Treasury to end Kenya Airways bailouts by December

By the end of December 2023, the government promises to develop a financing plan that will see it stop using taxpayer funds to support the operations of the loss-making Kenya Airways (KQ)

The plan was revealed by National Treasury in the draft 2023 Budget Policy Statement, which was released Wednesday evening.

“To support the aviation industry, the government will develop a turnaround strategy for Kenya Airways,” said Treasury in the document.

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

If the plan is put into action, taxpayers might save the billions of shillings needed to maintain the national carrier, which last generated a profit in 2012.

As a means of weaning KQ off debts and subsidies and putting it on a growth path, President William Ruto had earlier stated that the State was searching for a strategic partner to buy a majority position in the company.

Midway through December, the search for KQ’s strategic partners topped the list of Dr. Ruto’s trip to Washington at the US-Africa summit, according to Transport Cabinet Secretary Kipchumba Murkomen.

“We are doing everything possible to ensure that we no longer subsidise the airline and that is why we are looking for a strategic partner,” said Mr Murkomen then.

KQ received Sh36.6 billion in the current fiscal year as part of the State’s strategic investments in public businesses, mostly for its reorganization.

Given that it had been granted Sh26.6 billion in the prior fiscal year, the allocation increased the amount invested into the national carrier to Sh63.2 billion.

Between 2016 and 2020, the government lent KQ at least Sh35 billion, bringing the total amount of loans to the airline to almost Sh98.2 billion.

The International Monetary Fund (IMF) stated in a report from last year that the government “is projected to be servicing Kenya Airways’ guaranteed and unguaranteed loan amounts to $868.7 million (Sh107.8 billion) as of March 2022 and discussions are ongoing with Kenya Airways’ creditors.”

The airline would receive $473 million (Sh58.7 billion) in direct financial help from the government to pay off past-due debts and cover the up-front expenses of restructuring, according to information provided to the IMF by the government.