Kenya Airways Seeks Multi-Billion Shilling Government Bailout

Kenya Airways has requested a multi-billion shilling bailout from its government amid the growing impact of the COVID-19 pandemic. The airline was forced to halt international flights as per a governmental order on March 22nd and now much of its fleet remains grounded.

Kenya Airways 777
The majority of Kenya Airways’ planes aren’t taking off at the moment. Photo: Getty Images

Bad timing

Business Daily reports that the state gave its order at a time when the flag carrier of Kenya had no cash reserves. Therefore it is in need of urgent funds to cover expenses while operations are effectively non-existent. The firm states that it needs the money to pay its staff, settle utility bills, and maintain its aircraft.

It can still operate domestically but national flights only made up around eight percent of the airline’s sales in 2018, earning Sh9 billion ($85 million) out of Sh114 billion ($1.3 billion). Additionally, with the coronavirus outbreak lowering demand as it is, ticket sales are likely to continue plummeting this summer.

On Monday, Kenya Airways Chief Executive Officer Allan Kilavuka shared that his company had sent an emergency notice for additional funds to both the Kenyan treasury and the ministry of transport.

“We have requested the government for financial support through a bailout as at the moment we are cash strapped by the fact that we are no longer in operation, except for a few local flights,” said Kilavuka, as reported by Business Daily.

“Aircraft engines have to be maintained often and it is important that we get funds for this.”

Kenya Airways flight
The bailout could be crucial to saving the airline. Photo: Getty Images

Existing problems

The executive wants this aid as soon as possible. However, he did not confirm whether the airline is seeking money in the form of a grant or loan. Ultimately, it could be requesting a combination of both to balance the interests of both parties.

Kenya Airways is already indebted to the treasury following a recent loan of Sh5 billion ($47 million). The government is also the firm’s top shareholder, holding 48.9 percent of its shares.

The carrier has faced issues with corruption, mismanagement, aged debts and an increase in competition over the years. Moreover, its existing financial struggles have set it up for a tough summer amid the global aviation shutdown.

Kenya Airways
African carriers were some of the last to feel the true impact of the pandemic. Photo: Getty Images

Crucial period

Kenya Airways’ top executives and some members of staff have had a pay cut of up to 75 percent of their gross salary. This is in a bid to save money during this sensitive time. However, with the industry still uncertain about how governmental policies will play out over the next few months, the airline will be hoping that it can get its needed financial support immediately.

Altogether, the business is just one of several operators that are seeking bailouts amid the pandemic. These carriers will be keeping a close eye on the situation this month to see how authorities will review the global flight restrictions.

Simple Flying reached out to Kenya Airways for comment on its bailout request but did not hear back before publication. We will update the article with any further announcements.

What are your thoughts on Kenya Airways’ bailout request? How do you think the government will respond? Let us know what you think about the situation in the comment section.

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