The National Treasury was forced to bail out Kenya Airways (KQ) from a debt worth billions of shillings during the 2023/2024 fiscal year.
According to the ministry led by Cabinet Secretary John Mbadi, during the financial period ended on June 30, 2024, the national treasury made a payment of Ksh17.43 billion to settle the debt.
Further, treasury indicated that it had agreed to guarantee a debt on behalf of KQ during the period. This means that the national treasury had agreed to pay the debt if the national carrier was unable to do so.
Moreover, the payment consisted of sh14.3 billion principal payment, the original amount borrowed, and Ksh3.1 billion interest payment, cost of borrowing the money.
“The government serviced guaranteed debt on behalf of Kenya Airways (KQ) amounting to Ksh17.4 billion during the period under review.
“The national government paid Ksh17.43 billion guaranteed debt on behalf of Kenya Airways during FY 2023/24. The payments are composed of Ksh14.3 billion principal payment and Ksh3.1 billion interest payment in the period under review,” stated the ministry.
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Treasury PS on Kenya Airways Debts
Earlier on August 28, Treasury Principal Secretary Chris Kiptoo revealed to the National Assembly’s Committee on Public Debt and Privatization that Kenya Airways owes Tsavo Lenders Ksh120.15 billion ($924,232,675).
According to the treasury PS, the national carrier borrowed the money from Tsavo Lenders to buy planes.
Additionally, he explained that KQ entered into an agreement with Tsavo Lenders on March 26, 2014, for the procurement of six Boeing 787-8 aircraft, one Genx engine and one B777-300ER through the Tsavo Financing Facility.
“Tsavo Financing Facility comprises a senior facility and a junior facility. The senior facility totalled $841,645,781 financed by Citibank N. A, and J. P Morgan (later novated to Premier Export Funding Corporation who were guaranteed by the US Exim Bank,
“The junior facility totaled $82,586,894 financed by Afreximbank. It (KQ) started facing financial constraints and initiated a restructuring of the facility in November 2017,
“The company, however, could not service the debt upon expiry of the moratorium due to the impact of the pandemic and sought GOK’s support,” said Kiptoo.
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Kenya Airways First Profit in 11 Years
On the other hand, Kenya Airways on Monday, August 19, announced that it made a net profit of Ksh513 million in the first half of the year.
This is the airline’s first profit in 11 years, a significant increase from the Ksh168.2 million loss it reported during the same period in 2023.
KQ attributed the growth to its strategic turnaround plan, Project Kifaru, which focuses on customer obsession, operational excellence, financial discipline, innovation, and sustainability.
“Our financial results are a clear indication that our strategic initiatives are delivering the desired outcomes. We have focused on strengthening our core operations, enhancing our customer service, and exploring new avenues for growth,” KQ Chief Executive Officer Allan Kilavuka said.
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