Parliament backs Sh75b state guarantee for Kenya Airways debt

Kenyan lawmakers on Thursday approved a government proposal to guarantee $750 million worth of debt owed by Kenya Airways, part of a broader financial restructuring, parliament said in a statement.

The loss-making airline, in which Air France KLM and the Kenyan government both have stakes, has struggled to return to profit after tourist traffic slumped four years ago following a spate of attacks by Islamist militants.

The financial restructuring proposal also involves the conversion of a separate $243 million loan by the government into equity.

Private creditors are expected to participate with the conversion of their debt into equity but details have not yet been released by Kenya Airways.

Shares in the firm lost 30 percent after the restructuring was made public last week, hitting a low of 4.80 shillings ($0.05) each on June 14, before recovering some ground to trade at 5.25 shillings on Thursday.

Lawmakers debated the issue late into the evening. Parliament released its statement that the plan had been approved on its official Twitter account.

The proposal had to be approved on Thursday since it was the last session of parliament before an election on Aug 8.