The Kenya Airports Authority (KAA) is going hard on Kenya Airways (KQ) over Sh6.3 billion debt the airline owes it and which has been accumulating over the years.
In the year to June 2023, KQ’s debt to KAA increased by Sh1.6 billion to hit Sh5.89 billion, while the Kenya Airfreight Handling Limited -a subsidiary of the airline- owed the airports manager Sh463 million, notes Auditor-General Nancy Gathungu.
KAA charges airlines fees for various services including for parking aircraft, with the national carrier among its major clients operating from the various facilities including the Jomo Kenyatta International Airport.
“Effectively bringing the company indebtedness to Sh6,359,818,196 or 42 percent. It was also observed that the balance owed has not been attracting any interest to protect the interests of the authority (KAA) neither has there been recoveries during the year,” Ms Gathungu notes in her latest report on KAA.
While KQ did not make any payment to KAA, the airports authority indicated that it has entered into a payment plan with the national carrier, whose total debts now constitute 42 percent of the Sh15.18 billion owed to KAA.
KAA says the payment plan was entered into following talks facilitated by the ministries of transport and the National Treasury.
“(With regards to) debts relating to Kenya Airways including their subsidiaries Kenya Airfreight Handling and African Cargo Handling Limited, the authority is pursuing the debts through negotiation with the support from the parent ministry and National Treasury. The customer has provided a payment plan which we intend to ensure is adhered to,” KAA management stated. KQ itself owes the authority Sh5.9 billion, after the obligations rose by Sh1.6 billion in the year to June 2023.
“This constitutes 38.8 percent of the total trade receivables, an increase of Sh1,604,224,628 from Sh4,292,490,389 as at 30 June, 2022 to Sh5,896,715,017 as at 30 June, 2023,” Ms Gathungu notes.
The Sh6.3 billion that KQ owes KAA constitutes just 4.3 percent of all the liabilities KQ had in its books by end of December 2023, pointing to the financial difficulty facing the national carrier that continues to rely on government support to stay afloat.
This year, the airline is expected to repay Sh24.7 billion to its creditors, after spending Sh39 billion last year.
It closed 2023 with borrowings totaling Sh148 billion, which was a Sh9 billion increase from the total borrowings of Sh139 billion in 2022.
