Kenya Airways targets Tanzania

Kenya is looking to expand reach in Eastern Africa

Kenya Airways, one of Africa's most profitable airlines, plans to bid for a stake in rival Air Tanzania, 75% of which is due to be privatised this year.

"We believe Tanzania is a growing market, its economy is thriving and producing consistently high growth rates," Kenya Airways managing director Brian Presbury said, after reporting the company's results on Thursday.

We did suffer as carriers realigned excess capacity thinking they'll move it into a more lucrative market, namely the African market

Brian Presbury
Kenya Airways

Kenya Airways reported a full-year pre-tax profit of $11.1m (£7.6m; 11.8m euros), down from $26.3m last year.

This comes at a time when most major US and European airlines are making record losses.

"We were fortunate in that we were not heavy carriers of North American traffic," Mr Presbury added.

But the airline also said the 11 September attacks knocked $7.7m off its profits.

"We did suffer as carriers realigned excess capacity, thinking they'll move it into a more lucrative market, namely the African market," Mr Presbury said.

Africa takes off

The US attacks shook up air travel in Africa with the collapse of Swissair in October and the bankruptcy of Belgian airline Sabena in November.

The 40-year old Air Afrique also shut down in February after the 11 shareholding countries and part-owner Air France could not agree on a rescue plan.

But competition on trans-African routes has intensified with the launch of Uganda's AfricaOne and Brussels Airlines.

The Belgian carrier was formed from the rump of bankrupt airline Sabena and now flies to many of its African destinations.

Kenya Airways plans to make an initial bid for 49% of Air Tanzania, with the eventual aim of buying the entire stake on sale. Bids close on 31 July.

The Tanzanian government said earlier this month that eight airlines had shown interest including:

• South African Airways
• South Africa's Comair
• South Africa's Nationwide
• Ireland's Air Consult International
• Pakistan's Aero Asia International
• Tanzania's Precision Air.

Last year, Kenya Airways increased its capacity by leasing a number of Boeing 767s.

It also bought Africa Cargo Handling for $9m and made no major staff cuts.

Dutch carrier KLM owns 26% of Kenya Airways, the Kenyan government 23% and the rest of the shares are traded on the Nairobi and Uganda Stock Exchanges.