Qatar bids to buy KQ as state hints at CEO exit

Qatar Airways is among five firms interested in buying troubled Kenya Airways.

Transport Minister James Macharia told the Star in Brussels, Belgium that Qatar Airways is one of the airlines that have bid to buy the national airline whose code name is KQ. He did not name the other companies.

"We have received many proposals from companies in the Middle East and from America but no discussion has gone on yet because they are just expression of interests," he said.

"That is important, but it is not a priority right now. The priority is to restore the viability of that airline and get it to make profit once again."

He said although KQ was a private company, the government was bailing it out because it was strategic for the country. The government owns 29 per cent of the troubled airline.

KQ is experiencing turbulent times having posted huge losses in the last few years.

The government has moved in to rescue the airline. KQ on its part is leasing some Dreamliners and sold three triple B777s, the company has also been forced to sell a lucrative parking slot and other assets to raise cash for paying debts and sustain operations. In March, KQ sold its prime landing slot at London's Heathrow Airport in a deal estimated to be worth Sh3.7 billion. The airline has also sold a 30-acre piece of land in Embakasi, Nairobi valued at over Sh2 billion as part of the recovery plan. KQ needs more than Sh100 billion to completely turnaround.

Treasury Cabinet secretary Henry Rotich has allocated KQ Sh20.2 billion in next financial year's budget to stabilise it after a turbulent three years. This will be the second bailout after the initial Sh4.2 billion bailout the company was given six months ago.

Although he was reluctant to reveal details, the CS indicated that the management changes being undertaken at KQ could affect the topmost managers as well.

"We are changing management at all levels. You have seen us asking those at senior levels to leave so we will be restoring capacity in terms of management to ensure that we have the best people running it," said the CS.

KQ's loans stood at Sh52 billion at the end of September 2015, translating to a Sh3.4 billion financing cost burden. The company's management has admitted it is significantly supported by creditors and is looking at avenues of replacing short-term debt.

Source