The Chief Executive Officer of Kenya Airways, Mbuvi Ngunze has said that the airline will sell some older planes and land and is also negotiating a bridging loan to help it through a cash shortage caused by a drop in passenger traffic. According to a report monitored on Reuters, the carrier, partly-owned by Air France-KLM, made a big loss in the half-year to September after a spate of Islamist militant attacks drove tourists away from Kenya and made it tough to fill its fleet of Boeing 787 Dreamliners. The airline’s chief executive officer said that the outlook for the peak holiday season in July and August was steady for now but could be hurt by the latest attack in Kenya.
An assault on Garissa University in the Northeast killed 148 people and some beach hotels and safari lodges have already reported cancellations. According to Reuters, the company reported first-half losses of KES12.5 billion shillings about $134 million, while passenger volume decreased to 64 per cent in the period from 69 per cent in the prior year period. The airline’s shares have dropped by almost a fifth in 2015. Ngunze, who took over in 2014, said the airline was selling four Boeing 777-200s, a Boeing 767 and some land it owns to help cut its debt profile. “We have a fundraising target in terms of these assets, adding that it would help to “deleverage our balance sheet” Ngunze said.
He however did not disclose the target. The company’s debt to capital ratio was 275 per cent at the end of the financial year to March 2014, with net debt of KES77.8 billion shillings about $833.4 million but the airline did not give more recent figures. The airline is seeking a bridging loan to buy time to raise longer-term funds in the form of debt, equity or both. “We have bridging finance that we have been negotiating with a certain financier which we are in the last stages of that negotiation” he said. He however declined to name the financier or the amount. The airline boss said that aircraft sales will contribute to a reduction in the number of aircraft operated to 35 from 45 last year, adding that after that, the fleet will include Embraers and Boeing 737s for regional routes, and 787s for long-haul flights.
He said Kenya Airways had not fully benefited from the slide in the global oil prices due to its fuel-hedging policy. He stated that apart from these challenges, a dispute with the pilots’ union over an early retirement plan led to the cancellation of dozens of flights and that the Labour Ministry was mediating and that the issue would be resolved soon.
http://dailyindependentnig.com/2015/05/kenya-airways-sell-older-aircraft-land-raise-funds/
