Kenya Airways wants government to absorb mountain of $ 250 million debt

Kenya Airways (KQ, Nairobi Jomo Kenyatta) is in discussions with the country’s treasury over the settlement of the airline’s $ 250 million debt accumulated during the pandemic, chief executive Allan Kilavuka said.

In an interview with Bloomberg, he said that writing off debts, including debt owed to aircraft lessors and suppliers, would help the airline execute its turnaround and cost reduction plan which is designed in consultation. with London consultants Steer Group. .

“What we are focusing on is having the least expensive shares for the shareholder,” he said. “This is where the strategy is going to focus, that we have the right size, that we have the least possible costs and that we have the best possible productivity from assets and our people. “

Kenya Airways recently completed International Monetary Fund (IMF) assessments designed to inform the recovery plan and minimize spending in government coffers while ensuring key restructuring milestones are achieved. The National Treasury has already guaranteed $ 750 million in the airline’s debt.

The government, which owns 48.9% of Kenya Airways, wants to renationalize it, but the necessary bill has been crippled by parliamentary processes; although it was passed by parliament at first and second readings, it still has to be read a third time.

Kilavuka earlier told The Africa Report that Kenya Airways should ask its lenders for more deferrals of principal repayments. He said the airline only paid interest on its loans. “So far the lenders have been understanding,” he said. The airline’s troubles predate the pandemic, having reported losses since 2012.

Meanwhile, Kenya Airways expects capacity to return from 55% to 65% next year from pre-COVID levels. Kilavuka said internal roads have returned to 80% of normal levels and are expected to reach 90% by the end of the year. A return to 2019 levels would take until mid-2023, he said. The airline is in no rush to add short-term routes after having to suspend seven last year to preserve cash, he added.

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