Kenya Airways Board of Directors approves financing of new fleet
Kenya Airways Limited (Kenya Airways) today announced that its Board of Directors has approved the mandate to arrange the aircraft financing for the purchase of nine new Boeing 787-800s (Dreamliners) (B787s), one Boeing 777-300ER (B777-300ER), and ten Embraer-190 aircraft (E-190s) to the African Export-Import Bank (Afreximbank). The mandate was awarded to the Afreximbank following due consideration and assessment of several financing bids received pursuant to a request for proposals (RFPs) issued by Kenya Airways in March 2012.
The financing package consists of a pre-delivery payment (PDPs) facility and an aircraft delivery finance facility to fund the delivery of the B787s, B777-300ER, and the E190s.
The E190s are scheduled to be delivered during the 3rd quarter of 2012, whilst the B787 and B777-300ER deliveries are expected to commence during the 1st quarter of 2014 and the 4th quarter in 2014, respectively.
Commenting on the landmark mandate, Mr. Jean-Louis EKRA, President at Afreximbank said, “We at Afreximbank are truly honoured to support one of Africa’s leading carriers, Kenya Airways. The fleet expansion programme supported by the proposed financing promises to keep Kenya Airways ahead of its peers in the coming years, and more importantly facilitates intra-African trade, which is at the core of Afreximbank’s mandate. In implementing this important mandate, Afreximbank will extend its efforts towards modernisation of the African aviation sector, one of the key enablers of intra-African trade.”
In his comments, Dr. Titus Naikuni, Group Managing Director and CEO of Kenya Airways said, “Our 10 year strategy is quite robust, based on sound business projections. The new deliveries financed by AFREXIM, will serve both capacity increases as well as allow for replacement of aircrafts that are due for retirement. The Dreamliners will replace the 767s whilst the E190s will be used for capacity expansion on the Africa/regional routes. Africa is said to be the next economic growth frontier, it is therefore important to have an efficient transport infrastructure. Transport is an important component in economic development as it opens up markets allowing access to goods and services. Our Jomo Kenyatta International Airport hub is currently being expanded to effectively meet the growing traffic; the airport is centrally located to effectively open up Africa to the world.”
Kenya Airways is one of Africa’s largest airlines by both passenger aircraft count and total aircraft count. The airline was established following the breakup of the East African Community and jointly owned East African Airways in January 1977. In 1996 the Kenyan government privatized the airline with a view to ensuring its continued growth. In 1995 a strategic partnership was signed with KLM, culminating in an Initial Public Offering in 1996. Kenya Airways is a full member of the Sky Team Alliance; a global alliance of international airlines through whose network, Kenya Airways is able to reach a larger number of destinations. The Government of Kenya and KLM are the largest shareholders of the airline.
Kenya Airways recently raised Ksh14.487 Billion during its just concluded Rights Issue. The proceeds will go to financing pre-delivery payments for a fleet of nine Boeing 787-800 Dreamliner aircraft, the first of which is expected to join the airline fleet in 2014. The airline is currently implementing a 10-Year Growth Plan seeking to grow its fleet from 34 aircraft to 119 by 2021, and increase its destinations from 57 to 115 during the same period.
The African Export-Import Bank (“Afreximbank”) is a trade-finance-focused development bank that was established in October 1993 as supranational trade development institution to finance and promote trade between African countries and between Africa and the rest of the world, with its headquarters in Cairo, Egypt
As a supranational institution, the bank enjoys certain privileges and exemptions in its member states under an establishment charter that also grants the Bank a preferred creditor status in its countries of operation. The Bank was created as a profit-oriented Multilateral Development Bank (MDB), with a mixed public-private shareholder base, focusing on private sector loans, guarantees and advisory services.
The bank’s shareholder base is split in a three-tier structure with Class “A” shareholders comprising African states, central banks and public institutions, such as the African Development Bank (AfDB), Class “B” made up of African financial institutions and private investors, and Class “C” composed of non-African investors (mostly international banks and export credit agencies such as Standard Chartered Bank, HSBC, Citibank, China Exim Bank, and Exim India amongst others)
Afreximbank is rated BBB- by Fitch and Standard and Poor’s and Baa2 by Moody’s. All ratings have a stable outlook.
Caption – Mr. Jean-Louis EKRA- President Afreximbank signs the agreement for Aircraft Financing, looking on Dr Titus Naikuni – CEO Kenya airways, Finance Director Mr Alex Mbugua and Mr. Mbuvi Ngunze COOO Kenya airways.