Kenya Airways (KQ) incurred an additional Kes 11.3 billion in debt in the fiscal year that ended June 30, indicating a drawdown of some of the government-promised bailout funds.
KQ has been receiving new government loans in tranches since 2020 when it required assistance to see it through the grounding of its fleet following the ban on international flights as Kenya and other nations raced to contain the spread of Covid-19.
The National Treasury provided the airline with a Kes 11 billion bailout in 2020, followed by a Kes 14 billion bailout in 2021.
The Treasury received approval from MPs in March to release a further bailout package worth Kes 20 billion, and the airline is also set to receive additional support worth Kes 36 billion in the current fiscal year, which began on July 1.
KQ reported in its half-year 2022 financial results that borrowings received nearly tripled to Kes 11.3 billion, up from Kes 4 billion in 2021.
As a result, its current liabilities, which include debts due within one year, increased by Kes 20.5 billion during the period to Kes 101.5 billion, indicating that the majority of the new debt was of short duration.
Current liabilities also include lease liabilities, trade payables, and advance ticket sales. Non-current liabilities, which include long-term borrowings and other payables, increased by only Kes 2.8 billion during the period to Kes 160.7 billion.
The Treasury has described the KQ bailouts as strategic government investment, after abandoning plans to nationalize the airline.
Aside from the cash loans, the government also guaranteed Kenya Airways’ debt to a consortium of local banks and the US Exim Bank for Kes 90 billion ($750 million).
The airline, which has been losing money for the last ten years, reported that its half-year 2022 loss was Sh9.8 billion, down from Kes 11.48 billion the previous year.
Revenues increased by 76 percent to Kes 48.1 billion as a result of increased travel bookings.
Kenya Airways Performance outlook
However, the performance was hampered by higher operating costs, which increased by half to Kes 53.11 billion, owing to a sharp rise in global fuel prices.
The airline’s negative equity increased to Kes 98.3 billion at the end of June, up from Kes 83.3 billion in December, a Kes 15 billion increase in six months.
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