KQ’s big losses, bailouts call for forensic audit
Once popularly known by its slogan “The Pride of Africa”, Kenya Airways has in recent years become the joke of the continent. Critics now refer to it as the bottomless pit into which taxpayers’ money is sunk every year.
From a promising airline that ruled the skies in Africa and beyond, KQ continues to fly into headwind turbulence year after year. The billions injected into the airline have not had much impact. It is a sorry story of an airline that was one of the jewels of the aviation industry in Africa.
In one of its worst moments, the government is going to take over a Sh63.7 billion loan lent to the national carrier by America’s Exim Bank after it defaulted on repayment. It has been forced to take over a 10-year-old $525 million (Sh63.7 billion) loan that it guaranteed in 2017.
The airline had borrowed $841.6 million from the same bank to buy seven aircraft and an engine but failed to service it. That was as a result of cash flow challenges that were later worsened by the Covid-19 pandemic that literally grounded air travel for nearly two years.
Sh25 billion loan
The government, which has a 48.9 per cent stake in KQ, has been relentlessly shoring up the airline but with no signs of recovery. It’s like pouring public funds down the drain. KQ’s other financial challenges include delayed interest payment on a Sh25 billion loan from the government in December.
KQ, which has become synonymous with bailouts, had received another Sh11 billion government loan in 2020 and Sh14 billion last year. As part of the IMF conditions to rescue public enterprises, it is being restructured with staff layoffs and review of flight frequencies and routes.
A plan to nationalise the airline following an approval by Parliament in July 2019 has been shelved. At his vetting by Parliament, the new Transport Cabinet secretary, Kipchumba Murkomen, spoke about reforming KQ by splitting it into cargo, passenger, charter services and drone subsidiaries.
The heavy losses and bailouts cannot continue forever. There is a need for a forensic audit to confirm the viability of the investment in KQ and, if necessary, exit it to save public funds.
