Treasury clears half of Kenya Airways' guaranteed debt with new Sh6.9bn payment
Kenya Airways planes at the JKIA parking bay on November 5, 2022. Treasury has now offset Sh53.7 billion out of a Sh69.9 debt owed by KQ.
What you need to know:
- Treasury has now offset Sh53.7 billion out of a Sh69.9 billion debt that the national carrier took over last year.
- As of June last year, KQ had a total outstanding liabilities of Sh302 billion including outstanding claims by the government.
The National Treasury has cleared over half of Kenya Airways' (KQ) guaranteed debt with a fresh Sh6.9 billion payment in the quarter that ended in December.
This means the Treasury has offset Sh53.7 billion out of a Sh69.9 billion debt that the national carrier took over last year as part of a wider strategy to restructure operations of the airline.
The loan was tapped from the USA Export-Import Bank (EXIM) in 2017.
“During the quarter ending December 2023, the national government paid Sh6.9 billion in guaranteed debt on behalf of Kenya Airways. The payments consisted of Sh5.5 billion as principal payments and Sh1.4 billion as interest,” said the National Treasury.
Outside the debt, the government has weaned KQ off budget support and had not received any new direct budgetary support in the preceding year to November 2023 according to disclosures by the International Monetary Fund (IMF).
In six months of operations to the end of June, KQ reported an operating profit but remained in loss territory due to the exchange rate depreciation.
The national carrier has a moratorium on debt service for the amount owed to the government including the debt.
At the end of June last year, KQ had a total outstanding liabilities of Sh302 billion including outstanding claims by the government on account of its past and ongoing support.
Sh177 billion of the arrears relate to long-term liabilities while short-term liabilities at the end of the period amounted to Sh125 billion; comprising 14 per cent fuel, 39 per cent landing fees, 16 per cent leases, 13 per cent payroll, and 17 per cent taxes and statutory dues.
