Kenya Airways gets Sh4.2b Treasury bailout

NAIROBI: National carrier, Kenya Airways, has gotten a critical lifeline after the Government gave it a Sh4.2 bilion loan to help run its operations.

“Kenya Airways is facing challenges because their revenues have gone down due to the Ebola epidemic and the slump in tourism, therefore the carrier has been given a loan of Sh4.2 billion through the supplementary estimates,” the statement to Parliament read in part.

The airline has been having difficulties paying its staff and meeting the day-to-day costs of running its operations after a slump in tourist numbers hit its bottom-line. Its financial position had been worsened by the fact that capital expenditure to pay for new planes coincided with its current cash crunch position.

Kenya has been hit by a series of terror attacks, with the latest being the attack at Garissa University College which saw 148 people among them students and policemen killed by the Al-Shabaab terror group.

This has seen several countries, among them the United Kingdom and the United States, issue travel advisories, which have impacted negatively on Kenya’s tourism industry. Europe and the US are a key source tourist market.

The airline says it has been destabilised by a combination of factors among them fuel price volatility, intense competition and more recently, the threat of terrorism and epidemics that have had an adverse impact at the global travel.

Trouble for the airline started last year, marked by a Sh10.4 billion net loss in the six months to September 30. This was a dip from the Sh384 million in net profit made over a similar period last year.

And the airline expects to make another loss this year, which would make it the third loss in a row. Kenya Airways, which says it bleeds every time the Kenyan brand is battered, issued a profit warning for its full-year earnings last week.