Kenya Airways Looking for $91 Million More Than State Pledged
(Bloomberg) -- Kenya Airways Plc is looking for about 10 billion shillings ($91 million) on top of what the government has allocated the carrier to see out the year, with passenger volumes not seen recovering to pre-pandemic levels until about 2024.
The airline will consider seeking a debt guarantee from the state, its biggest shareholder, to borrow from multilateral lenders if the government won’t provide the extra cash, Chief Executive Officer Allan Kilavuka said Tuesday in an interview. Funds are needed for both debt repayments and for working capital, he said.
The National Treasury has allocated 28 billion shillings to Kenya Airways in the form of a loan, short of the 38 billion shillings the CEO says is required. The terms are still under discussion, he said.
“It would have been better to have an injection of capital, if it were possible,” Kilavuka said. “The issue with getting bits and pieces is that you tend to use that for operations as opposed to restructure the debt.”
Kenya Airways is among numerous airlines around the world turning to governments or shareholders for financial support to get through the worst crisis in aviation history. Repeated resurgences of virus infections and associated travel restrictions have dashed all hopes of a quick global recovery, while in Africa the slow roll out of vaccines offers no near-term panacea.
The East African airline’s loss widened to 36.2 billion shillings last year from 13 billion shillings in 2019, according to a statement Tuesday. Passenger numbers dropped 66% to 1.8 million.
As part of cost-cutting measures, Kenya Airways has reduced the workforce by about 1,300 people to just over 3,200 and looked to renegotiate leasing contracts. About eight out of 10 lessors of aircraft to Kenya Airways have agreed to utilization-based terms, helping the airline toward a target of reducing fleet-ownership costs by 40%.
“We have a very clear plan between now and 2024 to make sure that we are back even, and we can be able to become more competitive,” he said.
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