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The Treasury has now cleared more than half of Kenya Airways’ guaranteed debt with a fresh Sh6.9 billion payment in the quarter that ended in December
The Treasury has now cleared more than half of Kenya Airways’ guaranteed debt with a fresh Sh6.9 billion payment in the quarter that ended in December.
The latest payment means that the Treasury has offset Sh53.7 billion out of a Sh69.9 billion KQ debt it took over last year as part of a wider strategy to restructure the operations of the national carrier. Thloan was tapped from the USA Export-Import Bank (EXIM) in 2017.
During the quarter ending December 2023, the national government paid Sh6.9 billion in guaranteed debt on behalf of Kenya Airways. Of that, Sh5.5 billion was principal payments and Sh1.4 billion as interest. In six months of operations to the end of June, KQ reported an operating profit but remained in loss territory due to the exchange rate depreciation.
The national carrier has a moratorium on debt service for the amount owed to the government including the novated debt. At the end of June last year, KQ had total outstanding liabilities of Sh302 billion including outstanding claims by the government on account of its past and ongoing support.
Of the arrears, Sh177 billion relates to long-term liabilities while short-term liabilities at the end of the period amounted to Sh125 billion; comprising 14 percent fuel, 39 percent landing fees, 16 percent leases, 13 percent payroll, and 17 percent taxes and statutory dues.
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The company was in a negative equity position of Sh133 billion at the end of the six-month review period. According to the IMF, a detailed business restructuring action plan prepared in May 2022 has remained on hold as authorities assess the least-coach approach for the budget. Alternatively, the government is exploring privatization as a means to anchor the operations of the airline.
