Kenya Airways panhandles for $91mn more state aid

On the same day that Kenya Airways (KQ, Nairobi Jomo Kenyatta) announced a pre-tax loss of KES36.57 billion shillings (USD333 million) for 2020 – nearly triple that of the previous year – chief executive Allan Kilavuka revealed that the beleaguered flag carrier was looking for about KES10 billion (USD91 million) in additional government funding. Kenya’s National Treasury has already provided KES28 billion (USD255 million) to the company in the guise of a loan, Kilavuka told journalists on March 23, as reported by Bloomberg News, but this still falls short of the total KES38 billion (USD346 million) he claimed was needed. The terms of the aid are still under discussion, he added. “It would have been better to have an injection of capital, if it were possible,” he said. “The issue with getting bits and pieces is that you tend to use that for operations as opposed to restructuring the debt.” Further funds are needed, the CEO said, both for debt repayments and for working capital. If the government will not allocate the additional money, Kenya Airways will consider approaching the state for a loan guarantee to borrow from multilateral lenders, Kilavuka explained. The chief executive said he now anticipated a return to pre-Covid levels of demand in its passenger business in 2024. He pledged to boost the cargo business in an effort to compensate for the poor passenger sales. The government of Kenya holds a 44.9% stake in the airline, whose joint venture with Air France-KLM, which has 7.12%, is set to expire in September 2021. As previously reported, the government has been in talks to buy out minority investors, including Air France-KLM, in efforts to nationalise the airline. A law to prepare for nationalisation, which had been on the table even before the pandemic, is being reviewed by the parliament. Passenger numbers slumped by 66% in 2020, to 1.8 million. To cut costs, Kenya Airways has downsized the workforce by 1,300 people, to about 3,200, while renegotiating aircraft leasing contracts. According to the ch-aviation fleets advanced module, of its 38 aircraft, 19 are owned, while the other 19 are leased from eight lessors. Most of these lessors have agreed to utilisation-based terms, Kilavuka said. “We have a very clear plan between now and 2024 to make sure that we are back even, and are able to become more competitive,” he said.