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Kenya Airways may be headed for bankruptcy




By Nsikan Ikpe


One of Africa’s leading airlines, Kenya Airways is in dire financial straits at the moment and pundits say the outlook for the company going forward is really not looking good.

This dismal view is coming on the heels of the East African carrier having posted a record Sh25.7 billion ($251 million) loss after tax for the year ending March 2015.

Indeed so devastating are things at the organization that chief executive Mbuvi Ngunze is reportedly clutching at virtually any straw he can find at the moment to ensure that he brings the airline back to profitability.

But one thing that is clear to all at the moment however is that there are clearly no short-term solutions for reversing the profit slide of the carrier.

This is because the financial woes at the airline had become evident since 2013 when the national carrier posted a loss of Sh7.86 billion ($76.76 million). This persisting negative outlook continued in 2014 when it posted another loss of Sh4.8 billion ($46.88 million).

With a current negative equity of Sh6 billion ($56.60 million), the question now is as to whether the airline is totally insolvent and beyond any redemption or a quick rescue package can be put on the table to help resuscitate it over time.

Although there is good reason to believe Mr Ngunze’s remark that with patience all will be well, it is apparent that a massive capital injection is required.

Meanwhile, the airline has brought on board the Afrexim Bank to assist in raising a capital injection of Sh20 billion ($195 million).

The airline expects to also realise an additional Sh10.2 billion ($99.62 million) from the sale of land and some of its aircraft but analysts still see such injections as being yet too little, and perhaps too late.


 Pix: Kenyan President, Uhuru Kenyatta


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