The Kenyan government has approved several measures aimed at supporting efforts by Kenya Airways to restructure and get out of financial quagmire.
Some of the measures approved by the Cabinet include conversion of government loans approximated to be around Ksh4.2 billion, into equity and acting as Kenya Airways’ guarantee for loans taken locally and internationally.
The loans totaling to $750 million (Ksh75 billion) include the $525 million (Ksh52.5 million) that the airline owes Exim Bank and $225 million (Ksh22.5 million) owed to local lenders.
The approvals however have been reached pending parliamentary approval.
The cabinet noted that to achieve the required turnaround, Kenya Airways requires a financial restructuring to reduce overall debt burden on the Balance Sheet and to extend payment period of its debt.
This, according to Treasury Cabinet Secretary Henry Rotich, would stablise the company and allow it to meet its obligation and facilitate long-term growth. By so doing, it would also position the company to continue playing its crucial role in the economy.
“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 airlines future and ensure it has a healthy liquidity profile and remains operations,” said CS Rotich.
Kenya Airways contribution to economy
Transport Cabinet Secretary James Macharia noted the invaluable importance of the airline to the broader economy with trickle-down effect supporting thousands of Kenyans including over 4,000 people directly and over 140,000 jobs indirectly.
“Kenya Airways, as the national carrier, plays a major role in driving the country’s competitiveness and diplomacy and what we have settled for is the best interest not only of the airline but the country at large,” said Macharia.
Michael Joseph, the airline’s chairman said: “The full support of all the airlines creditors, principal shareholders and other stakeholders will see this transaction, once it is completed, position Kenya Airways for a new year of sustainable growth via a deleveraged balance sheet and a healthy liquidity profile.
“We are grateful for the support obtained from the government and urge the Narional Assembly to give its approval to allow KQ to remain the Pride of Africa.”
He said that already, KQ has made operating profit and reduced costs and losses adding that with a healthier liquidity, and at no cash cost to the government, the airline will be in a better place to continue with its operations in Kenya and the larger region.
This week, Kenya Airways signed a codeshare agreement with EgyptAir, on the Nairobi-Cairo route, in a bid to improve connectivity to Egypt.
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