The Treasury will offer Kenya Airways a further Sh146.9 billion bailout amid delayed recovery from a travel slump.
This is in financial support that will see the State drop the plan to nationalize the airline.
Treasury Secretary Ukur Yatani has said the government will take over Sh93.4 billion of Kenya Airways’ debt owed to multiple suppliers.
It will also give the airline Sh53.4 billion in direct budget support in the fiscal year that ends in June 2022.
This is as well as the subsequent one, making it the largest corporate bailout according to Business Daily.
KQ needs money for the maintenance of grounded planes, payment of salaries, and settlement of utility bills.
These are bills like security, water, electricity, and parking as well as ease the effects of the virus that has obliterated global demand for travel.
Kenya Airways Nationalization
The bailout comes as the State dropped the favored long-term solution for the ailing Kenya Airways that was anchored in the nationalization of the airline
A law to pave the way for the nationalization of the airline, which had been proposed before the pandemic, is before Parliament.
Kenya wanted to emulate countries like Ethiopia which run air transport under a single company.
This is done using funds from the more profitable parts to support others.
The government owns 48.9 percent of KQ shares.
Trade in the company’s shares on the Nairobi Securities Exchange has been suspended since July last year as the carrier works on a restructuring plan.
Now, the State is keen on pushing for the restructuring of the carrier on the back of the multi-billion-shilling bailout.
“KQ will be required to trim down its network, rationalize frequencies of flights, operate a smaller fleet, and rationalize its staff complement,” Mr. Yatani told the IMF.