Outgoing Kenya Airways CEO Sebastian Mikosz during an interview with the Star on September 5, 2019. Kenya Airways will not break even and return to its glorious days as the ‘Pride of Africa’ if the shareholding structure remains unchanged.
Outgoing CEO Sebastian Mikosz, in an exclusive interview with the Star yesterday warned that the airline would continue losing its market share if the status quo remains. Kenya Airways will not break even and return to its glorious days as the ‘Pride of Africa’ if the shareholding structure remains unchanged. See story https://bit.ly/2m1FP9F
Describing it as the ‘enemy within’, the Polish expert singled out the KQ financing structure as the biggest hindrance to the national airline’s growth.
Mikosz spoke just days after the troubled carrier’s half-year losses more than doubled to Sh8.56 billion, sinking shareholders into a deeper negative equity position of Sh16.18 billion.
KQ is funded by a consortium of banks holding shares as KQ Lenders Company, entities which Mikosz says charge the airline 11 per cent interest in dollars, making the KQ fleet of aircrafts the most expensive.
The banks hold 38.1 per cent shares in the company; government 48 per cent; KLM (7.8 per cent), minority shareholders (2.8 per cent), and KQ employees (2.4 per cent).
Another bane in the revitalisation effort is the refinancing structure of the Exim Bank loans, a funding framework which is deemed expensive compared with the market rates.
KQ owes CBA group Sh3.1 billion, NIC bank Sh2.1 billion, Equity Bank Sh5.2 billion, National Bank Sh3.5 billion, Co-operative Bank Sh3.3 billion, KCB Sh2.1 billion and a similar amount to DTB. If the shareholding structure does not change, it will be difficult to improve the airline; sadly, many people in Kenya don’t realise this In May, the Treasury wrote-off Sh24 billion loan it owed the lender, a move that came barely a month after the government secured Sh20 billion to help KQ repay another loan it borrowed from African Export-Import Bank (AfreximBank) two years ago.
An expensive labour force — highly paid captains and crews — has added to KQ cash flow woes. KQ cites an expensive infrastructure and costly tax regimes as part of the problem.
The two cadres of staff gobble half of the airline’s wage bill, with the crews paid at the same rate as Fly Emirates staff.
Mikosz painted a picture of an airline held hostage by a strong worker’s movement which has negotiated for high salaries without reciprocal returns.Dividends […]