Treasury Slashes Ksh10 Billion From KQ Bailout

The National Treasury has slashed 10 billion shillings in bailouts on Kenya Airways (KQ) as the exchequer steps in halting persistent bailouts to the National carrier.

Documents from the first 2022/23 Supplementary Budget indicate the government plans to revise the amount of capital injected into the national carrier to 20 billion shillings from the initial 30 billion shillings.

Treasury CS Njuguna Ndung’u had earlier announced that the Treasury would end the persistent bailouts on the carrier by December this year, and instead come out with a strategy that will bring the airline back to profitability.

“A critical plank of this strategy will be a financing plan that does not depend on operational support from the exchequer beyond December 2023,” he said.

The carrier has for many years struggled in debts something that has turned it into a burden for the government. To help service its debts, the government has persistently bailed out KQ in recent years, pouring in at least 35 billion shillings between 2016 and 2020.

In the six months to July last year, KQ reported a loss of 9.9 billion shillings. The recent loss is a 14 percent drop from 11.5 billion shillings in the same period in 2021. KQ attributed the loss to high fuel costs that saw the airline spend 11 billion shillings.

Total operational costs were at a five-year high of 57 billion shillings compared to 56 billion shillings in 2017. KQ had by September already received 10 billion shillings from the Treasury to help service its debts.

The Treasury further tabled an additional State bailout of 34.95 billion shillings for the carrier in the 2022/23 supplementary budget to repay its debts.

The airline has initiated some measures to curb losses while improving services. It is planning to halt its services in 12 loss-making routes and has already retired flights to 16 destinations globally.

The carrier will also reduce its fleet size by terminating some aircraft leases and eye negotiations with operating lessors to cut its annual lease costs. The airline is also betting on cutting operation costs, a move that will see it lay off some of its staff, and reduce distribution, ticketing, procurement, fuel, and maintenance costs.

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