Troubled KQ Receives Kes 10 Billion Bailout From Treasury
Kenya Airways has received Kes 10 billion from the National Treasury in a secret bailout. This comes as a contradiction from the National Treasury’s earlier claims that it will not approve the national courier’s request for funds to avoid collapse amidst the coronavirus pandemic.
A supplementary budget presented in Parliament on Tuesday revealed that Kenya Airways has received Kes 8 billion directly from the Treasury and an additional Kes 2 billion from the Transport Ministry to ease the effect of the Coronavirus pandemic that had affected the global aviation sector.
However, the Treasury did not indicate whether the funds offered to Kenya Airways was in form of equity or a loan from the government.
Treasury Cabinet Secretary Ukur Yatani stated that the Treasury’s kes 8 billion would allow the national courier to sustain basic operations despite the prevailing COVID-19 pandemic. He further noted that the additional kes 2 million is meant to cushion the company against the effects of the COVID-19 pandemic.
The State bailout comes less than a year after Kenya Airways received a Kes 5 billion loan from the Treasury, which increased the national carrier’s indebtedness to the government which owns 48.9 % of the shares.
KQ’s Financial Position
Kenya Airways recorded a pre-tax loss of kes14.36 billion for the period ended 30 June 2020, being a 40 % increase from a Kes 8.56 billion loss posted for a similar period in 2019. KQ’s management attributed the loss to the Coronavirus pandemic, which saw governments globally enforce travel bans to curb the spread of the virus.
Turnover for the period in review increased by 48 % to Kes 30.21 billion, notwithstanding, the National courier has been recording losses since 2014, bringing up discussions by the National government to acquire the loss making carrier.