KQ seeks Sh55bn bailout to navigate Covid storm

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KQ seeks Sh55bn bailout to navigate Covid storm


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Kenya Airways CEO Allan Kilavuka during a January 18 briefing in Nairobi. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • The company’s chief executive Allan Kilavuka, said yesterday that the money will be used on operations including staff remuneration, maintenance of aircraft and settling water, security and electricity bills.
  • Without the State aid, Mr Kilavuka warned the airline risks running out of money in the near future as banks are increasingly reluctant to lend to African carriers grappling with depressed earnings due to the coronavirus disruptions.
  • KQ, as the airline is known by its international code, reported a record Sh36.2 billion net loss in the year ended December, widening it from Sh12.9 billion the year before as costs surpassed revenues by a large margin.

Kenya Airways #tricker:KQ says it will need at least $500 million (Sh54.87 billion) in bailouts to stay afloat in the next nine months as it navigates the turbulent aviation sector following collapse in air travel demand amid Covid-19 economic fallout.

The company’s chief executive Allan Kilavuka, said yesterday that the money will be used on operations including staff remuneration, maintenance of aircraft and settling water, security and electricity bills.

Without the State aid, Mr Kilavuka warned the airline risks running out of money in the near future as banks are increasingly reluctant to lend to African carriers grappling with depressed earnings due to the coronavirus disruptions.

KQ, as the airline is known by its international code, reported a record Sh36.2 billion net loss in the year ended December, widening it from Sh12.9 billion the year before as costs surpassed revenues by a large margin.

The performance, which the national carrier said was exacerbated by the grounding of its aircraft between April and July last year, also expanded its negative equity to Sh64.1 billion from Sh17.8 billion.

“KQ requires a bailout as is the case with all airlines in the world. At the very minimum, what we need for 2021 is $500 million,” said Mr Kilavuka in an interview with Spice FM yesterday.

“We need the money because we have a lot of obligations to fulfil. Our operations is at 50 per cent and this cannot cover the cost we incurring today.”

The government, which has a 48.9 percent stake in the airline, has provided the company with tens of billions of shillings worth of shareholder loans in recent years.

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