Kenyan government lends $49.5 million to cash-strapped Kenya Airways
Kenyan government has granted a loan of 5 billion shillings ($49.5 million) to Kenya Airways (KQ), to facilitate the scheduled engine overhaul programmes on its E190 Embraer fleet.
March 02, 2020: Kenyan government has granted a loan of 5 billion shillings ($49.5 million) to Kenya Airways (KQ), to facilitate the scheduled engine overhaul programmes on its E190 Embraer fleet. The cash injection will cater to the overhaul of 11 Embraer engines which is required every eight years in order to uphold the highest levels of safety and maintain reliability and planned network schedules.
“I would like to thank the government of Kenya for making these funds available to us. As an airline, we need to be efficient across our operations but more importantly across our fleet. The Embraer fleet is our largest and is the networks’ workhorse. We also plan on undertaking refurbishments on our two Boeing 737-700 aircraft. The refurbishment will guarantee our passengers a better experience on their flights with us. The airline commits to prudent utilisation of the funds to ensure value for money,” said Michael Joseph, chairman, Kenya Airways.
KQ is 48.9 percent state-owned, 38.1 percent (lenders), 7.8 percent (Air France-KLM), 2.4 percent (Kenya Airways) employees, and 2.8 percent (individual investors). The state became the carrier’s main shareholder following a financial reorganisation in 2017 when it converted local-currency and dollar-denominated loans totalling $238.1 million.
The airlines group managing director and CEO Allan Kilavuka, who took charge as the permanent CEO last week from the earlier held position of acting CEO since January 1 said, “As a strategic national asset and key driver of Kenya’s economic development and GDP growth, it is important that the airline continues to operate optimally. It is on this premise that this year, we identified six key areas of focus which are – improving our customer’s experience, reducing costs and wastage, strengthening operational efficiency, stabilising the organisation, growing our profitability and managing relationships with our stakeholders.”
The ailing carrier is in discussions with the state and other entities in the nation’s aviation industry that include a “possible restructuring of the operations and corporate structure of KQ,” the company said in a statement.
In November 2019, Kenya’s National Treasury has planned to close the buyout of the carrier by the end of 2020, after KQ’s shares tumbled at the Nairobi Securities Exchange (NSE).
Kenya Airways shares closed at 2.19 as of February 28, 2020.