Kenya Airways picks US-based Seabury to advise on restructuring
A Kenya Airways plane lands in Mombasa from the Jomo Kenyatta International Airport in Nairobi on May 3, 2021.
What you need to know:
- Seabury has over the years advised several airlines around the world including India's Jet Airways, German Berlin Air and Norwegian Air Shuttle on cutting losses, increasing revenue, and restructuring their debt.
National carrier Kenya Airways has tapped a US-based consultancy, Seabury Group to advise it on financial restructuring as part of a State-backed bailout deal.
“They will assist with the restructuring as part of the financial support from the National Treasury,” Kenya Airways chairman Michael Joseph told the Nation while confirming the deal.
Seabury has over the years advised several airlines around the world including India's Jet Airways, German Berlin Air and Norwegian Air Shuttle on cutting losses, increasing revenue, and restructuring their debt.
“Seabury Consulting, now part of Accenture, offers a unique range of expertise specific to the aviation industry that complements Accenture’s global capabilities, solutions, and services to help propel airlines into the future,” says the firm on its website.
The appointment comes at a time the Treasury’s supplementary budget estimates presented to Parliament on Tuesday indicate fresh allocations of Sh26.5 billion to the troubled national carrier.
The national carrier needs money for the maintenance of grounded planes, payment of salaries, and settlement of utility bills such as security, water, electricity, and parking as well ease the effects of the virus that has obliterated global travel demand.
Without State aid, the airline risked running out of money soon against the background of unease among banks about lending to African carriers.
The bailout comes as the State dropped the favoured long-term solution for the ailing Kenya Airways that was anchored in nationalisation of the airline.
The Treasury had targeted offering Kenya Airways Sh53.4 billion in direct budget support in the fiscal year that ends in June 2022 as well as the subsequent one, making it the largest corporate bailout.
The nationalisation plan approved by lawmakers in July 2019 would have led to the delisting of the airline from the Nairobi Securities Exchange (NSE).
KQ said recently it is fast-tracking negotiations to launch common initiatives with South African Airways (SAA) with which it signed a pact last year to establish an African airline by 2023.
Mr Joseph told the Business Daily while the pact is a long-term agreement, both airlines are in talks to jointly expedite the implementation of common business plans to gain a competitive edge over rivals.
“We are already talking about some initiatives we can implement sooner,” Mr Joseph said.
The two carriers signed a Strategic Partnership Framework in South Africa last November, in a move that will see the two carriers eventually form a Pan-African carrier amid common longstanding financial woes exacerbated by the Covid-19 pandemic.
It is expected that the partnership will improve the financial viability of the two airlines. Customers will also benefit from more competitive price offerings for both passenger and cargo segments.
Both KQ and SAA have been loss-making for years.
