Treasury rejects KQ plea of Sh7bn emergency bailout

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The Treasury has denied Kenya Airways (KQ) its request of Sh7 billion emergency bailout following the coronavirus restrictions to ground the international passenger flights.

The carrier has been surviving through its cargo business, which KQ the chief executive Allan Kilavuka said it’s not adequate to meet the airline obligations.

The carrier needs capital for the maintenance of the grounded planes, pay their staff salaries, settle utility bills like water, security, electricity and parking.

According to Ukur Yatani, the Treasury Cabinet secretary, the Kenya Airways financial problems go beyond the corona related woes.

Mr. Yatani pointed out that the Treasury is in a move to pursue a turnaround plan to nationalize Kenya Airways, which was approved in July by lawmakers.  

“We are not making any commitments at this stage,” he said concerning the Sh7 billion. “Kenya Airways need to remain afloat, but it is important to look at structural challenges because what is happening now is more than the business environment,” He added.

The country wants to emulate countries like Ethiopia, which runs the operations of air transport from airport to fueling. This is done under a single company that uses funds from more profitable parts to support others. The model, which was approved by MPs, Kenya Airways, will be one of the subsidiaries in an aviation holding firm.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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