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Government to support Kenya Airways' turnaround

Kenya's government has pledged to provide support for the restructuring of the national flag carrier, though parliamentary approval is still to be secured.

Measures backed by the cabinet include conversion of state loans into equity, says Kenya Airways. The government will also, subject to the national assembly's backing, provide "contingent guarantees" – rather than cash – "in exchange for material concessions".

Kenya Airways adds: "The cabinet also noted that to achieve the required turnaround, the company also requires a financial restructuring to reduce the overall debt burden on the balance sheet and to extend the repayment period for its debt.

"This would stabilise the company and allow it to meet its obligations and facilitate long-term growth."

The government's treasury cabinet secretary Henry Rotich states: "The government continues to support Kenya Airways as it is a valuable national strategic asset. As a major shareholder, we are keen to secure the airline's future and ensure it has a healthy liquidity profile and remains operational."

He adds: "The proposed restructuring of the airline will generate concessions from all stakeholders and the recapitalisation of the business."

The government is Kenya Airways' largest shareholder, with a 29.8% stake. In second place is KLM with 26.7%.

Kenya Airways made an operating profit of KSh897 million ($8.7 million) in the year ended 31 March, after a KSh4.1 billion loss the year before. The SkyTeam carrier's annual revenue fell KSh10 billion to KSh106, but operating costs were cut by KSh15 billion to KSh105 billion.

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