Kenya Airways has sought a multi-billion shilling government bailout after the grounding of its aircraft due to the ban on international flights sparked by the coronavirus pandemic.
The airline stopped international flights after a State order on March 22 to cancel all cross-border passenger flights. The order effectively cut off Kenya Airways’ flow of new revenues at a time when it had no cash reserves.
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.
Kenya Airways Chief Executive Officer Allan Kilavuka Monday said that the carrier had sent an emergency notice for additional funds to both the Treasury and the Ministry of Transport.
The airline said it needs money for maintenance of grounded planes, payment of staff salaries and settlement of utility bills like security, water and electricity.
“We have requested the government for financial support through a bailout as at the moment we are cash strapped by the fact that we are no longer in operation, except for a few local flights,” said Mr Kilavuka in an exclusive interview with the Business Daily .
Mr Kilavuka declined to reveal the amount the carrier is seeking from the Treasury, but added that it had also sought for other incentives like tax breaks and waiver of navigation and landing fees at airports.
Domestic flights contributed only eight percent of the airline’s sales in 2018, bringing in Sh9 billion out of Sh114 billion that the listed firm recorded as revenue. This means that KQ on average generates about Sh300 million daily from international flights.
“Aircraft engines have to be maintained often and it is important that we get funds for this,” Mr Kilavuka said.
According to him, the national carrier requires the State aid “as soon as possible”. However, he did not disclose whether Kenya Airways is seeking a grant, a loan or a combination of both.
Bloomberg news last week listed KQ as one of the airlines that risks running into bankruptcy unless it gets immediate government intervention within the next two months.The grounding of international flights is a signal that the national carrier will take a big revenue hit this year. As part of mitigation measures, KQ’s top executives as well as some employees took a pay cut of up to 75 per cent of their gross salary following the grounding of international flights.KQ’s fresh request for a government bailout comes weeks after […]