Nairobi drops plans to renationalise Kenya Airways

The Kenyan government has scrapped its plan to renationalise Kenya Airways but instead will protect its financial interests during a US$1b restructuring of the flag carrier that will include a US$827m debt take-over and a US$473m cash injection, the International Monetary Fund (IMF) has revealed. In a recent country report on Kenya, the IMF said: “The [Kenyan] authorities do not intend to nationalise the carrier and are considering appropriate mechanisms to protect the Exchequer’s [National Treasury’s] financial interests during the restructuring process”. As part of putting Kenya Airways on a sustainable footing, the government will assume USD827 million of its debt. In addition, in FY2021/22 and FY2022/23, US$473m will be provided as direct budgetary support to clear overdue payment obligations and to cover the upfront costs of restructuring, which will include a trimming down of the carrier’s fleet, network, frequencies, and staff complement, the IMF said. By December, Kenya’s National Treasury (NT) will prepare a loan agreement with Kenya Airways that will include conditions for providing financial support to implement the restructuring plan. This will include clear KPIs, timelines, reporting obligations and a disbursement plan. The signing of loan agreements will follow the approval of the supplementary budget by the Kenyan Parliament.<br/>