Kenya Air to restructure debt after nationalization plans collapse
Kenya Airways has selected financial advisers at Seabury Securities to help the airline evaluate options to restructure its debt load, according to people with knowledge of the matter. The airline, in which the Kenyan government has a 48.9% stake, faces mounting debts and depressed passenger demand amid pandemic-related travel restrictions. A representative for Kenya Airways said the carrier is in talks with several consultants, including Seabury, but declined to elaborate further. A representative for Seabury Securities declined to comment. Kenya’s Treasury confirmed plans to hire a consultant by end of January to help with the airline’s restructuring. Kenya Airways has been banking on the government to take control and absorb its debt, which totaled 92.5b shillings ($847m) at the end of 2020-- as the pandemic exacerbated years of losses. But after rounds of talks, Kenya’s government scrapped a plan to fully nationalize the carrier. Restructuring the airline would cost an estimated $1b and and the Kenyan government would have to inject money into the air carrier because the East African nation’s Treasury has already guaranteed $750m of the company’s debt, according to the IMF. The government has set aside 26.6b shillings to help Kenya Airways and other state-owned enterprises in a supplementary budget for the year through June, local newspaper Business Daily reported on Wednesday. KQ, as the airline is known, needs to overhaul its business model to minimize the burden it places on the state given the aviation industry’s challenges amid the pandemic, the IMF said. Changes required include cutting back on its operations and staff, enhancing efficiency and renegotiating leases and suppliers’ contracts, it said. While Kenya Airways expects capacity to return to 65% of pre-virus levels this year, it isn’t rushing to add back routes, Chief Executive Officer Allan Kilavuka told Bloomberg in an interview in November. The airline suspended seven routes in 2020 in a bid to preserve cash.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2022-02-03/sky/kenya-air-to-restructure-debt-after-nationalization-plans-collapse
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Kenya Air to restructure debt after nationalization plans collapse
Kenya Airways has selected financial advisers at Seabury Securities to help the airline evaluate options to restructure its debt load, according to people with knowledge of the matter. The airline, in which the Kenyan government has a 48.9% stake, faces mounting debts and depressed passenger demand amid pandemic-related travel restrictions. A representative for Kenya Airways said the carrier is in talks with several consultants, including Seabury, but declined to elaborate further. A representative for Seabury Securities declined to comment. Kenya’s Treasury confirmed plans to hire a consultant by end of January to help with the airline’s restructuring. Kenya Airways has been banking on the government to take control and absorb its debt, which totaled 92.5b shillings ($847m) at the end of 2020-- as the pandemic exacerbated years of losses. But after rounds of talks, Kenya’s government scrapped a plan to fully nationalize the carrier. Restructuring the airline would cost an estimated $1b and and the Kenyan government would have to inject money into the air carrier because the East African nation’s Treasury has already guaranteed $750m of the company’s debt, according to the IMF. The government has set aside 26.6b shillings to help Kenya Airways and other state-owned enterprises in a supplementary budget for the year through June, local newspaper Business Daily reported on Wednesday. KQ, as the airline is known, needs to overhaul its business model to minimize the burden it places on the state given the aviation industry’s challenges amid the pandemic, the IMF said. Changes required include cutting back on its operations and staff, enhancing efficiency and renegotiating leases and suppliers’ contracts, it said. While Kenya Airways expects capacity to return to 65% of pre-virus levels this year, it isn’t rushing to add back routes, Chief Executive Officer Allan Kilavuka told Bloomberg in an interview in November. The airline suspended seven routes in 2020 in a bid to preserve cash.<br/>
