Kenya to inject $176 million into struggling national airline

Kenya plans to inject 20 billion shillings ($176 million) of capital into the country’s cash-strapped national airline, which is battling to survive after years of losses and a mounting debt pile.

The funding, detailed in supplementary budget documents submitted to parliament, “is dependent on certain restructuring milestones,” Kenya Airways Plc Chairman Michael Joseph said by text message on Thursday.

The capital injection emerged alongside a Bloomberg News report that Kenya Airways has selected financial advisers to help evaluate options to restructure its debt load, which totaled 92.5 billion shillings at the end of 2020. The government had been planning to nationalize the airline, already 48.9% state owned, before abandoning the plan last month.

While many airlines around the world ran into trouble after the coronavirus pandemic hammered global travel, Kenya Airways’s financial troubles pre-date the crisis. The size of the government’s stake is the result of an earlier state-backed restructuring which saw some lenders swap debt for equity. Air France-KLM is a small shareholder with a 7.76% stake.   

Kenya Airways has historically been one of sub-Saharan Africa’s three major carriers, alongside Ethiopian Airlines Group and South African Airways, which went into administration in 2019 and is the subject of a protracted takeover process.