Kenya to Lend Ailing Airline $49.5 Million, Mulls Restructuring

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(Bloomberg) --

Kenya’s government agreed to loan its cash-strapped national carrier 5 billion shillings ($49.5 million) for working capital and to enable it carry out a scheduled engine overhaul for its E190 Embraer fleet.

Kenya Airways Plc., which is 48.9% owned by the government, 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 an emailed statement. The deal is subject to regulatory approvals, it said.

The state became the carrier’s main shareholder following a financial reorganization in 2017 when it converted local-currency and dollar-denominated loans totaling $238.1 million. Air France-KLM’s stake shrunk to 7.76% from 26.7%.

The carrier has reported annual losses since 2013, according to data compiled by Bloomberg. The company said in November a proposed nationalization and its inclusion in a state-owned aviation holding company will enhance its ability to borrow funds for expansion.

Kenya Airways shares were up almost 2% by 1:10 p.m.

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