The national carrier announced in August that it is in dire need of fresh financial support from its anchor shareholder (the government) to fund its operations up to the end of this year.
Its employees agreeing to take up pay-cuts of up to 30 percent since January to help the airline survive the turbulent times.
KQ CEO Allan Kilavuka said the financial situation of the airline is precarious, with a negative equity position and that the company requires immediate financial support from its principals or elsewhere.
Kenya’s national carrier, Kenya Airways, which has forecast a grim full-year performance due to the effects of the Covid-19 pandemic made a net loss of Ksh11.48 billion ($104.36 million) during the six months period to June 30, down from a net loss of 14.32 billion ($130.18 million) in the same period last year.
The reduction in losses was helped by the diversification of the business into cargo and charter flight operations as passenger numbers shrank, wiping out passenger revenues.
The government has opted to take over the airline through a process called nationalization by buying out the minority shareholders.
Last year, Treasury Cabinet Secretary Ukur Yatani said the State was keen on a long-term solution anchored on nationalisation of Kenya Airways, rather than short term financial bailouts.
But the draft law that allows the state to take over the 44-year-old airline falters in parliament with other national matters taking precedence in the House business.
“The Bill is in parliament. It is waiting for scheduling by being put on the Order Paper for debate. We had a very long road on this Bill and so whatever those small, small things people were raising were not holding water, they were just rumours,” said David Pkosing, chairman of the National Assembly Transport Committee.
“You know in parliament there things that come and take priority, like for now we had the Building Bridges Initiative (BBI) and then the Budget but possibly when we come back from this recess it will be put on the Order paper.”
The national carrier announced in August that it is in dire need of fresh financial support from its anchor shareholder (the government) to fund its operations up to the end of this year.
Its employees agreeing to take up pay-cuts of up to 30 percent since January to help the airline survive the turbulent times.
KQ CEO Allan Kilavuka said the financial situation of the airline is precarious, with a negative equity position and that the company requires immediate financial support from its principals or elsewhere.
“The airline has received Ksh25 billion from the government. We are extremely appreciative of the government support we have received so far, considering that there are many industries that government is supporting during this unprecedented time,” Kilavuka told The EastAfrican in an emailed response.
On July 3, 2020, the airline’s stock on Nairobi Securities Exchange (NSE) was suspended from trading to pave way for the planned takeover by the state following the publication of the National Management Aviation Bill 2020 on June 18, 2020.
In March this year, the Bill was withdrawn from the business lined up for consideration by the National Assembly during a special sitting. This was after MPs threatened to shoot it down in protest over delays by the Treasury to release money for their National Government Constituency Development Fund (NGCDF).
The lawmakers were to debate and vote on the bill for its progression to the next stage—third reading or the amendment stage.
The House rules provide that if a bill is lost at the debate stage, it can only be reintroduced after six months.
KQ is 48.9 per cent owned by the government and a group of 10 local banks own 38.1 per cent of the shares.
Other shareholders include KLM Royal Dutch Airline (7.8 per cent), employees (2.4 per cent) and other shareholders at 2.8 per cent.
***** EDITOR'S NOTE: This story has been revised because of a factual error. We erroneously stated that Kenya Airways was seeking a fresh financial bailout of $500 million that was rejected by Treasury. We have established that no new bailout has been requested.
