Kenya Airways - History

History

Kenya Airways was established by the Kenyan government on 22 January 1977, following the break-up of the East African Community and the consequent demise of East African Airways (EAA). It started operations on 4 February 1977, with two Boeing 707–321s leased from British Midland Airways. The carrier also inherited two Douglas DC-9-32s and two Fokker F27-200s from EAA. In late 1977, three Boeing 707s were acquired from Northwest Orient. The following year, the company formed a charter subsidiary named Kenya Flamingo Airlines, which leased aircraft from the parent airline in order to operate international passenger and cargo services. Aer Lingus provided the company with technical and management support in the early years.

In 1985, the airline ordered two Airbus A310-300s. Kenya Airways became the first African carrier in acquiring the type, and these two aircraft were the first wide-bodies ordered by the company. Funded with a US$20,000,000 ($42,404,372 in 2012) loan, the delivery of these two aircraft was completed in late 1986. In early 1988, the carrier ordered two Fokker 50s; aimed at operating domestic routes, the airline received the first of these aircraft at the end of the year.

In 1986, Sessional Paper Number 1 was published by the Government of Kenya, outlining the country's need for economic development and growth. The document stressed the government opinion that the airline would be better off if owned by private interests, thus resulting in the first attempt to privatise the airline. The government named Philip Ndegwa as Chairman of the Board in 1991, with specific orders to make the airline a privately owned company. In 1992, the Public Enterprise Reform paper was published, giving Kenya Airways priority among national companies in Kenya to be privatised.

In the fiscal year 1993 to 1994, the airline produced its first profit since the start of commercialisation. Also, in 1994 the International Finance Corporation was appointed to provide assistance in the privatisation process, which effectively began in 1995. British Airways, KLM, Lufthansa and South African Airways, all held interest in Kenya Airways. KLM was eventually awarded the privatisation of the company, which restructured its debts and made a master corporation agreement with the Dutch airline that bought 26% of the shares, becoming the largest single shareholder since then. The Government of Kenya kept a 23% stake in the company, and offered the remaining 51% to the public; however, non-Kenyan shareholders could at most had a participation of 49% into the airline. Shares were floated to the public in March 1996 (1996-03), and the airline started trading on the Nairobi Stock Exchange. Following the takeover, the Government of Kenya capitalised US$70,000,000 ($103,730,108 in 2012), while the airline was awarded a US$15 million loan from IFC to modernise its fleet.

In June 2012 (2012-06) the company announced the issuance of rights worth KSh20 billion, aimed at increasing capital to support expansion plans. Following the allocation of shares, KLM increased their stake in the company from 26% to 26.73%, while the Kenyan government boosted their participation into the company from 23% to 29.8%, becoming the new major shareholder of the carrier.