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Kq Loss

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Submitted By kibet12
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National carrier Kenya Airways requires up to Sh100 billion new funding to stay afloat, Standard Investment Bank analysts have estimated.

KQ may need Sh50-60bn bailout, Rotich says
MPs to question ministers over KQ troubles

The amount is required in the form of fresh capital injection to reduce the carrier’s debt burden.

KQ may also need to significantly scale down its operations and cut on operating costs to return to profitability.

The airline on Thursday reported a Sh25.7 billion after-tax loss, which saw it sink into a Sh5.9 billion negative capital position.

“Kenya Airways needs new funds in the region of Sh80 billion to Sh100 billion,” said Eric Musau, an analyst at SIB.

Treasury secretary Henry Rotich, whose ministry has a seat on the KQ board, said at the weekend that a plan was underway to inject up to Sh60 billion into the company.

The airline also announced last week that it had signed a Sh20 billion loan from the African Export Import (Afrexim) Bank.

The anticipated new round of equity financing is expected to see the government’s ownership in KQ go above 50 per cent from the current 29.8 per cent.

This, analysts said, is based on the expectation that retail investors would avoid pumping new money into the airline having booked major losses that have culminated into their wealth being wiped out in the year ended March.

“The key is to reduce the debt burden as much as possible. The company also needs to take some tough decisions and become a smaller airline,” said Mr Musau.

READ: KQ posts Sh25.7bn loss on debt-fuelled modern fleet plan

He said a potential rights issue could see the government raise its ownership above the 50 per cent mark, diluting the combined ownership of other investors to less than 10 per cent.

Mr Musau said Dutch airline KLM — currently the second largest shareholder in KQ with a 26.73 per

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