Kenya Airways has requested a multi-billion shilling bailout from its government amid the growing impact of the Coronavirus. The airline was forced to halt international flights as per a governmental order on March 22nd and now much of its fleet remains grounded.
Bad timing
The Government of Kenya gave its order at a time when the flag carrier of the nation had no cash reserves. Therefore it is in need of urgent funds to cover expenses while operations are effectively non-existent. The firm states that it needs the money to pay its staff, settle utility bills, and maintain its aircraft.
It can still operate domestically but national flights only made up around eight percent of the airline’s sales in 2018, earning Sh9 billion ($85 million) out of Sh114 billion ($1.3 billion). Additionally, with the coronavirus outbreak lowering demand as it is, ticket sales are likely to continue plummeting this summer.
On Monday, Kenya Airways Chief Executive Officer Allan Kilavuka shared that his company had sent an emergency notice for additional funds to both the Kenyan treasury and the ministry of transport.
“We have requested the government for financial support through a bailout as at the moment we are cash strapped by the fact that we are no longer in operation, except for a few local flights,” said Kilavuka.
“Aircraft engines have to be maintained often and it is important that we get funds for this.”
Existing problems
The executive wants this aid as soon as possible. However, he did not confirm whether the airline is seeking money in the form of a grant or loan. Ultimately, it could be requesting a combination of both to balance the interests of both parties.
Kenya Airways is already indebted to the treasury following a recent loan of Sh5 billion ($47 million). The government is also the firm’s top shareholder, holding 48.9 percent of its shares.
The carrier has faced issues with corruption, mismanagement, aged debts and an increase in competition over the years. Moreover, its existing financial struggles have set it up for a tough summer amid the global aviation shutdown.
Crucial period
Kenya Airways’ top executives and some members of staff have had a pay cut of up to 75 percent of their gross salary. This is in a bid to save money during this sensitive time. However, with the industry still uncertain about how governmental policies will play out over the next few months, the airline will be hoping that it can get its needed financial support immediately.
Altogether, the business is just one of several operators that are seeking bailouts amid the pandemic. These carriers will be keeping a close eye on the situation this month to see how authorities will review the global flight restrictions.
About Guide2Uganda
Guide2Uganda (www.guide2uganda.ug) is the most comprehensive source of information about Uganda that exists on the web, with more content on Uganda and surrounding towns, attractions, museums and galleries than any other online guide that currently exists for Uganda as well as being a dynamic news and comprehensive events driven site with content being added daily.
According to WeFollow & Peer Index (whom both measure online influence) we are among the most influential online media organizations in Uganda. We were also awarded for ‘’Best Destination Website in Uganda’’ by Jumia Travel Uganda in the 2017-2018 Africa Travel Awards. If you are planning a visit to Uganda you can always reach us on; info@guide2uganda.ug
