Kenya: KQ Uncertain as to Whether Business Will Continue to Exist in Future

Nairobi — National carrier, Kenya Airways has raised growing concern as the whether the business will continue to exist into the foreseeable future in the wake of accumulated losses and its net current liability position.

This was part of the significant risks raised in its report for the year ended December which noted that the group faces liquidity risks as it is unable to service financial obligations as and when they fall due.

“The going concern is material uncertainty as to whether the business will continue to exist into the foreseeable future due to the accumulation of losses and the net current liability,” the report from the airline’s directors pointed out.

As part of the mitigation actions to curb the potential risks, KQ said it is engaging with key suppliers and financiers for moratoria.

The directors noted that the airline is also engaging with principal shareholders which include the Government for financial support.

The airline has for a long time been relying on bailouts from the Treasury amid increased losses that have made it technically insolvent.

The report additionally revealed that the airline did not make any payment for the loans taken in 2021 and 2020.

“As of December 2021, the group and company had not made any payments of interest on the government of Kenya loan as set out in the loan agreements,” the report read in part.

In the year ending December 31, the airline, nonetheless, narrowed its pretax loss by Sh15.8 billion driven by a cut in expenditure and higher revenue as travel picked up with the easing of COVID-19 restrictions.

The airline is banking on freezing noncritical spending and implementing temporary cuts for staff in order to bounce back to profits.

In the report, the national carrier identified competition from other aviation players as a potential risk.