Etihad in talks to buy KQ’s single largest shareholder

By AGENCIES

KLM, Kenya Airways’ largest shareholder, is in talks with Abu Dhabi-based Etihad Airways to sell it an undisclosed stake.

The financially struggling Air France-KLM is currently carrying out a major cost-saving programme after posting a loss of 809 million euros (Sh85 billion) for 2011 and a first quarter net loss in 2012 of 368 million euros (Sh38 billion).

A Netherlands newspaper, De Telegraf, reported on Wednesday that Etihad Airways was in talks to buy a stake in the Franco-Dutch company, which is Europe’s biggest airline.

“Etihad is still staking out Air France-KLM,” the daily said, adding that “the course is set” for a buy-in.

Air France-KLM owns 26 per cent in Kenya Airways (KQ), making it the largest shareholder ahead of the government of Kenya which controls 23 per cent.

However, it is expected that this shareholding structure will change tomorrow after the national carrier announces the results of its just ended rights issue.

Kenya Airways was fully owned by the government of Kenya until April 1995 before it was privatised in 1996, a deal which saw Air France-KLM acquire a 26 per cent stake.

The World Bank’s investing arm, the International Financing Corporation (IFC), will also be joining the list of large shareholders tomorrow with a 7.4 per cent buy-in.

It is not yet clear if the deal will have any significant change on the current board members of Kenya Airways and its partners. In April, Etihad Airways launched its first direct flight from Abu Dhabi to Nairobi.

The airline noted that this was the first step to increase its presence in Africa, posing direct competition to Kenya Airways, which draws much of its business by connecting African countries.

A spokesman KLM told De Telegraf that collaboration talks were still on, but did not give specifics.

Qatar Airways is also interested in taking a stake in the European airline, but has been kept on the sidelines for now, De Telegraf said.