General AviationKQ NEGOTIATES A MORATORIUM ON REPAYMENT DEADLINE

KQ NEGOTIATES A MORATORIUM ON REPAYMENT DEADLINE

The Aviator Africa KQ

Kenya Airways (KQ) is negotiating with its lenders to extend moratoria on the repayment deadline of its debt. This is due to low expectations of revenue this year because of low travel demand due to Coronavirus.

In an interview with the Standard newspaper, Geoffrey Langat the airline’s Head of treasury and corporate finance said that the finance costs were one of the carrier’s largest fixed costs which it had been unable to cover after its revenues declined drastically from March 2020 as its passenger operations were grounded for four months (April to August 2020) with the onset of the pandemic.

He further mentioned that the carrier had loans from a number of lenders including international and local banks, share holder loans from the government which had been the only entity to have advanced new loans last year, totaling KES11 billion (USD103 million). The government had also guaranteed loans totaling USD750 million (mostly from international lenders) until 2017.

“The Arline had been able to save more than KES6.5 billion (USD60.8 million) last year after it had been granted an initial six-month moratorium on the repayment of bank loans to October 2020, which was extended by another nine months to June 2021”, he further mentioned. Following that most of its lenders had not agreed to a moratorium on the principal loan, the Arline had to continue paying the interest.

Evans Kihara the technical Director said that KQ had managed to save KES1.4 billion (USD13.1 million) after reviewing all contracts with suppliers and insourcing some functions such as servicing aircraft.

He further said that KQ had increased its capacity to service its own aircraft including heavy maintenance services for its B787-8s. This increased the savings in outsourcing costs as travel restrictions imposed by the states had made it impossible to ferry the abroad for maintenance due to the Coronavirus scourge.

Joan Kifuko
Joan Kifuko is a communications enthusiast that is currently working as a writer at The Aviator magazine where you find your aviation news in one place. She is a journalist that has previously worked as a sales associate, guest relations officer, brand ambassador hence, the love for new adventures and roles. Joan graduated with a Bachelors degree of science in journalism.
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