National carrier Kenya Airways (KQ) took on an additional Sh11.3 billion in debt in the half-year ended June, pointing to a drawdown of part of the bailout funds promised to the airline by the government.
KQ has been receiving new loans from the government in tranches since 2020 when it needed support to see it through the grounding of its fleet following the ban on international flights as Kenya and other nations raced to curb the spread of Covid-19.
The National Treasury gave the airline an Sh11 billion bailout in 2020, and another Sh14 billion in 2021.
In March, the Treasury got a nod from MPs to release a further bailout package of Sh20 billion, while the airline is also in line for additional support worth Sh36 billion in the current fiscal year which began on July 1.
KQ said in its half-year 2022 financial results that the borrowings it had received in the half-year period nearly tripled to Sh11.3 billion, from Sh4 billion in 2021.
As a result, its current liabilities, which include debts that are payable within one year, rose by Sh20.5 billion in the period to Sh101.5 billion, indicating that the bulk of the new debt was short-term in nature.
Other items in current liabilities include lease liabilities, trade payables and advance ticket sales. Non-current liabilities, which incorporate long-term borrowings among other payables, rose by only Sh2.8 billion to Sh160.7 billion in the period.
The Treasury has labelled the bailouts it is issuing KQ as a strategic government investment, having dropped plans to nationalise the airline.
Other than the cash loans, the government also issued a Sh90 billion ($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 lossmaking in the last 10 years, reported that its half-year 2022 loss narrowed to Sh9.8 billion from Sh11.48 billion a year earlier.
Revenues jumped 76 percent to Sh48.1 billion as pent-up demand for travel spurred more bookings.
The performance was, however, weighed down by higher operating costs, which surged by half to Sh53.11 billion anchored by a sharp rise in global prices of fuel.
The airline’s negative equity deepened to Sh98.3 billion at the end of June from Sh83.3 billion in December, having widened by Sh15 billion in six months.
