Kenya’s National Treasury has neither received a budget nor a call from Kenya Airways (KQ, Nairobi Jomo Kenyatta) for a new financial bailout of nearly $ 500 million, the East African newspaper reports.
It quotes Stanley Kamau, acting director general of public investments and the directorate of portfolio management at the National Treasury, that the government is not aware of any new funding requests from the airline and, more importantly, that no allocation for such expenditure has been made in the budget for the current financial year (2021/22) taken into account. “We have not received a bailout request from Kenya Airways. We did not discuss this rescue operation with KQ. I’m not sure they asked for $ 500 million as I haven’t seen such a request, ”he said.
Kenya Airlines Chief Executive Allan Kilavuka briefed investors earlier this month on the airline’s half-year results, which ended in June 2021, saying the airline is technically insolvent and will continue to need government support to fund its operations through the year-end, because she is in a “precarious financial position” “.
The East African reported that Kilavuka had informed him in March that the airline had received an immediate cash injection of 499.77 million) since the previous fiscal year.
“The airline received KES 25 million. We are very grateful for the support we have received so far, considering that the government is supporting many industries in these unprecedented times, ”Kilavuka said in an email reply to the newspaper.
Kenya Airways’ liabilities exceeded its assets by KES 73.8 billion ($ 672.3 million) through June 30, 2021. For the six months ended June 30, the company recorded a net loss of KES 11.48 billion ($ 104.36 million). from a net loss of KES 14.32 billion ($ 130.18 million) for the same period last year. The decline was aided by diversification into cargo and charter operations as passenger numbers shrank during the pandemic and passenger revenue was wiped out. The airline’s employees have been accepting pay cuts of up to 30% since January 2021 to help the airline weather the current health crisis.
Last year, Treasury Secretary Ukur Yatani said the state was interested in a long-term solution anchored in the nationalization of Kenya Airways, rather than short-term financial bailouts. However, a bill allowing the state to take over the 44-year-old airline has been postponed in parliament as other national matters were prioritized during the pandemic.
National Assembly Transport Committee chairman David Pkosing said the 2020 National Management Aviation Bill is awaiting debate and could be discussed when Parliament returns from its current hiatus.
Kenya Airways shares were suspended from trading on the Nairobi Stock Exchange on July 3, 2020 in anticipation of planned nationalization following the bill’s release on June 18, 2020.
In March 2021, the National Assembly should debate and vote on the bill so that it can move on to the next phase – the third reading or the stage of amendments. However, it was pulled out of business during a special session after lawmakers threatened to shoot it down to protest delays by the Treasury Department in releasing National Government Constituency Development Fund funds. Under House rules, any bill lost in the debate can only be reintroduced after six months.
Kenya Airways is 48.9% government owned with a group of 10 lenders holding 38.1%, Air France-KLM 7.8%, employees 2.4% and others 2.8%.