Corporate News
By CHARLES WOKABI, SUNDAY NATION
In Summary
- Kenya Airways to lease remaining three Dreamliner jets as it eyes Middle East carriers like Qatar and Emirates in a cash-for-equity deal.
- This is said to be part of new measures the airline hopes will boost its struggle to get out of its current financial crisis.
- It is estimated that the airline would require about Sh18 billion to get out of the red.
Cash-strapped Kenya Airways has initiated talks with an airline from the Middle East in a bid to raise cash in exchange for equity.
Sources within the company also told Sunday Nation that the national carrier has abandoned midway its multi-billion project for the purchase of new Dreamliner jets.
This is said to be part of new measures the airline hopes will boost its struggle to get out of its current financial crisis.
Though the KQ management would not confirm or deny
the engagement with a potential partner yesterday, CEO Mbuvi Ngunze is
on record saying that the airline is looking for a partner with deep
pockets.
Those in the know say Qatar Airways and Emirates are among those the national carrier is looking at for a potential partner.
“We cannot comment on this. It’s a shareholder issue,” the company said in an emailed response on Saturday.
The airline, which is expected to release its
full-year financial results this month, has been in bad financial state
and has in the past few months relied on short-term loans to pay workers
and run daily operations.
It is estimated that the company would require about Sh18 billion to get out of the red.
Mr Ngunze said KQ would not purchase the remaining
three of nine of Dreamliner jets it had ordered from Boeing in 2006 but
would instead lease the aircraft from an Irish company.
The airline has already entered a sale and lease
agreement with AWAS Aviation Trading Ltd, a company based in Ireland,
meaning that the three planes will not be financed on the balance sheet
of Kenya Airways.
“Given our current financing, we must be prudent in
finding innovative financing solutions while keeping with our growth
ambition. The new aircraft will be important additions to our fleet as
we strive to give our guests the best experience possible,” the CEO
said.
He said the lease deal would be beneficial to the company’s balance sheet as it seeks to improve its liquidity.
Huge debts have been a key player in the matrix
that brought the national carrier to its knees. Most of this debt was
acquired to finance the purchase of Dreamliner jets as part of a fleet
modernisation project launched by former CEO Titus Naikuni.
The decision to rescind its intention to buy all
the nine new Dreamliners midway and instead run three of those on a
lease agreement could significantly prop the company’s financial
standing.
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