Cash-Strapped Kenya Airways Seeks 54.87 Billion Shillings Bailout from Gov’t

Kenya Airways (KQ) is seeking a $500 million (Sh54.87 billion) bailout from the government to stay afloat in the next nine months.

KQ CEO Allan Kilavuka says the funds will be used on the airline’s operations such as salaries, maintenance of planes, and payment of security and utility bills.

Kilavuka warned that the national carrier could become bankrupt in the near future if the government does not come to its aid.

Creditors have been reluctant to lend to African airlines as they struggle with reduced earnings following a collapse in air travel demand due to CIVID-19 disruptions.

“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,” Kilavuka said in an interview.

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

This week, KQ announced a loss of Sh36.2 billion, the largest by a corporate in the country’s history.

The loss in the year ended December 31st, 2020, which is nearly threefold the Sh13 billion loss recorded a year earlier, was largely attributed to the collapse of the airline’s operations in 2020 due to the COVID-19 pandemic-related disruptions.

Its cumulative revenues in the year under review dropped by 59 percent to Sh52.8 billion from Sh128.3 billion in 2019 while passenger income declined by Sh69.9 billion following the grounding of flights for five months in 2020.

During the period, the airline ferried 1.8 million passengers compared to 5.2 million in the previous year.