Kenya Airways Draws Down Part Of Bridging Loan

Kenya Airways has received the first half of a USD$200 million loan from Afreximbank to help keep the airline afloat and expects the second tranche in two weeks.

The airline, part-owned by Air France-KLM, has not made a profit in three years and sank further into the red in the year to March with a pretax loss of KES29.71 billion shillings (USD$289 million).

A series of militant attacks in Kenya has hurt the country's tourism industry, which hit the airline's revenue immediately after it updated its fleet.

Kenya, which holds 29.8 percent of the carrier, believes it may now need a USD$500 million - USD$600 million bailout though the exact amount will depend on a turnaround plan being prepared by consultants McKinsey and Seabury.

"Kenya Airways will survive... you can't die before you are killed," chief executive Mbuvi Ngunze told angry stockholders on Friday at its annual shareholders meeting, adding that the airline was carrying 10,000-12,000 passengers daily.

SUSTAINABLE FINANCING

The USD$200 million bridging loan from Cairo-based Afreximbank is in addition to a KES4.2 billion shilling loan from the government to help the airline meet its operational requirements and pay suppliers of fuel and other services.

"Our focus in the next three to six months is on getting sustainable financing," Ngunze told a news conference after the shareholder meeting.

He said Kenya Airways had managed to sell its Boeing 767 and 737 planes but attempts to sell four Boeing 777-200s had so far failed due to a softening of the wide-body aircraft market.

Ngunze did not share details of the turnaround plan being prepared but sought to assure shareholders the company would continue in business, despite being technically insolvent due to negative shareholder equity.