Parliament has slashed a further Sh1 billion from the financial support to Kenya Airways (KQ), dealing the struggling national carrier a blow.
The Treasury had in the supplementary budget reduced the KQ’s State support by Sh10 billion to Sh20 billion as the exchequer begins unwinding bailouts to the company.
The House's Finance and National Planning committee has further cut the capital injection to the national carrier to Sh19 billion.
“The committee proposes to reduce Sh1 billion from the Strategic Intervention Program (Capital Injection to KQ) under the National Treasury,” Kuria Kimani, the chairman of the Finance committee, said in a report on the mini-budget.
“This reduction will decrease the allocation to the Intervention Program (Capital Injection to KQ) from Sh20 billion to Sh19 billion,” he told the Budget and Appropriations Committee (BAC).
The Treasury had in the first 2022/23 Supplementary Budget revised the amount of capital injected into the national carrier to Sh20 billion from Sh30 billion.
Previously, the Treasury had in December disclosed to the IMF that it would provide Sh34.95 billion to Kenya Airways including assumed payments for a debt.
“Kenya Airways has in the past received huge Treasury support to fund operations. For instance, in the last financial year alone, KQ received a capital injection of Sh25 billion while in the current financial year, KQ is in receipt of Sh13.6 billion out of an allocation of Sh20 billion,” Mr Kimani said.
He told BAC that despite these strategic interventions, KQ, as the career is known by its international code, is still struggling to support its business operations with no tangible effort by the airline to supplement the Treasury support.
“This consistent bailout is done at the expense of other priority areas like the National Government Constituencies Development Fund(NG-CDF) that have a direct impact on the citizens of Kenya,” Mr Kimani said.
He said the government through the Treasury, the Ministry of Transport, BAC and the Finance committees should convene an urgent meeting to chart the way forward for KQ.
“We cannot continue pumping money to the 'Pride of Africa' and make it a ‘Cry of Kenyans.’ We must find a way out including fully privatising it,” Mr Kimani said.
He said the Treasury is pumping money into KQ at a time other smaller airlines are flourishing.
“Let us stop bleeding the exchequer through KQ bailouts. We can’t continue to allocate more money. We wanted to reduce the budget further but we realised the Sh19 billion has been committed to repaying loans that were guaranteed by the government,” Mr Kimani said.
He said failure by KQ to repay its loans will affect the country’s credit ratings.
