The National Treasury has made a significant cut to its support of Kenya Airways (KQ), reducing the amount of funding from Sh30 billion to Sh20 billion. This decision comes as the government begins to wind down its support of the struggling national carrier.
Previously, the Treasury had disclosed to the International Monetary Fund that it would provide Sh34.95 billion to KQ, including funds for debt service. In September 2022, Sh10 billion was disbursed, bringing the total amount of government support for the company to at least Sh35 billion between 2016 and 2020.
Turnaround Strategy for KQ
To support the aviation industry, the government has announced plans to develop a turnaround strategy for Kenya Airways. This strategy will include a financing plan that does not rely on government support beyond December 2023.
KQ has remained a burden on the government, which is currently involved in the process of taking over the carrier’s guaranteed debt of Sh60.7 billion. The National Treasury has already settled outstanding debt service arrears and included additional amounts for debt service payments in the 2022/23 Supplementary Budget.
All payments made on behalf of KQ are considered shareholder loans and agreements with agreed term sheets are being prepared. As of November 17, 2022, KQ’s debt portfolio was valued at Sh104.4 billion, including all debts, loans, letters of credit facilities, and convertible equity amounts.
