Kenya Airways to Seek Loan, Sell Aircraft After Record LossHelen Nyambura-Mwaura
Kenya Airways Ltd., sub-Saharan Africa’s third-largest carrier, said it will borrow $200 million and sell assets after posting the biggest loss in the nation’s corporate history. The stock plunged to an 18-year low.
The airline hired African Export-Import Bank to help raise long-term capital and refinance the business, Chief Executive Officer Mbuvi Ngunze told reporters Thursday in the capital, Nairobi. It expects to raise a further $100 million from the sale of seven of its 52 aircraft and land in the city, Chief Financial Officer Alex Mbugua said at a briefing.
“From an investor’s point of view, this is certainly a worrisome situation” because the company hasn’t given any guidance on how it will reverse the loss, said Eric Musau, an analyst at Standard Investment Bank. “They don’t seem to have visibility of how they’ll turn around the airline.”
KQ, as the airline is known, said it’s loss widened to 25.7 billion shillings ($252 million) in the year through March, from
3.38 billion a year earlier after it incurred hedging and impairment losses. The carrier, which is partially owned by Air France-KLM, booked a 5.8 billion-shilling loss for “hedging adjustments,” 5.6 billion shillings in impairment adjustments and 2 billion shillings of costs related to the depreciation of some of its aircraft.
“Those results are clearly a watershed for KQ and for this country,” Ngunze said.
The loss is the biggest reported by any Kenyan company, according to data compiled by Bloomberg, and comes after a slump in tourist arrivals to the East African nation following a series of attacks by Islamist militants. The number of visitors dropped 25 percent to 284,313 in the first five months of the year, according to the Kenya Tourism Board.
The shares dropped 18 percent to 5.60 shillings by 2:25 p.m. in Nairobi, heading for the biggest decline on record and to the lowest level since May 2003.
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