Kenya Airways has received $40 million loan from the Country’s government, as well as a $200 million bridging loan from African Export-Import Bank (Afreximbank) to settle its financial crisis.
The money is needed to support Kenya’s national carrier, which has not made a profit in the past three years due to a number of Islamist militant attacks, that has distorted the country’s tourism industry.
The airline, part-owned by Air France-KLM, also has rising debts from new plane purchases and its losses for the year to March increased to 29.7 billion shillings from a 4.86 billion shillings a year earlier, reports Reuters.
Kenya has estimated the carrier will need a $500-600 million bailout but a precise figure will depend on a turnaround plan being prepared by McKinsey and Seabury consultants.
The country’s finance minister, Henry Rotich, said Kenya’s government, which holds a 29.8 percent stake, had provided the 4.2 billion shilling loan to help the airline meet its operational requirements and pay off suppliers of fuel and other services.
The company told investors in July it had sought the $200 million loan from Cairo-based Afreximbank.
“This short term facility will be received in two tranches of $100 million each,” Finance Minister Henry Rotich told a committee at the Kenyan senate on Tuesday.
“Once the long-term capital requirements are firmed up based on the approved turnaround plan, the government in consultation with other shareholders will review its options, including equity injection and/or loan guarantees,” Rotich said.
Until its problems of the past few years, the carrier was regarded as a model of successful privatisation after its listing in 1996 turned it into a profitable company.