Africa: Kenya Airways, South African Airways Delay Pan-African Airline Formation For Recapitalisation

The establishment of a Pan-African Airline, scheduled to take shape this year, has been delayed as the two carriers intended to form the alliance are seeking to recapitalise.

Kenya Airways [KQ] and South African Airways [SAA] announced the establishment of the highly anticipated Pan-African Airline Group this year, following the initial proposal of the plan three years ago.

Last year, Kenya Airways disclosed the initiation of the second phase of the partnership framework between the two airlines, a crucial step that would pave the way for the formation of the new aviation group.

Despite the persistence of the plans, the timeline has been adjusted due to the ongoing recapitalisation efforts by both carriers.

“The plans are still on but will be delayed because we are recapitalising this year, and I believe so is SAA,” Allan Kilavuka, CEO of Kenya Airways told Business Day Africa.

To facilitate the recapitalisation, Kenya Airways has extended an invitation to external investors, including existing ones interested in increasing their stake.

This initiative, dubbed “Kifaru 2,” aims to inject fresh capital into the airline’s operations.

The airline is actively working to restructure its balance sheet, leveraging recent improved performance, which included reporting a $6.79 million operating profit in the first half of 2023–its first in six years, marking a 120 percent improvement compared to the same period in 2022.

Similarly, South African Airways has been in pursuit of a strategic investor since resuming operations in 2020 after a period of financial challenges led to a halt. Notably, the carrier received crucial approval for the sale of a 51 percent stake to the Takatso Aviation consortium, the government’s preferred partner.

Led by Harith General Partners, an asset management firm, the consortium is set to acquire a controlling 51 percent stake in SAA Group, injecting $167 million into the carrier’s operating capital.

The strategic partnership framework between Kenya Airways and South African Airways was initially signed in South Africa in November 2021, witnessed by President Cyril Ramaphosa and former President of Kenya Uhuru Kenyatta.

The collaboration aims to consolidate assets, enhancing connectivity for both passenger traffic and cargo, and providing passengers with more affordable fares and diverse flying route options.

Source: Business Day Africa [Nairobi]