Kenya Airways (KQ) has today announced that the Government of Kenya is planning on turning the Ksh. 4.2 Billion loan to the airline into equity. This move will see the government shareholding increase from the current 29.8 per cent a move which will give it greater say in the running of the airline.
The cabinet is also said to have approved a decision to guarantee KQ’s debt which currently stands at Ksh.77 Billion. Of this amount Ksh. 54 Billion is owed to the Export – Import Bank of the United States and Ksh. 23 Billion is owed to a consortium of local banks.
The cabinet while approving the guarantee noted that for the airline to achieve the required turnaround, the company required a financial restructuring to reduce the overall burden on the balance sheet and to extend the repayment period for the debt. This according to them would help stabilize the company and allow it to meet its obligations and facilitate long term growth.
This comes at a time when KQ reported a loss of Ksh. 10.2 Billion for the full year to March 2017 a huge improvement from the net loss of Ksh.26.2 Billion the previous year. The new CEO, Sebastian Mikosz also took office last week.
This financing arrangement still has to go to the National Assembly for approval.