A Kenya Airways plane at the Jomo Kenyatta International Airport. The National Treasury has rejected a proposal by cash-strapped Kenya Airways (KQ) for a fresh financial bailout estimated at $499.77 million, spelling doom to the operations of the loss-making national carrier.
Chief executive Allan Kilavuka told The EastAfrican that in March, the airline proposed a $500 million financial bailout, but the government has only disbursed Ksh25 million ($227,270), since the last financial year.
"The airline has received Ksh25 million ($227,270). We are extremely appreciative of the support we have received so far, considering the many industries government is supporting in these unprecedented times," Kilavuka said in an emailed response.
However, Stanley Kamau, the acting Director General in-charge of Public Investments and Portfolio Management Directorate at the National Treasury told The EastAfrican that the government was unaware of the fresh bailout proposal and as such no allocation for that expenditure has been factored into the budget for the current (2021/22) fiscal year.
"We have not received any bailout request from Kenya Airways. No. We haven’t received any. We have not discussed with KQ about this bailout for 2021/2022 with anyone," Mr Kamau told The EastAfrican during an interview last week.
In March, the airline said it was in desperate need of an immediate capital injection of about $500 million to cover short-term debts that had fallen due and shore up its depleted working capital in order to survive what it considers another difficult year under the third wave of the Covid-19 pandemic.
"No, I’m not sure they asked for $500 million for I haven’t seen such a request," he said.
Last year, Treasury Cabinet Secretary Ukur Yatani said the state was keen on a long-term solution anchored on nationalisation of Kenya Airways, rather than short term financial bailouts.
The national carrier, which is technically insolvent announced in August that it was in dire need of fresh financial support from its anchor shareholder (the Kenya government) to fund its operations to year-end, with its employees accepting pay-cuts of up to 30 percent since January to help the airline survive the turbulence.Kilavuka termed KQ’s financial situation precarious, with a negative equity position that required immediate financial support from its principals or elsewhere.The carrier, which has forecast a grim full-year performance due to the effects of the Covid-19 pandemic posted a net loss of Ksh11.48 billion ($104.36 million) during the six months to June 30 down […]