Kenya Airways says restructuring plan soon to be approved

Reuters | Kenya’s government is close to approving a restructuring plan for Kenya Airways to replace one introduced by the previous administration and backed by the International Monetary Fund (IMF), the airline’s CEO told Reuters.

The airline, one of Africa’s three biggest, fell into insolvency in 2018 after an expansion drive left it with hundreds of millions of dollars of debt.

The administration of former President Uhuru Kenyatta introduced a plan in 2021 under which the government agreed to provide loans and eventually take over US$800 million of the airline’s debt.

Kenyatta’s successor William Ruto, who took office last September, has said he will cut borrowing and called into question the government’s participation in Kenya Airways.

A new restructuring plan is with the government, CEO Allan Kilavuka told Reuters.

“The government is currently at the tail end of approving this strategy,” he said, in written responses to Reuters‘ questions.

Also responding to written questions, Finance Minister Njuguna Ndung’u said the government wanted to turn around Kenya Airways to secure a strategic investor but did not provide details of the new plan.

The IMF approved the previous scheme as part of a US$2.34 billion lending programme it agreed to in April 2021 with Kenya’s government, which holds a 48.9 percent stake in the airline.

Kilavuka said the plan would include some of the same elements as the previous one, including eliminating loss-making routes, but did not say how the two would differ.

A senior Kenya Airways source, who asked not to be named, said it was not yet known if the new plan would maintain the government’s commitment to taking over the US$800 million in debt.

“It is a big if,” the source said.

The IMF’s representative in Kenya did not respond to requests for comment.