KQ Might Collapse If Ksh 7 Billion Emergency Bailout Backfires

National Carrier Kenya Airways has sought 7 billion shillings bailout from the state as the airline continues to deal with various challenges brought forth by the Covid-19 pandemic.

In a request sent to the National Treasury, KQ seeks an emergency bailout to remain afloat after most of its flights were grounded at the Jomo Kenyatta International Airport over Covid-19 restrictions, a situation that has made it difficult for the airline to pay its dues.

The 7 billion shillings emergency bailout will help KQ in maintaining grounded planes, payment of staff salaries, and settlement of utility bills like security, water, electricity, and parking fees.

Currently, KQ is surviving on Cargo freights which do not provide the airline with enough revenue to settle all the owed dues. Transport CS said KQ has only two cargo freights that cannot travel for longer distances thus affecting its cargo business.

“Kenya Airways has only two cargo freighters, one of which is currently undergoing heavy maintenance. These freighters, however, fly short distances and cannot, therefore, fly to Europe,” said the Transport CS.

To salvage its businesses, KQ has been forced to convert some of its passenger planes to cargo planes, but this too has not borne fruits as Competition from other airlines has reduced its share of Cargo business.

Another challenge the Airline is facing is the payment of parking fees at the JKIA. The parking and landing fees are too high prompting the airline to seek a waiver until the Covid-19 dust settles.

For a large plane to be parked at JKIA, an Airline has to pay 2,650 shillings per day while the landing fees are charged at 62,010 shillings and 74,412 shillings for the daytime and night respectively.

KQ Chief Executive said the Airline is currently at a critical condition and its survival is limited even if it depends on Cargo revenue.

“We can survive if we get some revenue from cargo, but only just survive. For us to meet our full obligations, we need government support urgently,” said Mr. Kilavuka.

“Aircraft engines have to be maintained often and it is important that we get funds for this.”

However, the National Treasury has said it is reviewing KQ’s application but with no assurance, since the airline recently received 5 billion shillings from the Government.

“We are looking into KQ’s 7 billion shillings request during this difficult time,” said Treasury Secretary Ukur Yatani.

“The request will be reviewed against the background that the airline recently received Sh5 billion from the government.”