In its latest Annual Debt Management Report (2021/2022 fiscal year) that the loss-making national carrier secured the loan with a security from the national government but failed to repay.
Of the 841.6 million, the government guaranteed $525 million.
“Kenya Airways defaulted on both the guaranteed portion of the loan amount as well as the non-guaranteed portion,” the National Treasury says.
“The National Government is in the process of novating the debt to be finalised during 2022/2023 fiscal year.”
Original contract extinguished
Novation is the process by which an original contract is extinguished and replaced with another, under which a third party takes up rights and obligations duplicating those of one of the parties to the original contract. This means that the original party transfers both the benefits and burdens under the contract.
KQ’s loan from the Exim Bank of USA was meant to purchase seven aircraft and one engine.
“The Covid-19 pandemic containment measures adversely affected the airline business globally including KQ. Government intervention included, among other financial support, the settlement of the guaranteed debt extended to KQ,” National Treasury’s director in charge of debt management, Dr Haron Sirma told The EastAfrican.
KQ chief executive Allan Kilavuka however disputed the Treasury figure when reached by The EastAfrican.
“The value you quote for the US Exim facility is not correct; $485 million is what relates to the US Exim guaranteed debt. I don’t have the context… maybe they have included other guarantees, not just the US Exim facility,” he said.
Negotiated moratoria
He said that due to Covid-19, when it reduced operations, KQ negotiated moratoria.
“The airline is yet to get back to full operations and has requested GOK (Government of Kenya) to support on the guaranteed loan to avert the possibility of the loan going into default.”
Treasury says it will closely monitor contingent liabilities arising from state-owned enterprises, as they pose major fiscal risks to the economy.
KQ is 48.9 per cent owned by the government and a group of 10 local banks which own 38.1 per cent of the shares.
Other shareholders include KLM Royal Dutch Airline (7.8 percent), employees (2.4 percent) and other shareholders at 2.8 per cent.
Push for restructuring
The government has been pushing for the restructuring of the airline on the back of state bailout plan.
Under the plan the airline is required to reduce its network, operate a smaller fleet and possibly reduce its workforce further.
As a result the airline has focused on restructuring its fleet including selling planes and sub-leasing to other airlines in an attempt to return to profitability.
Data from the airline shows that the national carrier’s fleet size narrowed in the last nine months to 41 aircraft from 43 in December 31 2021 after two leased aircraft (Embraer 190) were returned to the lessor following the expiry of their leases.
Of the 41 aircraft, 18 are owned/financed by the airline itself while 23 are on lease arrangement.
Its fleet size dropped to 39 in the year 2017 from a high of 52 in 2015, before rising to 43 in 2021.
Renegotiating lease contracts
The airline is renegotiating aircraft lease contracts with the lessors as part of a string of austerity measures to reduce operating costs.
Other measures rescue measures include engagement with principal shareholders (government) for financial support, engagement with key suppliers and financiers for moratoria, freeze on non-critical spending and implementation of temporary salary cuts for staff.
KQ has also increased focus on cargo business and has already converted two passenger aircraft to cargo freighters.
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Tanzania Confirms Second Marburg Outbreak After WHO Chief Visit
Dar es Salaam — Tanzania’s President Samia Suluhu Hassan has declared an outbreak of Marburg virus, confirming a single case in the northwestern region of Kagera after a meeting with WHO director-general Tedros Adhanom Ghebreyesus.
The confirmation follows days of speculation about a possible outbreak in the region, after the WHO reported a number of deaths suspected to be linked to the highly infectious disease.
While Tanzania’s Ministry of Health declared last week that all suspected cases had tested negative for Marburg, the WHO called for additional testing at international reference laboratories.
“We never know when an outbreak might occur in a neighbouring nation. So we ensure infection prevention control assessments at every point of care as routine as a morning greeting at our workplaces.”Amelia Clemence, public health researcher
Subsequent laboratory tests conducted at Kagera’s Kabaile Mobile Laboratory and confirmed in Dar es Salaam identified one positive case, while 25 other suspected cases tested negative, the president told a press conference in Dodoma, in the east of the country today (Monday).
“The epicentre has now shifted to Biharamulo district of Kagera,” she told the press conference, distinguishing this outbreak from the previous one centred in Bukoba district.
Tedros said the WHO would release US$3 million from its emergencies contingency fund to support efforts to contain the outbreak.
Health authorities stepped up surveillance and deployed emergency response teams after the WHO raised the alarm about nine suspected cases in the region, including eight deaths.
The suspected cases displayed symptoms consistent with Marburg infection, including headache, high fever, diarrhoea, and haemorrhagic complications, according to the WHO’s alert to member countries on 14 January. The organisation noted a case fatality rate of 89 per cent among the suspected cases.
“We appreciate the swift attention accorded by the WHO,” Hassan said.
She said her administration immediately investigated the WHO’s alert.
“The government took several measures, including the investigation of suspected individuals and the deployment of emergency response teams,” she added.
Cross-border transmission
The emergence of this case in a region that experienced Tanzania’s first-ever Marburg outbreak in March 2023 has raised concerns about cross-border transmission, particularly following Rwanda’s recent outbreak that infected 66 people and killed 15 before being declared over in December 2024.
The situation is particularly critical given Kagera’s position as a transport hub connecting four East African nations.
Amelia Clemence, a public health researcher working in the region, says constant vigilance is required.
“We never know when an outbreak might occur in a neighbouring nation. So we ensure infection prevention control assessments at every point of care as routine as a morning greeting at our workplaces.”
The Kagera region’s ecosystem, home to fruit bats that serve as natural reservoirs for the Marburg virus, adds another layer of complexity to disease surveillance efforts.
The virus, closely related to Ebola, spreads through contact with bodily fluids and can cause severe haemorrhagic fever.
Transparency urged
Elizabeth Sanga, shadow minister of health for Tanzania’s ACT Wazalendo opposition party, says greater transparency would help guide public health measures.
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“This could have helped to guide those who are traveling to the affected region to be more vigilant and prevent the risk of further spread,” she said.
WHO regional director for Africa Matshidiso Moeti says early notification of investigation outcomes is important.
“We stand ready to support the government in its efforts to investigate and ensure that measures are in place for an effective and rapid response,” she said, noting that existing national capacities built from previous health emergencies could be quickly mobilised.
The situation coincides with leadership changes in Tanzania’s Ministry of Health, with both the chief medical officer and permanent secretary being replaced.
This piece was produced by SciDev.Net’s Sub-Saharan Africa English desk.
Source: allafrica.com
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European Union Bans Air Tanzania Over Safety Concerns
Kampala — The European Commission added Air Tanzania to the EU Air Safety List, banning the airline from operating within European Union airspace. This decision follows the denial of Air Tanzania’s Third Country Operator (TCO) authorization by the European Union Aviation Safety Agency (EASA), citing significant safety deficiencies.
The EU Air Safety List includes airlines that fail to meet international safety standards. Commissioner Tzitzikostas emphasized the importance of passenger safety, stating: “The decision to include Air Tanzania in the EU Air Safety List underscores our unwavering commitment to ensuring the highest safety standards. We strongly urge Air Tanzania to take swift action to address these safety issues. The Commission has offered its assistance to Tanzanian authorities to enhance safety performance and achieve compliance with international aviation standards.”
Air Tanzania joins several African airlines banned from EU airspace, including carriers from Angola, the Democratic Republic of Congo, Sudan, and Kenya. Notable names include Congo Airways, Sudan Airways, and Kenyan carriers Silverstone Air Services and Skyward Express. The ban reflects the EU’s strict approach to aviation safety worldwide.
Source: allafrica.com
