KQ bailout dependent on adherence to agreed reforms: Macharia

NAIROBI, Kenya, Feb 4 — Transport Cabinet Secretary James Macharia on Friday said the financial support earmarked to help the ongoing restructuring of Kenya Airways is dependent on adherence to agreed reforms.

He said the reform agenda includes restructuring of the airline’s network, its fleet, and operations.

CS Macharia said the support will be extended with the concurrence all stakeholders, including suppliers, capital providers, aircraft financiers and employees.

This is after government confirmed the allocation of Sh26.6 billion under the supplementary budget for the financial year ending June 30, 2022.

“The government’s financial support is contingent on Kenya Airways adhering to agreed reforms, including permanent cost reduction measures, increased productivity and improved operational efficiencies,” the CS said in a statement issued on Friday.

He said the funds will help Kenya Airways to strengthen its cash flow, and place the airline in a better financial position to achieve its long-term success.

Under the initial plan, KQ was set to receive Sh53.4 billion with the monies set to be directed towards maintenance of grounded planes, payment of salaries, and settlement of utility bills.

The provision of the bailout to the national airline is an alternative to the initial plan to nationalize the airline which reported losses worth Sh36.2 billion in the 2020 financial year.

In the first half of 2021, the airline narrowed its pretax loss by 20 percent to Sh11.5 billion.

The bid which had been approved in 2019 would entail a process aimed at forming a holding company with four subsidiaries: Kenya Airports Authority, Kenya Airways, Jomo Kenyatta International Airport (JKIA), and a centralized aviation college.

Under the supplementary budget, the Ministry of Health has been allocated Sh68 billion, Ministry of Defence (Sh114) billion, Ministry of Energy (Sh6 billion) while the Judiciary is set to receive Sh15 billion.