The government is committed to supporting Kenya Airways in its turn around strategy that requires government financial support, acting National Treasury CS Ukur Yattani has said.
KQ, as it is known by its international code, needs up to Sh45 billion to get operations back to profitability, according to chairman Michael Joseph.
Speaking in Nairobi on Friday, during the release of the 2019 tourism sector performance results, Yattani said the government has a revival plan.
“Very soon we are going to have it done. As Treasury we are working on looking for resources to inject into KQ so that they can continue to remain float,” the CS told tourism stakeholders.
The loss-making carrier has been pushing for a capital injection to help it stabilize its operations, which has been dented by a high debt stock amid loses.
It reported a Sh8.56 billion half-year loss for the period ended June 30,2019, double the Sh4.03 billion posted in a similar period previous year.
Plans are underway to nationalize the airline which according to the government, remains critical in the growth of the country’s economy.
“Cabinet has passed the policy on nationalization. We are now working on administrative and procedural issues to make sure that we align the acts in regards to the laws in place because we cannot afford to loose KQ in anyway,” Yattani said.
KQ posted a Sh7.55 billion net loss for year ended December 2018. Its worse loss was however in 2016 when it reported a Sh26.2 billion loss after falling deeper from the Sh25.7 billion loss reported in 2015.
In 2017, the national carrier reached a deal with key creditors and major shareholders to convert Sh25 billion debt it owed the government and about Sh23.25 billion commercial loans from 11 domestic banks to equity.
“The turbulence that they have been going through in the last few years, particularly the last one year, has a direct consequence on tourism and the general economy,” the CS noted, “We will not allow it to go.”
In May 2017, it appointed Polish CEO Sebastian Mikosz to help with its turnaround. He left in December last year.
Jambojet CEO Allan Kilavuka is currently steering the national carrier in an acting capacity.
“We are very happy with the management changes that is taking place and I am very sure it is going to help,” Yattani said.
It is estimated to take at least 21 months for the government to take full control of KQ, which requires buying out of minority shareholders and converting shares held by banks into Treasury bonds.
KQ owes CBA group Sh3.1 billion, NIC bank Sh2.1 billion, Equity Bank Sh5.2 billion, National Bank Sh3.5 billion, Co-operative Bank Sh3.3 billion, KCB Sh2.1 billion and a similar amount to DTB.
It is currently owned by government (48.9%), 38.1 per cent is owned by its lenders-Lenders Company 2017 Ltd. (in turn owned by a consortium of banks), while KLM has a 7.8 per cent stake in the company.
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