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Airline spared auctioneer's hammer over Sh1.3b debt

By Dominic Omondi | September 3rd 2020 at 00:00:00 GMT +0300

The High Court has thrown a lifeline to a Wilson Airport-based airline distressed by Covid-19 after it allowed it to pay its more than Sh1 billion debt in instalments.

Amra Leasing Ltd had wanted DAC Aviation (East Africa) to pay the £8.9 million (Sh1.3 billion) it owes in a lump sum, nine months from the date of judgement by the High Court.

But, in a ruling on August 24 by Justice David Majanja, DAC was allowed to pay the money in instalments of Sh5.4 million in the first six months.

Thereafter, the cash-strapped airline is to pay $100,000 (Sh10.8 million) for 12 months.

Justice Majanja further ruled that the airline which, for two decades has been providing humanitarian air charter in conflict areas, including Sudan, South Sudan and Somalia, would pay $325,000 (Sh3.5 million) every four months until the debt is fully settled.

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However, Majanja warned: “In the event of any default in payment of the instalments of the due date, the entire debt shall become due and owing and the decree holder shall be at liberty to proceed with execution.”

DAC was given the reprieve owing to its financial position aggravated by Covid-19, with the airline failing to pay its workers.

The airline told the court that it had lost some key contracts, including a deal it had with Tullow Oil.

The UK-listed oil explorer, which was its largest revenue generator, terminated its contract with DAC in 2015 after the fall in oil prices in late 2014, leading to a decrease in revenue from approximately Sh108 million per month to Sh21.6 million per month.

It also lost about 20 per cent of its expected income following a decline in the euro from its contract with the European Commission which was its second-largest revenue-generating contract.

High Court Covid-19 Amra Leasing Ltd
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