Flag carrier Kenya Airways (KQ) incurred additional debt of 11.3 billion shillings in the six months to June, indicating a withdrawal of some of the bailout funds pledged to the airline by the government.
KQ has been receiving new government loans in installments since 2020 as it needed help to navigate its fleet grounding following the ban on international flights as Kenya and other countries rushed to curb the spread of Covid-19.
The National Treasury has granted the airline a bailout of 11 billion shillings in 2020 and another 14 billion shillings in 2021.
In March, the Treasury got a green light from MPs to release a new 20 billion shillings bailout, while the airline is also in line for additional support worth 36 billion shillings over the course of the current fiscal year which began on July 1.
KQ said in its 2022 half-year financial results that borrowings it received in the half nearly tripled to 11.3 billion shillings from 4 billion shillings in 2021.
As a result, its current liabilities, which include debt repayable within one year, increased by 20.5 billion shillings over the period to 101.5 billion shillings, indicating that most of the new debt was short-term in nature.
Other current liabilities include rental debts, trade payables and advance ticket sales. Non-current liabilities, which include long-term borrowings among other debts, increased by just 2.8 billion shillings to 160.7 billion shillings during the period.
The Treasury has called the bailouts it is giving KQ a strategic government investment, after scrapping plans to nationalize the airline.
In addition to the cash loans, the government also issued a 90 billion shillings ($750 million) guarantee covering KQ’s debt to a consortium of local banks and the US Exim Bank.
The airline, which has been plagued by losses for the past 10 years, said its 2022 half-year loss narrowed to 9.8 billion shillings from 11.48 billion shillings a year earlier. .
Revenue jumped 76% to 48.1 billion shillings as pent-up travel demand spurred more bookings.
Performance was weighed down, however, by higher operating costs, which jumped by half to 53.11 billion shillings anchored by a sharp rise in global fuel prices.
The airline’s negative equity worsened to 98.3 billion shillings at the end of June, from 83.3 billion shillings in December, after increasing by 15 billion shillings in six months.