Bank loan

Kenya Airways posts losses as strain on $841.6m bank loans mounts |

Reports from our neighbors reveal that Kenya Airways has defaulted on an $841.6 million loan from the American Exim Bank to purchase aircraft, the National Treasury has said.

According to the latest annual debt management report (financial year 2021/2022), the loss-making national carrier obtained the loan with a guarantee from the national government but did not repay. Of the $841.6 million, the government has guaranteed $525 million.

says the National Treasury. “Kenya Airways has defaulted on both the secured portion of the loan amount and the unsecured portion,”
The national government is in the process of novation the debt which will be finalized during the financial year 2022/2023.
It should be noted that novation is the process by which an original contract is extinguished and replaced by another, whereby a third party takes over rights and obligations that duplicate those of one of the parties to the original contract. This means that the original party transfers both benefits and burdens under the contract. KQ’s loan from the Exim Bank of USA was to purchase seven aircraft and one engine.

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