Kenya Airways has selected U.S. investment banking firm PJT Partners to advice on long-term capital-raising and the restructuring of its balance sheet, as it seeks to secure its survival after a long period of losses.
The airline has been making losses for the past three and a half years and last year needed a bridging loan to keep flying. The Kenyan government, which holds a 29.8 percent stake, has said the carrier requires a capital injection of $500-$600 million to survive.
“We are at a stage where our turnaround strategy is beginning to gain traction,” Mbuvi Ngunze, the airline’s chief executive said late on Monday.
He said PJT Partners, which offers strategy, restructuring and fund-raising services, will work with the carrier over the next six to nine months.
The airline, also 26.7 percent owned by Air France KLM, drew down half of its $200 million bridging loan with Cairo-based Afreximbank last year. It is also selling some of its Boeing-made, wide-body aircrafts as well as land to shore up its capital.
A series of Islamist militant attacks in Kenya has hurt the country’s tourism industry, cutting into the airline’s revenue right after it bought expensive, modern airplanes. (Reuters)
Now this is the balance sheet PJT Partners is set to aid in restructuring:
We have highlighted the areas which we think they should consider in their restructuring exercise.
Share Price
Kenya Airways closed at KES 4.20 per share on Tuesday 15th February 2016. In an exercise in seeking to chart out KQ’s historical prices we were perplexed by this chart. Gone are the days when it touched an all-time high in the hundreds range. We are now at lows never seen before in the company’s trading lifecycle.
Have a look at the chart below:
Source: Financial Times
We further sought to seek out foreign investor movement in 2015. It seems most of them have been on the ‘flight to safety’ mode.
Source: Financial Times, FactSet Research Systems Inc.
Conclusion
This is a really tough time for the Airline Company and it surely needs ALL the help it can get. That being said we wish PJT Partners the very best in their contribution towards bringing back the Prestigious Kenyan Airline Company back to profitability.
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