This archive report was first published on 13 January 2020.
January 13, 2020
Kenya Airways, the country's national carrier, is on the brink of collapse, and the government is preparing to inject more funds into the struggling airline. National Treasury Cabinet Secretary Ukur Yatani announced the plan at the launch of the 2019 Tourism Sector Report on Friday.
“Kenya Airways is critical to the country and for the national brand, and the government cannot afford to lose it,” Yatani said. “We have a plan, and Treasury is currently looking for resources for KQ to ensure it does not collapse.”
The airline has already issued a profit warning for 2019, indicating that its loss for the year to December 2019 would be lower by 25 per cent or more. This comes at a time when the airline is searching for a new chief executive after its immediate former boss Sebastian Mikosz left last month.
Kenya Airways received a State bailout in 2017, which raised the country's commercial debt to Sh725.7 billion. Parliament approved the Treasury's guarantee of $750 million (about Sh77.3 billion at the then exchange rate) loans owed by the ailing airline.
However, the deal has now come back to haunt the State, which will have to buy out commercial banks and up to 80,000 small shareholders as part of the reorganisation settlement. The government is also in the process of developing the administrative and legislative structures to breathe new life into the national carrier.
