Kenya’s government is close to approving a restructuring plan for Kenya Airways (KQNA.NR) to replace one introduced by the previous administration and backed by the International Monetary Fund (IMF), the airline’s CEO told Reuters.
The airline, one of Africa’s three biggest, fell into insolvency in 2018 after an expansion drive left it with hundreds of millions of dollars of debt.
The administration of former President Uhuru Kenyatta introduced a plan in 2021 under which the government agreed to provide loans and eventually take over $800 million of the airline’s debt.
Kenyatta’s successor William Ruto, who took office last September, has said he will cut borrowing and called into question the government’s participation in Kenya Airways.
A new restructuring plan is with the government, CEO Allan Kilavuka told Reuters.
“The government is currently at the tail end of approving this strategy,” he said, in written responses to Reuters’ questions.
Also respnding to written questions, Finance Minister Njuguna Ndung’u said the government wanted to turn around Kenya Airways so it can secure a strategic investor but did not provide details of the new plan.
The International Monetary Fund (IMF) approved the previous scheme as part of a $2.34 billion lending programme it agreed in April 2021 with Kenya’s government, which holds a 48.9% stake in the airline.
Kilavuka said the plan would include some of the same elements as the previous one, including eliminating loss-making routes, but did not say how the two would differ.
A senior Kenya Airways source, who asked not to be named, said it was not not yet known if the new plan would maintain the government’s commitment to taking over the $800 million in debt.
“It is a big if,” the source said.
The IMF’s representative in Kenya did not respond to requests for comment.
Kenya Airways will present its 2022 results to investors on Monday.
