Kenya Airways says plans to raise capital

Kenya Airways plans to raise capital to pay for its expansion, the airline said on Thursday without saying how much it would raise or how.

Analysts said the company was under pressure to raise cash to pay for a higher wage bill and fuel.

Shares in the company, one of the leading carriers in Africa, hit a 13-month low of 40.25 on Tuesday and again on Thursday as rising oil prices unsettled investors, traders said.

Kenya Airways today announced its intentions to raise capital to finance its strategic future growth and expansion plans, the airline said in a statement.

The company said CFC Stanbic Bank would act as financial adviser. No details were given on whether the airline would target a bond or a rights issue of new stock.

Some analysts said the carrier's aggressive expansion into new African routes could unnerve some investors.

The airline industry is a cost-intensive industry and expansion means that KQ's (Kenya Airways) capital reserves are under pressure as they will need more planes, an increased wage bill and fuel costs, said Samuel Gichohi, a senior analyst at NIC Securities.

The airline said last November its revenue rose to 41.21 billion shillings in the first half to end-September from 33.5 billion a year earlier, resulting in a pretax profit of 2.05 billion shillings.