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Dreamliners held at plant as KQ runs out of cash

Two Boeing 787 Dreamliners for Kenya Airways (KQ) are stranded outside a Seattle factory in the US because of a financing hitch, sources familiar with the matter say.

The jets are the first Boeing aircraft to be left in limbo because of the shutdown of the US Ex-Im Bank, a longtime source of funding for overseas sales, especially for buyers that find it hard to borrow commercially.

Ex-Im loan guarantees and other support have been unavailable since the bank’s charter lapsed in June amid congressional critics’ complaints that the agency amounts to “crony capitalism.”

However, two new loans provided by the government and African Export-Import Bank (Afreximbank) could help the national carrier complete the financing needed to take delivery of the aircraft now in storage in Everett, Washington.

National Treasury Cabinet Secretary Henry Rotich told a Senate committee on Wednesday that the government had provided a Sh4.2 billion loan to the airline while the Afreximbank had approved a $200 million (Sh20 billion) bridging loan.

Boeing 787 Dreamliners for Kenya Airways. Photo/FILE
Boeing 787 Dreamliners for Kenya Airways. Photo/FILE

Boeing, Aviation Finance Company and the Afreximbank are still trying to work out financing with the struggling national carrier, according to the sources. The Dreamliners together list for about $450 million (Sh46.3 billion).

“I can confirm we are working with Boeing, KQ and Afreximbank to find a better solution for Kenya,” Aviation Finance chief executive Douglas Brennan said Wednesday in a telephone interview. Kenya Airways and Boeing declined to discuss details of the financing status of the two planes.

Boeing spokesman Doug Alder said the plane maker was “working closely” with the airline, while KQ chief executive Mbuvi Ngunze said he would comment on the terms when they are completed. The planes are the last of nine Dreamliners ordered by the airline, and have been ready for delivery since mid year.

Kenya Airways financed the first six of the planes through the US Export-Import Bank, which provided an $835.1 million (Sh86 billion) authorisation to the carrier last year, according to the bank’s website. Afreximbank is said to have helped work on that transaction.

A seventh plane was financed in April by Ireland-based AWAS Aviation Trading and Aviation Finance. Since then, AWAS has dropped out, and Dublin-based Aviation Finance has stepped in to provide direct financing to the airline.

Meanwhile, KQ and Kenya Tourism Board (KTB) have signed a partnership agreement to boost inbound tourism to the country by leveraging on the airline’s global passenger network.

Under the agreement, the two firms will effect a range of joint marketing activities targeting leading inbound visitor markets—China, Nigeria, Uganda and France.

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