Gov’t bails out Kenya Airways again, pumps in Ksh.5 billion
The National Government has once again come to the rescue of Kenya Airways pumping Ksh.5 billion to shore up its operation.
The bailout comes in handy for the airline that has been struggling financially to stay airborne even as plans are underway to nationalize it.
In a letter to Nairobi Securities Exchange, KQ chairman Michael Joseph said the funds would crucial in revamping their engineering operations and general administration.
“The National Treasury made a loan on commercial terms to KQ,” reads part of the letter addressed to NSE CEO Geoffrey Odundo.
Early this year, Kenya Airways made the bailout request to the government: this was to assist it complete its E190 Embraer fleet as well as boost its working capital.
Last year, Treasury took another Ksh.20 billion loan to help the carrier to repay another loan it borrowed from African Export-Import Bank (Afrexim) in 2017.
In the last three years, Treasury has written off an estimated Ksh.24.2 billion loan advanced to the airline at different times.
In 2017, the government had also agreed to act as a guarantor for the listed airline Ksh77 billion debt which was taken from US Based Export-Import Bank and a group of local banks.
Kenya Airways has been unable to turn around its loss making run in the last five financial years.
In its last report ending June 2019, Kenya Airways reported half-year loss for of Ksh.8.56 billion from Ksh.4.03 billion in similar period last year.
In the letter to NSE, Joseph also alluded to the impending nationalization urging for caution in trading of its shares at the bourse.
“The possible restructuring may once confirmed in greater detail have a material effect on the price of KW securities,” he added.
On Thursday, the KQ board confirmed Allan Killavuka as new managing director, taking over from Sebastian Mikosz.
Killavuka who was also the Jambojet CEO had been acting since December 2019 when Mikosz left .
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