Kenya drops nationalization of KQ amidst $1 billion restructuring
Nairobi-based Kenya Airways (KQ) will no longer undergo nationalization following reports that the Kenyan government has withdrawn its interest to do so. However, the carrier’s government has committed to providing the carrier financial support to aid its restructuring.
Having faced challenges both prior and during the pandemic, KQ amassed a significant amount of debt owed to its creditors.
In a state report by the International Monetary Fund, the airline’s restructuring is estimated to cost $1 billion, of which $750 million had previously been guaranteed by the Kenyan government.
According to the IMF, “the [Kenyan] authorities are developing plans to restructure Kenya Airways (KQ) and anticipate providing significant financial support over the medium term.”
The airline's restructuring plans include decreasing its operations and personnel workforce amidst a large remodeling of its business. The Kenyan government has agreed to assume $827.4 million of KQ's debt and provide financial support in FY2022 and FY2023. The state will provide $473 million to handle the airline's payment obligations and restructuring costs as part of this assistance package.
“The authorities have indicated their intentions to put in place strong safeguards to ensure progress under this plan, including tight links between phased financial support and performance on restructuring steps,” according to the IMF’s review.
While navigating the pandemic environment Kenya Airways has also been busy forming new mutually beneficial alliances with airlines in the African aviation sector. In April 2021, KQ entered a two-year agreement with Congo Airways to lease two of its Embraer E190 aircraft as part of a cargo codeshare partnership.
In late September 2021, Kenya Airways inked a partnership with South African Airways (SAA) to cooperate in bringing forth a Pan-African airline by 2023. The airlines aim to share expertise and knowledge that could potentially bolster air services both in South Africa and in Kenya.
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