IMF: Kenya Airways restructuring to cost USD1bn, government not intending to nationalise airline

International Monetary Fund (IMF), in its Kenya country report for Dec-2021, provided (22-Dec-2021) the following updates on Kenya Airways' restructuring programme:

• Kenya Airways has been insolvent for some time with ongoing financial difficulties compounded by the onset of the COVID-19 pandemic. The Kenyan Government's exposure to the airline includes USD750 million of guarantees to creditors. Due to its cashflow problems over the past three years, Kenya Airways has not been able to pay lessors and creditors due invoices, resulting in significant outstanding obligations. The company had to negotiate moratoriums and waivers with lenders and lessors and has been dependent on cash injections from the budget;
• The restructuring of Kenya Airways is projected to cost USD1 billion and the restructuring will have sizeable government budget costs. The airline will be required to reduce its network, rationalise service frequencies, operate a smaller fleet and rationalise its workforce. The government will take over USD827.4 million of Kenya Airways' debt and will provide USD473 million as direct budgetary support in FY2022 and FY2023 to clear overdue payment obligations and cover the upfront costs of restructuring;
• Government authorities to not intend to nationalise Kenya Airways. As previously reported by CAPA, the government had intended to resume full ownership of the airline;
• IMF will introduce budgetary offsets for 50% of Kenya Airways fiscal support, in line with programme commitments and the flexibility built into programme conditionality. IMF will also prepare a loan agreement with Kenya Airways by Dec-2021 that shall include conditions for providing financial support to implement the restructuring plan. [more - original PR]