The Treasury has made a significant payment of KES 6.9 billion towards Kenya Airways’ debt, effectively clearing more than half of the total debt of KES 69.9 billion accumulated last year.
This payment, which is part of a broader strategy to restructure the national carrier, comprises KES 5.5 billion for principal repayment and KES 1.4 billion for interest, leaving a remaining balance of KES 16.2 billion. Despite recording an operating profit, Kenya Airways continues to face financial challenges, including those stemming from exchange rate fluctuations.
The airline has benefited from a suspension on repaying government debts, with its total liabilities standing at KES 302 billion as of June last year. Long-term liabilities amount to KES 177 billion, while short-term liabilities cover expenses such as fuel costs, landing fees, leases, payroll, and taxes, totaling KES 125 billion. Kenya Airways currently has a negative equity of KES 133 billion, prompting ongoing efforts to restructure since May 2022. However, detailed planning has been put on hold as authorities assess the budgetary implications.
According to a report from the International Monetary Fund (IMF) in January, the government tasked ministries with reviewing restructuring strategies for Kenya Airways in November 2022. A draft Cabinet Memorandum has been submitted for review, with a decision expected in April 2024 regarding a new implementation plan. Financial support for external debts is limited, prompting the airline to seek an equity investor, with plans to finalize a consultant by December 2023.
Kenya is also exploring privatization options, drawing inspiration from successful models in countries such as Romania. This strategy involves consolidating companies within a fund to attract investors. A decision on these strategies is anticipated by June 2024, marking a pivotal moment for Kenya Airways’ financial stability and operational efficiency.
