Kenya Airways (KQ, Nairobi Jomo Kenyatta) has revealed that it will need to obtain waivers from the African Export-Import Bank (AFREXIM) due to non-compliance of its financial obligations. The national carrier made the revelation in its annual report for the year ended March 31, 2017.
"One of the facilities for the purchase of ten Embraer E190 aircraft, contains some financial covenants, which are monitored against the annual audited financial statements," the airline's annual report states. "The Group is not in compliance with all the financial covenants and is in the process of obtaining waivers from the financiers."
Kenya Airways secured a financing package in June 2012 to enable it to purchase nine B787-8s, one B777-300(ER), and ten E190s. The package consisted of a pre-delivery payments (PDPs) facility and an aircraft delivery finance facility. The ten Embraers were delivered before November 2013 and the nine Dreamliners started delivery in April 2014.
According to its annual report, the AFREXIM loans carry an average interest rate of 4.82% and are due for maturity in 2025. The interest due for 2017 is KES21.5 billion (USD204.5 million).
Kenya Airways posted an operating profit of KES0.9 billion, an improvement on 2016's operating loss of KES4.1 billion. However, the loss after tax for the year was still KES10.2 billion, down from a loss of KES26 billion in 2016.
