Kenya: Treasury Declines KQ Sh7 Billion Bailout Appeal

Kenya Airways planes at JKIA in Nairobi.

The Treasury has refused to offer a commitment to Kenya Airways's request for a Sh7 billion emergency bailout after its aircraft were grounded due to the restrictions on international passenger flights sparked by the coronavirus pandemic.

Treasury Cabinet Secretary Ukur Yatani said the State was keen on a long-term solution anchored in nationalisation of Kenya Airways, arguing the carrier's financial troubles go beyond the corona-related woes.

The national carrier needs money for the maintenance of the grounded planes, payment of staff salaries and settlement of utility bills.

The freeze on all cross-border passenger flights on March 22 and restriction of movement into and out of four counties including Nairobi, Mombasa, Kwale and Kilifi to curb the spread of the virus has hit Kenya Airways hard.

Mr Yatani reckons that the Treasury is keen to pursue a turnaround under the plan to nationalise Kenya Airways, which was approved by lawmakers in July.

"We are not making any commitments at this stage," he said about the Sh7 billion bailout. "Kenya Airways need to remain afloat but it is also important to look at structural challenges because what is happening now is more than the business environment."

He added that a restructuring plan backed by the Treasury and Transport ministry is ready and would be unveiled in coming weeks.

Kenya wants to emulate countries like Ethiopia, which run air transport assets under a single company, using funds from the more profitable parts to support others.

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