Kenya Airways is talking to “about three or four” foreign institutional investors and airlines about buying a stake to raise cash for the lossmaking carrier, its chief executive said on Monday.
The airline, 27 percent-owned by Air France KLM, has been reducing the size of and modernising its fleet, selling land and cutting jobs to recover from losses caused by a slump in tourism.
“We are talking to about three or four parties,” Mbuvi Ngunze, the CEO of Kenya Airways, told Reuters.
The search for a strategic investor is part of a plan, drawn up with the help of U.S. investment bank PJT Partners, to raise new debt and equity funds.
Ngunze did not say how much they planned to raise but the company previously said it would need about 70 billion shillings ($692 million).
The carrier is also talking to its creditors, including banks, to amend terms of its debt and provide it with sufficient funds for operation in the short term, he said.
The Kenyan government, which has a 29.8 percent stake, said it was still examining the proposals for recapitalisation.
“There is ongoing work to determine the nature of the restructuring that is going to take place,” said Esther Koimmett, the public investment secretary without offering more details. No one at Air France KLM was immediately available to comment.
Ngunze said they were encouraged by the interest the business has received from potential suitors, attributing it to Nairobi’s status as a major African hub airport.
Kenya Airways has an extensive route network on the continent, operating numerous flights a week to cities like Lusaka in the south and Accra in the west.
“We have a fantastic business across Africa … Africa is where things will grow and it shows you that people have an interest in the business of Kenya Airways in spite of the fact that we have had these hurdles,” he said.
Forward Keys, a firm that predicts future travel patterns by studying bookings, said last week air travel to Kenya was up 14.9 percent in the first eight months of this year, outpacing a 5.6 percent growth rate for the entire continent.
Ngunze attributed the higher demand to some recovery in tourism in Kenya after a spate of Islamist attacks since 2012 had deterred holidaymakers, and more international meetings being hosted by the country.
Kenya’s attractions have also been highlighted by several famous visitors this year, including music superstar Madonna, who enjoyed a holiday in the summer, and Facebook founder Mark Zuckerberg, who went on a game drive during a visit earlier this month.
Ngunze cautioned, however, that there was a lot that still needed to be done before the sector can fully recover.
“We are still significantly behind where we wanted to be,” he said. “We have to be patient.”
($1 = 101.1500 Kenyan shillings)