Kenya Airways shares jump after pilots defer strike threat

Kenya Airways has been struggling to return to profitability after years of losses caused by a slump in tourism and high financing costs caused by the purchase of new planes.

By: Reuters | Nairobi | Updated: October 18, 2016 2:15 pm

 

airplane1-thinkstock-759 The pilots’ union KALPA had called for an indefinite strike to start on Tuesday to demand management changes at the loss-making airline, which is partly owned by both the government and Air France-KLM. (Representational Image)

Shares in Kenya Airways jumped 6.5 percent in early trading on Tuesday, after pilots suspended a planned strike following talks between the union, airline and government. The pilots’ union KALPA had called for an indefinite strike to start on Tuesday to demand management changes at the loss-making airline, which is partly owned by both the government and Air France-KLM.

The union, airline executives and government held talks on Monday to avert action that officials said would hurt the carrier’s slow recovery. A new chairman was named after the talks, meeting part of the pilots’ demands. The shares rose as high as 4.90 shillings ($0.05) before giving up some of their gains to trade at 4.70 shillings, or 2.2 percent higher.

Daniel Kuyoh, an analyst at Alpha Africa Asset Managers, said retail investors were booking profits after the shares had climbed more than 10 percent this month on expectations of a management shake up and after the airline showed losses narrowing.

Michael Joseph, a board director, was named as the new chairman to replace Dennis Awori. However, the fate of Chief Executive Mbuvi Ngunze, who pilots have said must go, was not immediately clear. The new chairman said it was too early for him to comment when contacted by Reuters on Tuesday.

Kenya Airways has been struggling to return to profitability after years of losses caused by a slump in tourism and high financing costs caused by the purchase of new planes. ($1 = 101.2200 Kenyan shillings)