Kenya Airways (KQ, Nairobi Jomo Kenyatta) has decided not to sell shares to a strategic partner as part of its recovery strategy but instead seeks an investor to inject additional capital into the airline, according to CEO Allan Kilavuka.

Speaking to the East African newspaper, Kilavuka clarified that despite the Kenyan government's willingness to sell its 48.9% stake, the airline wants an investor to inject additional capital rather than buy existing shares.

"We are seeking an investor who doubles up as a complementary growth partner. Engagements and talks with potential investors are ongoing, and we hope to finalise this by the end of the year," Kilavuka said. "So, it is not about government divestiture; it is about additional investment."

The investment would be the second phase of Kenya Airways' Project Kifaru turnaround plan, which aims to stabilise the airline financially within three years by boosting operating profits and ensuring sustainable growth. "Our stability is anchored on strengthening the balance sheet and ensuring that the cash flows and revenues are stable. We project achieving this in three years' time," Kilavuka said.

Phase One of the plan involved improving the airline's operating profit, with a target of breaking even by 2024. In June 2023, Kenya Airways recorded a net loss of KES21.7 billion Kenyan shilling (USD 168.2 million) despite achieving its first operating profit of KES998 million (USD7.7 million) in the same period. The airline's restructuring and financial recovery are integral to Kenya's USD4.43 billion programme with the International Monetary Fund (IMF).

Kenya Airways is talking to a range of airlines and hopes to tie up a partner by the end of 2024. The carrier is part of Skyteam, whose prominent member Air France-KLM's share was 7.76% as of December 2023 following a previous privatisation initiative. The government now owns 48.9%, KQ lenders (a consortium of 10 Kenyan banks) own 38.1%, and minority shareholders (75,000 individuals) 2.8%.

The government had previously considered nationalising Kenya Airways but abandoned this plan in 2021. Historically, the government and local banks have converted debts into equity to support the flag carrier. It could receive a further KES1 billion (USD7.7 million) in state funding for the financial year 2024/25 after the state serviced its guaranteed debt of KES17.4 billion (USD135 million) on behalf of Kenya Airways in the third quarter of the 2023/24 financial year ending March 2024.

Kenya Airways continues to pursue a Pan-African airline alliance with South African Airways, which is also seeking a strategic partner again after abandoning its privatisation attempt with the Takatso Aviation Consortium.