Treasury has injected Sh5 billion into Kenya Airways
to fund the national carrier’s E190 Embraer fleet engines overhaul and maintenance.
The
funding, a commercial loan that will also finance day-to-day operations
for the loss-making airline, underlines its overreliance on
Treasury-backed loans and financing.
The facility comes
months after the Director of Criminal Investigations (DCI) opened a
probe into the procurement of the service provider to maintain the
engines of its aging fleet.
“The National Treasury
made a loan on commercial terms to KQ of Sh5 billion for the purpose of
enabling KQ to complete the scheduled engine overhaul programme on its
E190 Embraer fleet and fund its general working capital requirements,”
said Kenya Airways chairman Michael Joseph in a letter to the Nairobi
Securities Exchange
on Friday.
KQ,
in plans announced last year, is also seeking to sell six Boeing 787-8
Dreamliner planes, a Boeing B777-300 and a spare GE engine in efforts to
raise cash for its operations at the back of continued losses.
As at December 2018, the airline had a fleet of 41 airplanes
comprising a mix of Boeing planes for long-haul and Bombardier and
Embraers on its short and medium haul flights.
The
shrinking fleet and shortfall in pilot numbers has in recent times
forced the airline to cancel dozens of flights in what further dimmed
its efforts to reduce its widening losses.
In January,
KQ agreed to a deal with Kenya Airline Pilots Association (Kalpa) to
hire 30 direct entry captains, both local and foreign to ease the acute
shortage.
At the back of its struggles that have cut
its fleet size from 52 in 2017, KQ will be re-nationalised before the
end of the year after Members of Parliament voted last year in favour of
the move that has been described as the most viable option to save it
from mounting debts.
Treasury in November 2018 said it
would buy out the stakes held by Air France-KLM, local banks and more
than 80,000 individual shareholders and delist Kenya Airways from the
NSE.
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