KLM HAS EMERGED as the winner of a three-cornered competition to take a stake in Kenya Airways. The Kenyan Government still has to rubber-stamp the deal - a move, which is expected before the end of the year.

Under the deal, KLM would take a 26% holding in the national carrier, helped by a change in Kenya's ownership laws, which raised the maximum foreign investment to 40%.

British Airways is understood to have pulled out from the final bidding, leaving a straight contest between KLM and South African Airways, which had raised concern in Nairobi by its recent move into neighbouring Uganda and Tanzania through the Alliance joint-venture.

Kenya Airways managing director Brian Davies says that the airline's privatisation plan is on course to be completed in the first quarter of 1996 with a flotation on the Nairobi Stock Exchange.

Davies says that the airline expects to post improved profits for its latest financial year to the end of March, so fulfilling Kenyan rules that a company should complete three profitable years before making a stock-market debut.

The strategic alliance with Kenya Airways will enable KLM to strengthen its growing presence in the African market, where it now serves 15 cities. A twice-weekly service to Lusaka will be added on 10 January 1996.

Although KLM's African traffic has increased by more than 50% in the last four years, it needed better local representation to make further substantial progress. For Kenya Airways, the partnership will bring much-needed access to long-haul markets.

Initially, the airlines plan to concentrate on coordinating schedules, but this will be followed by wider co-operation on marketing and services.

Source: Flight International