INTRODUCTION: East African Airways had to cancel several of its scheduled services on Friday (28 January) as the crisis over its cash-flow shortage threatened to cripple the airline's operation.
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GV Airport control tower PAN TO E.A.A. VC-10 sitting on tarmac
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Last week's ministerial meeting to consider the airline's problem took place following Kenya's announcement that it would no longer give financial support, include in the backing of bank overdrafts, to the airline. After two days of talks a statement was issued saying that agreement had been reached to maintain EAA as a united airline serving the whole of East Africa. It reaffirmed earlier arrangements for the transmission of money from Uganda and Tanzania to the EAA headquarters.
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Background: INTRODUCTION: East African Airways had to cancel several of its scheduled services on Friday (28 January) as the crisis over its cash-flow shortage threatened to cripple the airline's operation.
SYNOPSIS: The previous day the airline had announced that some of its services were to be suspended because it could not pay in advance for fuel. The airline, which is jointly owned by Kenya, Uganda and Tanzania, claims it is owed about 100 million Kenyan shilling) (7 million pounds sterling) by the governments of Uganda and Tanzania.
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A spokesman at the airline's headquarters in Nairobi, Kenya, said that the cash-flow problems had already reached a point where the airline could not pay for fuel for its aircraft, and oil companies were now insisting on payment in advance. One of Friday's cancellations was a VC-10 bound for Rome and Copenhagen.
To help out in the current difficult situation, East African Airways is operating a Boeing 747, leased from Aer Lingus, between London, Frankfurt and Nairobi. An airline spokesman said that Friday night's flight would not be affected by the present difficulties. If the airline ever did go bankrupt the creditors would not gain much.
EAA has three DC-9's, and four super C-10's, but they are being bought on hire purchase and not one is even half paid for. Ministers from the three share-holding countries had met last week to discuss its future.