AIRLINE FACES HEAVY HEADWINDS AHEAD OF OPERATIONS RELAUNCH
(Posted 13th July 2020)
The trading of shares of Kenya Airways at the Nairobi Securities Exchange was last week suspended following an application by the company – and will remain in effect for at least three months.
The airline hopes to have parliament conclude legislation of a formal take over of the airline by the government but especially small investors, financially raped during the debt for equity swap two years ago, are vehemently opposed to the plan unless they are compensated in full similar to the deal Kenya’s banks secured for themselves.
Small scale and institutional investors reportedly owned some 24 percent before the debt for equity swap, which was subsequently reduced to less than 3 percent, for many wiping out lifetime savings.
Kenya’s banks in contrast extracted a commitment from the government that should the airline be nationalised they would get back their entire loan portfolio values, an arrangement now coming under increased criticism.
The airline has a negative working capital of some 400 million US Dollars according to reports received from Nairobi, making it technically bankrupt, not good news of course as Kenya Airways intends to resume some domestic services as of 15th of July.
Come Wednesday this week does Kenya Airways intend to resume services to Mombasa – twice a day – and operate a single flight to Kisumu. In contrast has subsidiary Jambojet – as reported here over the weekend – announced three daily flights to Mombasa while both Kisumu and Eldoret will see two daily services operated.
This will at least ensure that the combined flights will meet the rising demand for travel to the Kenya coast from upcountry destinations.
Happy Landings when flights resume!