A Kenyan government plan to convert Kenya Airways (KQ, Nairobi Jomo Kenyatta) debt to equity has stalled with the Kenyan National Assembly's Finance, Trade and Planning committee unable to authorise a parliamentary guarantee of KES77.3 billion (USD747 million). The Star reports that the Committee needs to determine the legality of using aircraft as collateral before approving the guarantee.

Under the restructuring deal, the Kenyan Treasury, which owns 29.8% of the airline, would exchange its KES25 billion (USD241.5 million) loan for shares, and would also extend the guarantee for the airline's debts. These include a USD525 million loan from the US Export-Import Bank (EXIM Bank) and other loans from local lenders (USD225 million).

Defending the deal, former CEO of Kenya Airways Mbuvi Ngunze emphasised that the assets to be used as collateral are not leased. "These are the planes we acquired using funds from US Exim Bank. These are not leased aircraft, but assets we duly own," he told the Committee. "We are today generating cash flows. We have been liquidating non-core assets through the sale of planes and land and have not defaulted on any payments so far."

The national carrier has suffered four consecutive years of losses, but has been working to turn its results around. Although it posted an operational profit of KES897 million (USD8.6 million) in March 2017, it still closed the year with a loss after tax of KES10.207 billion (USD98.8 million).

The Kenyan parliament is set to dissolve this week ahead of a general election on August 8. Therefore, the delay from the Committee could see the restructuring plan shelved for some time.