Kenya Airways has frozen the sale of its assets and will instead focus on growing sale of airline tickets to generate enough cash to meet its obligations.
Disposal of some of its assets had formed part of its recovery plan, which was in addition to the restructuring concluded last year and which reduced the stock of debt as creditors converted loans into equity.
The sale of substantial chunks of land in Embakasi had earned the airline billions and injected cash in its business that has been critical to enable it meet its obligations in the face of losses the airline has been reporting.
KQ had earmarked some of its remaining land, also in Embakasi, for sale, which had even got board approval. The land was expected to fetch some Sh310 million but its sale has however been reversed.
Kenya Airways CEO Sebastian Mikosz said the airline had stopped sale of assets such as buildings and land, as they could come in handy while seeking credit from financial institutions.
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He said he is bringing on board a policy of holding on to land and other valuable company assets and instead focus on ticket sales to boost the carrier’s cash position.
“I reversed the decision (to sell the Embakasi land) and blocked sale of all assets. Our position is that we do not sell assets anymore, not under me. I do not live from selling assets. I either turn around the company or not but I will not make money from the sale of assets,” said Mikosz in an interview.
No more sale
He added that going forward the airline would consider the sale of land only in an instance where it gets an ‘impressive’ offer as opposed to selling assets for cash to meet the firm’s operating expenses. It will have conclude planned sale of its old aircraft.
“My policy is that I think it’s a mistake to sell the company’s assets. We need to keep the assets because they can be used as collateral when taking loans. However, if someone comes with a very impressive offer then we will consider it but from where I stand, there will be no more sale of buildings or land,” he said. “Kenya Airways should be selling tickets and not land.”
As at December 2017, the airline’s land and buildings were valued at Sh9.68 billion up from Sh9.37 billion in March 2017. Among the recent land deals undertaken by KQ was a 2016 sale of a 14.5 acre piece to Kenya Medical Supplies Agency (KEMSA), which earned the airline Sh1.9 billion.
