Kenya Airways’ (KQ) total bailout has skyrocketed to KSh35 billion after the Government announced plans to offer the airline an additional KSh26.5 billion shareholder loan.
The loan will be channelled through the National Treasury investment in public enterprises, in addition to the KSh8 billion directly from the Treasury and KSh2 billion from the Transport Ministry. These bailouts seek to ease the coronavirus’s effects that have caused a slump in global travel demand.
If the airline fails to pay, the loan could be converted into shareholding, diluting other shareholders including Air France-KLM, local banks and retail investors.
The Government converted KSh27.2 billion loan into shares just four years ago, thereby increasing its stake in the carrier to 48.9% from 29.8%.
For the first six months in 2020, Kenya Airways total income for the airline fell by 48% to KSh30.2 billion compared to KSh58.6 billion recorded in the six months to June in 2019.