The money is needed to support Kenya’s national carrier, which has not made a profit in three years because the country’s tourism industry has suffered fallout from a number of Islamist militant attacks.
The airline, part-owned by Air France-KLM, also has rising debts from new plane purchases and its losses for the year to March increased from the previous year.
Kenya has estimated the carrier will need a $500-600m bailout but a precise figure will depend on a turnaround plan being prepared by McKinsey and Seabury consultants.
Finance minister Henry Rotich said Kenya’s government, which holds a 29.8% stake, had provided the $40m loan to help the airline meet its operational requirements and pay off suppliers of fuel and other services.
Fallout from Islamist militant attacks
The company told investors in July it had sought the $200m loan from Cairo-based Afreximbank.
“This short term facility will be received in two tranches of $100m each, Finance minister Henry Rotich told a committee at the Kenyan senate on Tuesday.
“Once the long-term capital requirements are firmed up based on the approved turnaround plan, the government in consultation with other shareholders will review its options, including equity injection and/or loan guarantees, Rotich said.
Until its problems of the past few years, the carrier was regarded as a model of successful privatisation after its listing in 1996 turned it into a profitable company.
Reuters
