Kenya Airways #ticker:KQ has asked the Treasury for a Sh7 billion emergency bailout after its aircraft were grounded due to the restrictions on international passenger flights sparked by the coronavirus pandemic that has killed over 280,000 people globally.
The Treasury is reviewing the application but has remained non-committal on whether it will offer the national carrier the money it needs for the maintenance of the grounded planes, payment of staff salaries and settlement of utility bills like security, water, electricity and parking fees.
Large aircraft pay $25 (Sh2,650) daily to park at airports like JKIA and $585 (Sh62,010) and $702 (Sh74,412) to land during the day and night respectively.
Besides the bailout, the airline is also seeking other incentives like tax breaks and waivers of navigation and landing fees. Without State aid, the airline risks running out of money in the near future against the background of banks’ uneasiness in lending to Africa carriers which are facing a plethora of challenges.
The International Air Transport Association has warned that the aviation industry may take years to recover from the Covid-19 pandemic and that African airlines could lose upto $6 billion (Sh636 billion) in passenger revenue this year alone, further compounding their woes.
“We are looking into KQ’s Sh7 billion request during this difficult time,” Treasury Secretary Ukur Yatani told the Business Daily .
“The request will be reviewed against the background that the airline recently received Sh5 billion from the government.”
The Treasury has indicated that it has not included a provision for Kenya Airways in the budget estimates for the year starting July, which are before Parliament for approval.
Kenya Airways received a Sh5 billion commercial loan from the Treasury in late February to fund its fleet engines overhaul and maintenance as well as to finance day-to-day operations for the loss-making airline. This underlines the airline’s overreliance on Treasury-backed loans and financing.
In the latest case, Mr Yatani did not disclose whether Kenya Airways is seeking a grant, a loan or a combination of both.
The State suspended all cross-border passenger flights on March 22, stopping KQ’s flights to destinations outside Kenya. The order effectively cut off Kenya Airways’ flow of new revenues at a time when it had no cash reserves.On April 6, the government also barred movement into and out of four counties including Nairobi, Mombasa, Kwale and Kilifi, forcing Kenya Airways to ground local flights as well and hinge its survival solely on cargo business, […]