Kenya Airways’ shares trading suspension has been extended until April next year owing to delays in finalising the nationalisation plan.
Nairobi Securities Exchange (NSE) on Friday said the national carrier was yet to finalise its operational and corporate structure for the government buy it out, following publication of National Aviation Management Bill, 2020 on June 18.
KQ, as the airline is known by its international code, had in July applied and was granted suspension by Capital Market Authority after filing the Bill to the Parliament, that is if passed, would see it become a State-owned entity.
The suspension was for a duration of three months and was to end in October 3.
The bill has faced delays after Parliament stopped debate on the buy-out process owing to claims that it lacked input of Kenyans and other stakeholders in line with the Constitution.
The extension means now shareholders will be unable to buy or sell their stake for nine months.
"The extension of suspension from trading the company’s shares will remain in force for an additional six months, with effect from October 4, 2020," NSE said.
Withdraw the bill
The bill was meant to see KQ – 48.9 percent State-owned, 7.8 percent held by Air France-KLM and 38 percent by local lenders – assume the structure adopted by its regional competitors, and help it turnaround to profitability.
KQ has in the past expressed fears of losing market share to airlines such as RwandAir, Ethiopian Airline and Air Tanzania that receive funding from their respective governments.
The airlines have raised competition for the struggling local airline that posted a Sh12.98 billion net loss due to increasing operating costs.Under the bill, KQ will join two other subsidiaries – state corporation, Kenya Airports Authority and Jomo Kenyatta International Airport (JKIA)-to form Aviation Holding Company.Meanwhile players in the aviation industry are opposed to the Bill that they say will promote unfair competition.In its submissions to Parliament, the Kenya Association of Air Operators’ argues there are many contributors to sector in the country and thus proposals that only favour the airline are biased. They want Parliament to withdraw the bill."The benefits that will accrue to Kenya Airways from the proposed Bill must accrue to other players, "KAAO argues.