The Kenyan government has unveiled plans to drop bailout support for Kenya Airways (KQ) by December 2023, introducing a financing plan to help return the carrier to profitability.
The plan, devoid of implementation details, was revealed by the National Treasury in a 2023 Budget Policy Statement draft, as reported by the Business Daily.
The treasury emphasized the need to support the country’s aviation sector by developing a “turnaround strategy” for the flag carrier, the report continued.
“A critical plank of this strategy will be a financing plan that does not depend on operational support from the exchequer beyond December 2023,” the treasury added.
Business Daily also reported that Kenya Airways has received a total Sh98.2 billion ($790 million) in bailout loans from the Kenyan government. Between 2016 and 2020, KQ received up to Sh35 billion ($279 million) in bailout loans.
KQ’s most recent loan, a Sh34.9 billion ($257 million) aid package, was approved in December 2022, in a bid to help the airline repay its arrears to lessors.
In mid-December 2022, the Kenyan government revealed its intent to pair the Kenyan flag carrier with a strategic investor.
Kenyan government keen to sell controlling stake in KQ to investors
The government declared its interest in selling its entire stake (48.9%) in KQ to interested parties.
“I’m not in the business of running an airline that just has a Kenyan flag, that’s not my business,” Kenya’s newly elected President William Ruto said during an interview with Bloomberg.
In the interview, Ruto said that the Kenyan government is “looking for partnerships that will make Kenya Airways a profitable entity whatever that means, in whatever configuration, [and in] whatever form it takes.”
Delta Air Lines was among the potential airline partners that the government was interested in partnering with, stating that discussions with the airline were at a “preliminary stage.”
KQ last recorded a profit in 2012.
The Kenyan government owns a 48.9% stake in Kenya Airways while Air France-KLM SA holds 7.8%. A group of 10 local banks, control a 38.1% stake in the airline, while employees hold 2.4% and other shareholders hold 2.8%.