The Kenyan government is developing a financing strategy for Kenya Airways (KQ, Nairobi Jomo Kenyatta) that will end its reliance on state support by the end of December 2023, according to a brief note in its draft 2023 Budget Policy Statement.
“To support the aviation industry, the government will develop a turnaround strategy for Kenya Airways. A critical plank of this strategy will be a financing plan that does not depend on operational support from the exchequer beyond December 2023,” the statement reads.
Meanwhile, the technically insolvent flag carrier will receive state support of KES34.9 billion shillings (USD283.2 million) this year after the government earlier pledged continued financial aid in FY2022/23 to prevent defaults for the settlement of lessors’ arrears and working capital support. Since June 2022, Kenya Airways has been undergoing restructuring – financed with state loans that will have to be repaid – focusing on fleet and network simplification, staff rationalisation, cost management, labour agreement overhauls, ancillary business and strategic partnerships.
In May 2022, the government approved a state loan of KES20 billion shilling (USD173.9 million), and the airline borrowed another KES11.3 billion (about USD95 million) in the half-year ending June 30, 2022. This followed loans of KES11 billion (USD95.2 million) in 2020 and KES14 billion (USD121.1 million) in 2021.
The Kenyan government, in the meantime, is looking for a cash-rich foreign airline to take Kenya Airways off its hands. President William Ruto reportedly pitched a plan to Delta Air Lines (DL, Atlanta Hartsfield Jackson) during a visit to the United States recently.
Source: Ch-aviation
