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Kenya Airways gets $240 million in loans from government, Afrimexbank

02 September 2015, 21:27

Nairobi - Kenya has provided a 4.2 billion shilling ($40 million) loan to loss-making Kenya Airways , the country's finance minister said, while African Export-Import Bank (Afreximbank) has approved a $200 million bridging loan for the airline.

The money is needed to support Kenya's national carrier, which has not made a profit in three years because the country's tourism industry has suffered fallout from a number of Islamist militant attacks.

The airline, part-owned by Air France-KLM, also has rising debts from new plane purchases and its losses for the year to March increased to 29.7 billion shillings from a 4.86 billion shillings a year earlier.

Kenya has estimated the carrier will need a $500-600 million bailout but a precise figure will depend on a turnaround plan being prepared by McKinsey and Seabury consultants.

Finance minister Henry Rotich said Kenya's government, which holds a 29.8 percent stake, had provided the 4.2 billion shilling loan to help the airline meet its operational requirements and pay off suppliers of fuel and other services.

Also read: Kenya's Uchumi says earnings for year ending in June to fall 25 pct

The company told investors in July it had sought the $200 million loan from Cairo-based Afreximbank.

"This short term facility will be received in two tranches of $100 million each," Finance minister Henry Rotich told a committee at the Kenyan senate on Tuesday.

"Once the long-term capital requirements are firmed up based on the approved turnaround plan, the government in consultation with other shareholders will review its options, including equity injection and/or loan guarantees," Rotich said.

Until its problems of the past few years, the carrier was regarded as a model of successful privatisation after its listing in 1996 turned it into a profitable company.

- Reuters


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