Connect with us

Business News

Treasury says KQ rescue move an informed choice

CS Henry Rotich says airline is a strategic national asset and plays an important role to the country’s economy and, therefore, the need for government to come in to enable trade and economic growth



National Treasury Cabinet Secretary Henry Rotich addresses the media after signing the financial and capital optimisation agreement with his Transport counterpart James Macharia at the Treasury Building in Nairobi.

The government says its decision to inject funds into ailing national carrier, Kenya Airways, is an informed choice to support the airline through capital restructuring to enable it remain operational.

Following the move, the government will be the largest shareholder to a tune of 48.9% from the current 29.8%, which National Treasury Cabinet Secretary Henry Rotich says will go a long way in reducing the company’s financial strain.

“Kenya Airways is a strategic national asset and plays an important role to our economy and, therefore, the need for government to come in to enable trade and economic growth within Kenya and the East African region,” he added.

The CS noted that the financial restructuring will restore the confidence of key stakeholders where the government has provided contingent guarantee amounting to Ksh 75 billion to the operating asset lessors and lenders.

This follows a deal proposed by the airline that will see 11 local banks convert Ksh 17.3 billion of the Ksh 22.5 billion in loans issued to the airline into equity.

The shares will be owned by a new special purpose vehicle called KQ Lenders Company managed by Minerva Fiduciary Services from Mauritius.

“The move is to harness the power of the private sector by encouraging shareholders to take up both equity and financing opportunities to enable the airline restructure its operations and return to profitability,” Rotich stated.

Speaking during the signing of the financial deal late on Monday, Transport James Macharia said Kenya Airways contributes 10% of the Gross Domestic Product (GDP) and, therefore, a strategic investment for the country.

READ: Kenyan real estate firm clinches Sh47b financing deal

“The airline is critical to the economy as it enables other sectors such as trade and tourism to move on making our country to be a strategic economic hub in the region,” Macharia stated.

He added that the country is realizing major investment at the Jomo Kenyatta International Airport since the airport has recently acquired the category 1 status and will soon have direct flights to the United States.

He said by 2013, the airport will have the capacity to enable movement of 12.5 million people per year.

“We are at an advanced stage in the development of the second run way, and will open more routes to ease the movements of people and goods,” Macharia explained.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News Updates

Opinion1 hour ago

Align Kenya’s political system with global standards

There is need to ensure that our system is in line with international best practice especially as they relate to...

NEWS2 hours ago

Kitui County embroiled in models ‘sex scandal’

At least 16 models have dismissed the crowning of four winners at a beauty pageant held last month

NEWS2 hours ago

Kenya not yet fully a free democracy, new report says

While a full report on the country's performance is not yet available online, a summary of the report notes that...

NEWS4 hours ago

Family of five perishes in Juja inferno

Police said a woman, three children - all aged below 10 years, and a man were found early Tuesday morning

NEWS4 hours ago

Americans urged to support conservation

Conservation of nature in many countries in Africa contributes significantly to sustainable rural community livelihoods

NEWS21 hours ago

It’s business as usual, Mike Sonko says

He dismissed reports that Igathe called it quits last Friday following disagreements arising from implementation of key projects and award...

NEWS23 hours ago

Police mum on theft of State House furniture

Nakuru OCPD Samuel Obara told the press that only police headquarters in Nairobi or State House spokesman Manoah Esipisu can...

NEWS24 hours ago

Uncertain future for 100 police officers recalled from NTSA

The Director of Personnel at Vigilance House, the Kenya Police Service nerve centre, Boniface Maingi asked the commanders to send...

Person of Interest4 days ago

Fred Matiang’i: Second most powerful man after President Uhuru

The no-nonsense Cabinet Secretary has become Uhuru Kenyatta's Mr Fix It in government affairs in the processing getting big ministries...

Politics4 days ago

Jubilee script goes haywire as Igathe quits

Details on boardroom rifts started emerging when Sonko shared screenshots of private Whatsapp conversations with his deputy as he fought...