Kenya Airways is on course for a State-takeover after a bill to guide the process was tabled before Parliament on Thursday. This now sets in motion a buyout of shareholder and conversion of bank shares into government Treasury bonds.
Under the “National Aviation Management Bill 2020”, the National Assembly will start the debate on the takeover process set to end by October. The Bill also includes the national carrier’s intended future operations as a subsidiary under the Aviation Investment Corporation.
“We are ready to complete the transaction once Parliament passes the Bill. A lot of work has been done in the background, including striking an agreement with KLM and talks are advanced with banks on the conversion of their equity to bonds,” reveals Treasury Secretary Ukur Yatani.
According to the Bill, the nationalization will Parliament set aside Sh800 million to purchase shares from a consortium of minority investors at a premium rate. Local banks with a 38 percent stake(Sh5.38 billion) at the national carrier are paid through government credit in the form of Treasury bonds.
The nationalization move will see Kenya emulate Ethiopia, which runs its air transport assets under a single firm that receives incentives on engines, fuel, and maintenance.