Kenya Airways’ Restructuring Plan Close to Being Approved by the State

Kenya’s government is close to approving a restructuring plan for Kenya Airways (KQ) to replace one proposed by the previous administration and supported by the International Monetary Fund (IMF), according to the airline’s CEO.

The airline, one of Africa’s three largest, declared bankruptcy in 2018 after incurring hundreds of millions of dollars in debt during an expansion drive.

Former President Uhuru Kenyatta’s administration announced a plan in 2021 under which the government agreed to provide loans and eventually assume $800 million of the airline’s debt.

Kenyatta’s successor, William Ruto, who took office in September, has said he will reduce borrowing and has questioned the government’s involvement in Kenya Airways.

CEO Allan Kilavuka told Reuters that the government is working on a new restructuring plan.

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

In response to written questions, Treasury Cabinet Secretary Njuguna Ndung’u stated that the government wanted to turn around KQ so that it could secure a strategic investor, but he did not elaborate on the new plan.

The previous scheme was approved by the IMF as part of a $2.34 billion lending program agreed upon in April 2021 with the government, which owns 48.9 percent of the airline.

Mr Kilavuka stated that the new plan would include some of the same elements as the previous one, such as eliminating loss-making routes, but he did not elaborate on how they would differ.

A senior KQ source, who did not want to be identified, said it was unclear whether the new plan would keep the government’s commitment to assume the $800 million in debt.