Kenya Airways is set for a $176 million cash injection from the Kenyan government as the carrier struggles to stay afloat amid years of financial losses.
Reports indicate that the airline’s total debt amounted to $846 million at the end of 2020.
The move comes after the Kenyan government abandoned plans to nationalize the flailing airline.
After years of financial losses and growing debt, Kenya Airways is to receive a $176 million bailout from the Kenyan government.
The cash injection was detailed in supplementary budget documents submitted to the Kenyan parliament this week.
According to Kenya Airways Chairman Michael Joseph, the struggling carrier’s problems stretch back long before the pandemic but have only become worse as passengers and revenues dry up.
Total debts stood at Sh82.5 billion ($846 million) by the end of 2020 and are believed to have grown significantly since then due to the impact of COVID-19.
The Kenyan government, which still owns a 48.9% stake in the airline, has backed its debts with guarantees worth about $750 million. Additionally, Kenya’s National Treasury converted $217.4 million of debt owed by Kenya Airlines to the government into equity.
The government has set aside a total of Sh26.6 billion ($234 million) in bailout funds which it will allocate to Kenya Airways and other state-owned corporations.
Kenya Airways is currently in the process of restructuring its loans and will work with Seabury Consulting, a subsidiary of professional services giant Accenture. The consultancy firm will spearhead Kenya Airways’ debt restructuring, which is estimated to cost upwards of $1 billion.
Kenya’s Treasury told the IMF that some of its cost-cutting measures would include cutting Kenya Airways’ fleet size, trimming its staff and reducing the frequency of flights.