Kenya Airways seeks US$501m bailout to weather Covid-19 pandemic

KENYA – National carrier Kenya Airways (KQ) says it will need at least US$500 million in bailouts to stay afloat in the next nine months as it navigates the turbulent aviation sector following collapse in air travel demand amid Covid-19 economic fallout.

The airline’s chief executive officer Allan Kilavuka, said that the money will be used on operations including staff remuneration, maintenance of aircraft and settling water, security, and electricity bills.

Without the government bailout, Mr Kilavuka warned the airline risks running out of money in the near future as banks are increasingly reluctant to lend to African carriers grappling with depressed earnings due to the coronavirus disruptions.

KQ, as the airline is known by its international code, reported a record US$329.5 million net loss in the year ended December, widening it from US$329.5 million the year before as costs surpassed revenues by a large margin.

“KQ requires a bailout as is the case with all airlines in the world. At the very minimum, what we need for 2021 is $500 million”

Allan Kilavuka – CEO, Kenya Airways

The performance, which the national carrier said was exacerbated by the grounding of its aircraft between April and July last year, also expanded its negative equity to US$584 million from US$162 million.

“KQ requires a bailout as is the case with all airlines in the world. At the very minimum, what we need for 2021 is $500 million,” said Mr Kilavuka in an interview with a local radio station Spice FM.

“We need the money because we have a lot of obligations to fulfil. Our operations is at 50 per cent and this cannot cover the cost we are incurring today.”

The government, which has a 48.9 percent stake in the airline, has provided the company with tens of millions of dollars’ worth of shareholder loans in recent years.

In a bid to turn the struggling airline to profitability, Kenya government hatched a plan to nationalise and merge it with other state enterprises like Kenya Airports Authority in October 2020, but the bid flew into headwinds after a section of lawmakers blocked the legislation citing lack of public participation citing the country’s constitution.

Kenya Airways was privatised 24 years ago but sank into debt and losses in 2014 after a failed expansion drive, costly purchase of aircraft and a slump in travellers after a major terror attack.

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