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Kenya Airways suspends ticket sales in Malawi – ch-aviation

Kenya Airways (KQ, Nairobi Jomo Kenyatta) has suspended its ticket sales in Malawi again and has warned it may stop flying there to mitigate further losses after being unable to repatriate an undisclosed sum of its revenue from the country.
As a result of a "significant amount" of blocked funds, "Kenya Airways has found it challenging to meet its operational costs and maintain the commercial viability of its operations in Malawi," the airline explained in a statement.
It said it had engaged with the Malawian authorities throughout 2022 to find a solution. The airline was now demanding that the Malawi government release its funds forthwith and implement "a proper mechanism to ensure that Kenya Airways funds do not accumulate".
"Under the current difficult circumstances, and to mitigate against further losses moving forward, Kenya Airways has been left with no other option but to suspend its ticket sales in Malawi. Failure to collect the funds will lead to Kenya Airways suspending its operations in Malawi," it warned.
The suspension affects only reservations made in Malawi. It comes after the Kenyan flag carrier in May 2022 already suspended its ticketing system for travel agents in Malawi primarily because of the shortage of foreign currency.
"Kenya Airways has been operating in Malawi since 1977 and remains committed to continuing and growing operations. We hope to find a win-win resolution with the Malawi government on the repatriation of blocked funds to enable us to resume normal ticket sales," the airline stated.
Malawi has faced acute shortages of foreign currency for months as sales of its main foreign currency earner, tobacco, dropped in line with declining smoking worldwide. Ethiopian Airlines (ET, Addis Ababa) has also suspended its ticketing services in Malawi over the forex crisis.
Kenya Airways (KQ, Nairobi Jomo Kenyatta) is amongst the biggest beneficiaries of a Kenya Airports Authority (KAA) KES700m shilling (USD5.6 million) waiver in airport parking fees and concession payments for airlines and concessionaires in the 2020/2021 financial year, reports Nation newspaper.
“Despite the challenging business environment, the authority extended support estimated at KES700million to airlines and concessionaires in terms of waivers on aircraft parking and concession payments to catalyse business recovery,” KAA board chairman Isaac Awuondo was quoted by the newspaper.
Kenya Airways mainly operates from KAA-managed airports in the country, including Nairobi Jomo Kenyatta; Mombasa; Kisumu; and Eldoret, making it the key beneficiary of the waiver.
KAA charges KES1,230 (about USD10) daily parking fees for smaller aircraft and more than KES12,300.26 (almost USD100) for larger aircraft.
The airport authority granted the waivers following an application by the Kenya Association of Air Operators (KAAO), an umbrella body of Kenyan commercial airlines, based on declining income from fewer flights.
KAA data showed that aircraft movements and passenger volumes declined…
Kenyan President William Ruto reportedly has pitched a plan to Delta Air Lines (DL, Atlanta Hartsfield Jackson) to save Kenya Airways (KQ, Nairobi Jomo Kenyatta) as the government seeks to divest entirely from the struggling carrier.
Ruto met top Delta executives on the sidelines of the US-Africa Leaders Summit in Washington DC on December 15, where he launched a bid to sell the government’s entire 48.9% stake in Kenya Airways, reports Bloomberg.
He declined to provide details of the talks as Kenya seeks a cash-flush foreign airline as a strategic investor in the national carrier to offer expertise and cut its reliance on national treasury handouts for operational cash. “Discussions with Delta are at a preliminary stage,” Ruto said. “The government is looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, whatever form it takes,” he was cited by Business Daily Africa.
“I’m willing to sell the whole of Kenya Airways Plc,” he told Bloomberg. “I’m not in the business of running an…
The search for strategic investors for Kenya Airways topped the agenda of Kenyan President William Ruto while attending the US-Africa Leaders Summit in Washington DC on December 13 to 15, 2022, according to Kenya’s Transport Cabinet Secretary Kipchumba Murkomen.
As US President Joe Biden hosted leaders from across the continent, Ruto made a pitch for a cash-rich strategic investor to inject capital and offer management expertise and so remove the burden of supporting struggling Kenya Airways from the national fiscus.
“We are doing everything possible to ensure that we no longer subsidise the airline and that is why we are looking for a strategic partner,” Murkomen was cited as saying by The East African newspaper. “Even on the president’s trip to the US, one of the topics for discussion is how to get a strategic partner for Kenya Airways.”
Should Ruto secure a deal, the Kenyan government would be prepared to reduce its shareholding from 48.9% and a lenders’ stake to 38%. The move would see Air France-KLM, which holds 7.76%, joined by other multinationals….
The Kenyan government has paid Kenya Airways’ loan arrears for purchasing seven aircraft and one engine to US lender Private Export Funding Corporation (PEFCO), with the balance of the loan to be novated to the government.
This is according to the Kenyan National Treasury’s Annual National Debt Report of 2021/22, but the actual amount repaid was not mentioned.
It disclosed that during FY2021/22, the lender had called in a 10-year USD525 million guarantee issued in 2017 by EXIM Bank (United States of America), which in turn had been guaranteed by the Kenyan government. Even though the guarantee only matures in FY2027/28, the lender had called it in because Kenyan Airways had defaulted on loan repayments after experiencing cash flow problems exacerbated by travel restrictions imposed during the Covid-19 pandemic.
“Kenya Airways had borrowed a total of USD841.6 million from EXIM Bank of USA to purchase seven aircraft and one engine. Out of this amount, the government had guaranteed USD525 million. Kenya Airways defaulted on both the guaranteed portion of the loan amount and the non-guaranteed portion….
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.