State to pay Sh72b for KQ loans
Kenya Airways will have gobbled up Sh72.2billion as interest payments for guaranteed loans by the financial year 2025/2026 if the troubled airline continues making losses, a new report shows.
According to a Budget and Appropriations Committee (BAC) report, the government is already planning to spend Sh2.26 billion to meet interest payments for guaranteed loans of the airline, and this will continue if nothing changes at KQ.
“Cumulatively, by FY 2025/2026, the government will spend approximately Sh72.2 billion to meet payment of Kenya Airways guaranteed debt,” reads a report of the parliamentary committee.
Constrained fiscal space
In its report tabled at the National Assembly yesterday, the BAC which is chaired by Kieni MP Kanini Kega raised concerns that contingent liabilities emanating from state-owned enterprises were constraining fiscal space.
“ In the 2022/2023 budget, there is an allocation of Sh 36.6 billion for capital injection into Kenya Airways and Sh2 billion to service guaranteed debt. In the supplementary estimates no 1 for the FY 2022/2023, the airline also received an allocation of Sh 200 million. There is no framework of disbursement,” reads the report.
The move comes even as the airline’s net loss for the year ended December 2021 dropped by more than 50 per cent helped by increased revenue on domestic and regional routes.
The struggling carrier announced that its net loss dropped 56.58 percent to Sh15.88 billion compared with a record loss of Sh36.57 billion the previous year.
The company blamed the onslaught of Omicron virus that led to in movement, which led to grounding of planes and shut down of some routes.
Improved revenue
KQ’s total revenue jumped 32.98 per cent to Sh70.22 billion, the firm said in a financial statement, adding that operating costs fell 3.62 per cent to Sh77.02 billion.
During that period, the group airlifted a total of 2.2 million passengers in the year under review, which a25 percent increase. This is however 57 per cent lower compared to the year 2019 before the pandemic struck Kenya.
Kenya Airways CEO said in a past report that other airlines are also seeking government bailouts. These include Egypt Air, Qatar, Emirates, Airfrance and many others, are also seeking bailouts. “KQ is not alone in seeking government support to survive the COVID-19 crisis,” Kilavuka said.
