Kenya Airways (KQ) is seeing a glimmer of hope as the government takes significant strides in alleviating its debt burden, particularly to the American Exim Bank. In the last quarter of 2023, the National Treasury of Kenya disbursed KSh 6.9 billion to the US lender, marking a substantial step towards clearing the airline’s financial obligations.
This payment contributes to a total payout of KSh 53.7 billion, a significant portion of the KSh 69.9 billion debt incurred in 2017 to revamp the operations of the national carrier.
The infusion of funds from the government comes as a beacon of relief for Kenya Airways, signalling a potential exit from the precarious financial position it has found itself in. Despite turning a profit in the fiscal year ending June 2023, the airline’s financial woes were exacerbated by the depreciation of the Kenyan shilling, pushing it further into the red.
Kenya airways total debt
Data from the airline reveals the staggering magnitude of its debt, which stood at $1.347 billion (approximately KSh 187.74 billion) as of May 30, 2023. Among these financial obligations is the $439.8 million (KSh 61.4 billion) Tsavo facility, linked to the acquisition of crucial assets such as Boeing 787-8 aircraft, a Boeing 777-300 ER aircraft, and a Genx engine back in 2012. Additionally, Kenya Airways owes suppliers KSh 22.9 billion and syndicates KSh 13.7 billion, funds utilized for the procurement of 10 Embraer e-jets.
The terms of the loan from the US Exim Bank were underscored by a fixed exchange rate of KSh 84 per unit of the US dollar, as disclosed by PS Kiptoo to the parliamentary committee on Public Debt and Privatization in February 2023. This fixed rate offers some stability amidst the fluctuating currency market, albeit with its own set of challenges.
In a bid to address its financial predicament, discussions have been held, including those led by President William Ruto in 2022, with American investors to potentially divest the government’s controlling stakes in Kenya Airways. Such initiatives aim to inject fresh capital and strategic direction into the airline, paving the way for its resurgence in the competitive aviation landscape.
As Kenya Airways navigates through these turbulent financial waters, the recent efforts by the government to alleviate its debt burden mark a significant step forward in the airline’s journey towards financial stability and operational revitalization.
