Nod to Sh77bn state guarantee for KQ debt

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Kenyan lawmakers on Thursday approved a government proposal to guarantee Sh77.62 billion ($750 million) worth of debt owed by Kenya Airways, part of a broader financial restructuring, Parliament said in a statement.

The loss-making airline, in which Air France-KLM and the Kenyan government both have stakes, has struggled to return to profit after tourist traffic slumped four years ago, following a spate of attacks by Islamist militants.

The financial restructuring proposal also involves the conversion of a separate Sh25.15 billion ($243 million) loan by the government into equity.

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Private creditors are expected to participate with the conversion of their debt into equity but details have not yet been released by Kenya Airways.

Shares in the firm lost 30 per cent after the restructuring was made public last week, hitting a low of Sh4.80 ($0.05) each on June 14, before recovering some ground to trade at Sh5.25 on Thursday.

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