Kenya Airways planes at the Jomo Kenyatta International Airport on March 6, 2019. FILE PHOTO | NMG The Treasury offered Kenya Airways a further Sh10 billion in a secret bailout despite having publicly stated it would reject the national carrier’s request for funds to avoid collapse amid the effects of the coronavirus pandemic.
A supplementary budget tabled in Parliament on Tuesday revealed Kenya Airways received Sh8 billion directly from the Treasury and Sh2 billion from the Transport ministry to ease the effects of the virus that has obliterated global demand for travel.
This marks a departure from the Treasury’s earlier position that it would reject a bailout for Kenya Airways in favour of a long-term solution anchored on nationalisation of the airline.
The national carrier needs money for the maintenance of grounded planes, payment of staff salaries and settlement of utility bills like security, water, electricity and parking.
Without State aid, the airline risked running out of money in the near future against the background of unease among banks about lending to African carriers.
The Treasury did not indicate when the billions of shillings were offered Kenya Airways or if the funds were in the form of equity or a loan from the government, which is in talks to buy out minority investors, including lenders and Air France-KLM.
“Sh8 billion is for Kenya Airways to enable the airline to sustain basic operation during the Covid-19/post-Covid-19 pandemic,” Treasury Cabinet secretary Ukur Yatani said in the revised national budget.
“Sh2 billion for cash injection for the Kenya Airways to cushion against the impact of the Covid-19 pandemic which grounded its operations.” Running into bankruptcy
Bloomberg News last year listed KQ as one of the airlines that risked running into bankruptcy unless they got government intervention within the next two months.
The airline has already laid off hundreds of staff, slashed workers’ pay and reduced its network in the race to remain afloat. It also plans to offload undisclosed assets.
First-half pre-tax losses for the period to June were Sh14.36 billion as Covid-19 derailed travel and slashed revenues. This compared to a Sh8.56 billion loss in the same period a year earlier.Turnover in the review period plummeted 48 percent to Sh30.21 billion.Kenya Airways resumed domestic flights in mid-July after the government cleared local air travel, and international flights were restarted on August 1.The airline was struggling before the coronavirus outbreak, posting a 2019 loss of almost Sh13 billion. Nationalisation A law […]