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Published on : Friday, June 9, 2017
The Kenyan government has said that Kenya will convert its $243 million in loans to Kenya Airways into equity, as part of a broader restructuring to assist the ailing airline back to financial health.
The government owns a 29.8 per cent stake while Air France KLM has a 26.73 per cent stake in the airline, which faced a slump five years ago following a downturn in tourism after a spate of attacks by Islamist militants. Since then, the airline has failed to record a pretax profit and the losses have compounded the huge debts the airline took on to buy a fleet of new Boeing planes, pushing it into negative equity territory.
The government previously said that it planned to convert its loans into equity but did not give an amount. Kenya Airways said in a statement on Thursday that there was a risk of “significant” dilution of existing shareholders as it offers new equity in the restructuring exercise.
Kenya Airways said that the financial restructuring will help it get out of its negative equity position and get a better balance between cash flow and debt repayments.
The government is also seeking to guarantee $750 million worth of the company’s current debt with international and local lenders as part of the restructuring.
Kenya has spent a lot of money in upgrading the country’s main airports and views the airline as a strategic asset, supporting other industries such as tourism and encouraging investment from abroad.
Tags: Kenya Airways