier Kenya Airways will join hands with partners in South Africa to establish a Pan-African airline, with unmatched continental reach and global coverage,” he said.
Last month, Kenya dropped its plan to renationalise KQ, opting instead to protect its financial interests in a $1 billion restructuring that will include a $827 million debt take-over and a $473 million cash injection, the International Monetary Fund (IMF) noted.
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“The (Kenyan) authorities do not intend to nationalise the carrier and are considering appropriate mechanisms to protect the Exchequer’s (National Treasury’s) financial interests during the restructuring process,” the IMF added.
The KQ-SAA partnership is billed to help secure the future of two ailing carriers whose fortunes took a turn for the worst following economic fallout caused by COVID-19 on the aviation industry.
SAA spokesperson Vimla Maistry has, however, denied reports of a full merger with KQ
SAA resumed regional and domestic operations in September 2021 nearly a year after grounding most of its fleet.
The South African flag carrier had been mired in financial woes even before the pandemic hit.
On the other hand, although KQ never stopped service during the pandemic, it was only able to do thanks to roughly $100 million of government support advanced to it in 2020.
In the pandemic era, about eight airlines in Africa filed for bankruptcy as a result of the dents arising from the pandemic.
In February 2020, Air Namibia ceased operations and filed for bankruptcy after 70 years in business.
Last month, Kenya said it would pay more than $800 million of debt that KQ owed and provide another $500 million or so in budget support over the next couple of years to keep the national carrier in the skies.
While details of the KQ-SAA deal remain scanty, the move is set to see both nations’ flag carriers regain some of their long-haul options that were lost during the pandemic.
