KQ, as the carrier is known by its international code, has in recent years been borrowing exclusively from the government after defaulting on local banks to the tune of Sh17 billion in 2017.
The company’s latest annual report shows that it borrowed Sh14 billion from the government last year and Sh11 billion in 2020.
The national carrier’s creditworthiness declined further in the wake of the Covid-19 pandemic, forcing the government to provide emergency loans which the airline has also defaulted on.
Local and international banks have stopped funding Kenya Airways #ticker:KQ , leaving the airline to rely on shareholder loans from the National Treasury.
KQ, as the carrier is known by its international code, has in recent years been borrowing exclusively from the government after defaulting on local banks to the tune of Sh17 billion in 2017.
The lenders were allotted stakes in the Nairobi Securities Exchange #ticker:NSE -listed firm as part of the settlement of their claims, with the airline’s share price falling by more than half from the issue price of Sh7.78 apiece and the stock was subsequently suspended from trading.
The company’s latest annual report shows that it borrowed Sh14 billion from the government last year and Sh11 billion in 2020. It made no new borrowing in 2019 and 2018.
KQ previously had favourable access to banks, a move that saw it take loans from 10 institutions including small and big lenders in a debt binge that culminated in the default.
The banks that had issued loans to the airline include KCB #ticker:KCB , Equity #ticker:EQTY , NCBA #ticker:NCBA , Co-op Bank #ticker:COOP , DTB #ticker:DTK and Ecobank.
The national carrier’s creditworthiness declined further in the wake of the Covid-19 pandemic, forcing the government to provide emergency loans which the airline has also defaulted on.
“As of December 2021, the group and company had not made any payments of interest on the Government of Kenya loan as set out in the loan agreements,” KQ says in the report.
The loans attract an annual interest at the rate of three percent which should be paid by the 20th of June over five years but the national carrier says it sought a waiver and deferral on the unpaid interest.
KQ says the waiver and deferral on the loan helped protect its cash reserves as it struggles to recover from the Coronavirus-induced economic meltdown.
The loans were meant to foot staff salaries, maintenance of aircraft and settling water, security and electricity bills in the wake of the Covid-19 disruptions that saw KQ post a Sh36.2 billion net loss in 2020 —the worst ever in the history of the airline.
