Kenya Airways claims $3.8 mln compensation from airport authority over fire

NAIROBI Wed Aug 13, 2014 8:25am EDT

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NAIROBI Aug 13 (Reuters) - Kenya Airways wants Kenya's High Court to compel the country's main airport to pay $3.8 million to the national carrier over a fire last year that forced it to cancel flights and led to revenue losses.

Kenya Airways, one of the leading airlines in Africa, alleges in court papers seen by Reuters on Wednesday that the Kenya Airports Authority (KAA) failed to provide adequate fire-fighting equipment at the airport, the carrier's main hub.

KAA said it was waiting to receive the court summons and could not yet comment on the case.

"We have been negotiating over an insurance claim, and it is news to us that Kenya Airways has gone to court. KAA cannot comment at this stage until the summons reach us," Angela Tilitei, KAA corporate communications manager, told Reuters.

The blaze at Nairobi's Jomo Kenyatta International Airport in the early hours of Aug. 7 last year destroyed the international arrivals building, forcing the temporary closure of a vital travel and trade gateway to East Africa, and cancellations for passengers transitting through the airport.

The airline, which is 26.73 percent owned by Air France-KLM and 29.8 percent by the Kenyan government, had at the time estimated the lost revenue at $4 million as many flights were cancelled at the airport.

KAA "failed to take reasonable and efficient measures whether by inspection or examination, to ensure that there would be no risk of fire arising from any electrical or other faults in the premises", Kenya Airways argued in the court papers.

The airline rents facilities at the airport, and wants the landlord to be held responsible for the damage.

Following investigations, Kenyan authorities ruled that the fire was caused by an electrical fault.

It was not clear when a ruling on the matter would be given.

Kenya Airways shares rose as much as 4.39 percent to 10.70 shillings following news of the claim, before paring gains to stand at 10.25 shillings. The fire last August had temporarily weakened the airline's stock over fears of revenue losses.

"The news of the compensation claim is seen as positive, especially by retail investors, and it contributed to the share price rise," Nicholas Sang, analyst at NIC Securities said.

The fire was a blow to Kenya at the start of the peak tourism season, disrupting travel at Africa's fourth-busiest airport. The horticulture industry, a major foreign exchange earner for East Africa's biggest economy, was also affected. (Reporting by Humphrey Malalo; Writing by James Macharia; Editing by Dale Hudson)

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