Kenya Airways Reveals $690 Million Bailout Plan After Incurring Loss $261 Million Last Year
By Staff Writer
Mar 10, 2016 04:11 AM EST
Regions
Nairobi, KENYA: Kenya Airways Chief Executive Officer Titus Naikuni gives a press conference 07 May 2007 in Nairobi. None of the 114 people aboard a Kenya Airways plane that crashed in a swamp in Cameroon survived, a rescue worker who reached the scene said 07 May 2007. The wreckage of the six-months-old Boeing 737-800, which carried 105 passengers of various nationalities and nine Kenyan crew was found 06 May 2007 on Sunday in swampland some 20 kilometres (12 miles) southwest of the city of Douala. It had vanished from radar screens in a violent storm shortly after taking off from Douala en route to Nairobi. (Photo : SIMON MAINA/AFP/Getty Images)
Kenya Airways Ltd. (KA), the third largest aircraft in sub-Saharan Africa, has disclosed planning for a KES70 billion ($690 million) restructuring program. The restructuring includes reducing fleet and job cutting as the management seeks to turn around the fortunes of the struggling national carrier.
The Nairobi based carrier has reported for a full year loss of KES25.7 billion ($261 million) during last year, the largest lost in Kenyan corporate history. Now, it has been planning to raise KES40 billion through debt and equity funding as part of its strategy, reports Bloomberg quoting Mbuvi Ngunze, chief executive officer for KA while addressing an interview aired on Wednesday through Citizen TV, a Nairobi based broadcaster.
KA is expected to hold a board meeting on Thursday discuss pay cut option or further retrenchment. The agenda also includes a major shake-up targeting aiming to cut operation costs. The meeting is expected to deliberate on a number of recommendations aimed at helping the firm bounce back.
The management of KA is going to burn the midnight fuel finding ways of bringing the firm back to profitability. However, KA has confirmed planning for adopting cost cutting measures upon contact with The Standard Digital News. The carrier has also sold two Boeing 777-200 aircraft and intends to sell two more. Meanwhile, it has been searching for carriers to sub-lease four of its Boeing 777-300 planes for a period of four or five years. McKinsey & Co. has pledged to reinstate the company in the profit trend through a reorganization plan which may eventually lead to job cuts. The carrier has appointed PJT Partners Inc. during last month to advice on restructuring the company's balance sheet while raising long-term financing. According to the plan, around 30% from its total fleet of 4,000 workers will be axed, reports Quartz quoting Eric Musau of Standard Investment Bank Ltd. A cabin crew member of the carrier, seeking for anonymity has acknowledged pay cuts and been forced to accept finding no other choice. KA hasn't made clear up to which fraction the salary is getting reduced. However, some sources predict for 50% cuts of the employees' salary. February's salary for the KA has been delayed following common trends for the recent months. No mean for communication has been left untried in getting an explanation reasoning the delay.
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