Kenya Airways gets Sh5 billion loan for restructuring process

Kenya Airways has received Sh5 billion from the national government that would be used for the restructuring process, according to a news report by CapitalFM.

Kenya Airways Chairman Michael Joseph confirmed in a letter that Sh5 billion has been received and said the funds would crucial in revamping their engineering operations and general administration.

"KQ through the national treasury made a loan on commercial terms of Sh5 billion for the purpose of enabling KQ to complete the scheduling engine overhaul program on its E190 Embraer fleet and fund its general working capital requirements," reads the statement.

In the last three years, Treasury has written off an estimated Sh24.2 billion loan advanced to the airline at different times, CitizenTV said in a report.

"The possible restructuring may once be confirmed in greater detail have a material effect of the price of KQ securities, therefore, shareholders are advised to exercise caution when dealing in KQ's securities until a further announcement is made," Michael Joseph adds.

To assist the loss-making airline bounce back to profitability, the government had written off an Sh24.2 billion loan last month, according to the reports. The loan was part of Sh27.2 billion worth of dormant loans that the Cabinet authorized to be written off.

The Cabinet Secretary for National Treasury, Ukur Yatani, had also announced last month that the treasury department was mobilizing resources to restore the company. The airline recently appointed Allan Kilavuka as the CEO following Sebastian Mikosz's resignation.