Kenya Airways to Renegotiate Partnership with KLM

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Kenya’s national carrier, Kenya Airways (KQ) is set to renegotiate a pact it agreed with Royal Dutch Airlines KLM in 1995 regarding the control and directorship of the airline as KQ undergoes a restructuring process.

Prior to the restructuring plan, KLM and Kenyan Airways were the two single largest shareholders of KQ and both steered the affairs of the airline.

However, the new structure in place will see 11 banks, who are owed about Sh23 billion ($221 million) by KQ, take over the airline as well as hold a seat on the company’s board.

“The government, KQ lenders company and KLM as the principal shareholders of KQ have agreed to enter into the cooperation agreement,” read a statement by KQ to its shareholders’ states.

Reports by Business Daily Africa further show that the restructuring process will necessitate the conversion of the Sh23 billion debt of KQ to a 35.7 percent equity for the banks, making them the largest shareholders of the airline.

The 1995 joint venture agreement that allowed KQ and KLM share revenue on certain routes will now be renegotiated based on the terms of the new structure. “The JV is a commercial agreement between KLM and KQ and is independent of changes to shareholding as is happening right now,” said Mr Mbuvi Ngunze, KQ’s former Chief Executive.

Both Airlines fly a combined 45 routes which earn them an estimated revenue of $500 million.



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