Kenya Airways Gets Parliament Backing For Debt Guarantee
Kenya’s parliament has approved a KES77.5 billion (USD$747 million) loan guarantee for Kenya Airways as the West African airline continues its restructuring efforts.
The government’s support also includes the conversion of existing loans to the airline into equity. The amount currently owed to the government is about USD$243 million including accrued interest.
Kenya’s Treasury Cabinet Secretary Henry Rotich said last week of the proposal to guarantee the loan “The Government continues to support Kenya Airways as it is a valuable national strategic asset. As a major shareholder, we are keen to secure the airline's future and ensure it has a healthy liquidity profile and remains operational.”
“The proposed restructuring of the airline will generate concessions from all stakeholders and the re-capitalisation of the business,” he added.
The Kenyan government currently owns just under 30 percent of the airline, with Air France-KLM holding a 26.7 percent stake.
Kenya Airways has made a string of annual losses after inbound tourism slumped after a series of terrorist attacks in 2013, including at the Westgate shopping mall in Nairobi where 67 people died.
In the financial year to 2016, the airline made a KES26.2 billion (USD$253.3 million) net loss, after a KES25.7 billion loss the previous year.