Kenya Airways

Early years

Kenya Airways was established by the Government of Kenya on 22 January 1977, following the break-up of the East African Community and the consequent demise of East African Airways (EAA). On 4 February 1977, two Boeing 707-321s leased from British Midland Airways inaugurated operations, serving the Nairobi–Frankfurt–London route. On internal and regional flights, the carrier deployed aircraft formerly operated by the EAA consortium, such as one Douglas DC-9-52 and three Fokker F-27-200s. In late 1977, three Boeing 707s were acquired from Northwest Orient. The following year, the company formed a charter subsidiary named Kenya Flamingo Airlines, which leased aircraft from the parent airline in order to operate international passenger and cargo services. Aer Lingus provided the company with technical and management support in the early years.

1980s–1990s

In July 1980, the airline had 2,100 employees and a fleet of three Boeing 707-320Bs, one Boeing 720B, one Douglas DC-9-30 and three Fokker F-27-200s. At this time, Addis Ababa, Athens, Bombay, Cairo, Copenhagen, Frankfurt, Jeddah, Kampala, Karachi, Khartoum, London, Lusaka, Mauritius, Mogadishu, Rome, Salisbury, Seychelles and Zürich were among the airline's international destinations, whereas domestic routes radiated from Nairobi to Kisumu, Malindi, Mombasa and Mumias. A Nairobi–Bombay nonstop route was launched in 1982 using Boeing 707-320Bs. A year later, the company commenced serving Tanzania while flights to Burundi, Malawi and Rwanda were launched in 1984. Capacity on the European routes was boosted in November 1985 with the incorporation of an Airbus A310-200 leased from Condor. Kilimanjaro was first served in March 1986. That year, the airline ordered two Airbus A310-300s. Kenya Airways was the first African carrier to acquire the type and was the first wide-bodies ordered by the company. Funded with a US$20,000,000 (equivalent to $58,743,169 in 2025) loan, the delivery of these two aircraft took place in May and September 1986. They flew on the Kenya–Europe corridor, and permitted Kenya Airways to return the A310-200 to the lessor. In early 1988, the carrier ordered two Fokker 50s; for domestic routes, the airline received the first of these aircraft at the end of the year. Also in 1988, the lease of a third Airbus A310-300 was arranged with the International Lease Finance for a ten-year period; the aircraft joined the fleet in November 1989. Leased from Ansett Worldwide, the first Boeing 757-200 was received in January 1990, whereas a third Fokker 50 was acquired in October 1990. By late 1991, two Boeing 737-200s had been leased from Guinness Peat Aviation.

In 1986, Sessional Paper Number 1 was published by the Government of Kenya, outlining the country's need for economic development and growth. The document stressed the government's opinion that the airline would be better off privately owned, thus resulting in the first privatisation attempt. The government named Philip Ndegwa as chairman of the board in 1991, with specific orders to make the airline a privately owned company. In 1992, the Public Enterprise Reform paper was published, giving Kenya Airways priority among national companies in Kenya to be privatised. Ndegwa was succeeded by Isaac Omolo Okero. In September 1992, Brian Davies was appointed as the new Managing Director of the company. Davies had been previously hired to carry out a study of viability on privatisation, working for British Airways' Speedwing consulting arm. Swissair was the first company to provide Kenya Airways with privatisation advice. In the fiscal year 1993 to 1994, the airline produced its first profit since the start of commercialisation. In 1994, the International Finance Corporation was appointed to assist in the privatisation process, which effectively began in 1995. A large aviation industry partner was sought to acquire 40% of the shares, with another 40% reserved for private investors and the government keeping the remaining stake. The government would absorb almost US$90 million in debts and would convert another US$31 million it provided in loans into equity; after reorganisation, the company would have a debt of approximately US$78 million. British Airways, KLM, Lufthansa and South African Airways were among the airlines to express interest in taking a stake in Kenya Airways.

KLM purchased a 26% shareholding, becoming the largest shareholder. Shares were floated to the public in March 1996, and the airline started trading in the Nairobi Stock Exchange. The Government of Kenya kept a 23% stake in the company, and offered the remaining 51% to the public; however, non-Kenyan shareholders could hold a maximum 49% share of the airline. Despite 40% of the shares being kept by foreign investors following privatisation (including KLM's 26% stake), top management positions were held by Kenyans. Following the takeover, the government of Kenya capitalised US$70 million, while the airline was awarded a US$15 million loan from the International Finance Corporation to modernise its fleet.