Kevin O'Toole/LONDON

AFRICA'S STATE-OWNED airlines are lining up to follow the lead set by Kenya Airways as it nears completion of what is being seen as a model privatisation.

Kenya Airways has already completed the first phase of its privatisation by securing an international airline partner in KLM, which has agreed to pay $26 million for a 26% stake in the East African airline.

The next phase will be the flotation of another 34% of the carrier on the Nairobi stock exchange, and the sale of up to 14% to international investment funds. A further 3% has also been earmarked for an employee-share scheme. The plan is due to be completed before the end of March, the finish of the carrier's 1995/6 financial year.

The Kenyan Government will retain a minority 23% holding in the airline for the foreseeable future, but has retained no special voting rights.

Other African carriers are already showing signs of following the Kenyan lead. Ghana Airways has called in Speedwing, the British Airways consultancy which advised on the Kenya Airways restructuring, with a view to eventual privatisation. Air Zimbabwe has also indicated that it hopes to be privatised within the next 18 months.

"I don't think that there's anything unique about the Kenya Airways situation. There's no reason why it couldn't be replicated," says managing director Brian Davies, who was brought in by Speedwing in 1992 to see through the carrier's turnaround. He warns, however, that there is no "universal formula".

Michael Tiller of International Finance (IFC), the consulting arm of the World Bank which is overseeing the Kenya Airways restructuring, says that IFC has received several approaches from airlines interested in following the model.

One attraction for cash-strapped African governments is the opportunity to stem the losses from their national carriers. The Kenyan Government, which wrote off Kenya Airways' debts equivalent to around $120 million in the run-up to privatisation, now stands to recoup the bulk of its spending through the proceeds of the share sale.

Source: Flight International