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Kenyan airways have found itself in a bit of a financial bind.
The flag carrier airline of Kenya, Kenyan airways, is currently facing some financial challenges. It was reported that the airline has defaulted on an $841.6 million loan from the American Exim Bank for the purchase of an aircraft.
The announcement was made by the National Treasury.
“Kenya Airways defaulted on both the guaranteed portion of the loan amount as well as the non-guaranteed portion,” the National Treasury reported.
“The National Government is in the process of novating the debt to be finalized during the 2022/2023 fiscal year.”
The latest Annual Debt Management Report (2021/2022 fiscal year) revealed that Kenyan Airways acquired the loan with security from the national government but has fallen short of repaying.
Of the 841.6 million, the government guaranteed $525 million.
Management for the airline disclosed that the Covid-19 lockdown which restricted travel stifled the company’s projected growth and as a result ate at the revenue that would have been used to repay its debt.
The airline no doubt currently has an outstanding debt, with The Exim Bank of the USA, however, the chief executive of Kenyan Airways Allan Kilavuka has disputed the Treasury figure, calling it inaccurate.
“The value you quote for the US Exim facility is not correct; $485 million is what relates to the US Exim guaranteed debt. I don’t have the context… maybe they have included other guarantees, not just the US Exim facility.” He said.
The loan received by Kenyan Airways from the Exim Bank of USA was intended for the procurement of seven aircraft and one engine.
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