Covid-19: Kenya Airways seeks financial aid from government
Kenya Airways has sought an undisclosed sum from the government to be able to survive the next six months as it runs out of money after grounding all international flights to help contain the coronavirus, chairman Michael Joseph said.
April 02, 2020: Kenya Airways has sought an undisclosed sum from the government to be able to survive the next six months as it runs out of money after grounding all international flights to help contain the coronavirus, chairman Michael Joseph said.
The carrier is operating only a handful of domestic flights after the government has issued a directive to cease all incoming and outgoing international passenger traffic from the midnight of March 25, 2020.
“We are asking for some assistance to support the airline through this period for critical operational costs like salaries,” Joseph told Reuters.
It will cost the airline about $5 million a month to manage its grounded fleet and retain a workforce operating on lower pay from this month. The company was already losing $8 million a month before the Covid-19 pandemic forced it to shrink its network.
The airline has already furloughed most of its workers and cut all salaries by as much as 80 percent, including for group managing director and CEO Allan Kilavuka.
In the first week of March this year, the Kenyan government has granted a loan of 5 billion shillings ($49.5 million) to Kenya Airways, to facilitate the scheduled engine overhaul programmes on its E190 Embraer fleet. The cash injection will cater to the overhaul of 11 Embraer engines which is required every eight years in order to uphold the highest levels of safety and maintain reliability and planned network schedules.
The government has been working on a plan to renationalise the airline to save it from mounting debts that had already been restructured in 2017 in an attempt to save the business.
KQ is 48.9 percent state-owned, 38.1 percent (lenders), 7.8 percent (Air France-KLM), 2.4 percent (Kenya Airways) employees, and 2.8 percent (individual investors).
In November 2019, Kenya’s National Treasury planned to close the buyout of the carrier by the end of 2020.
Airlines all over the world have been laid low by the impact of the coronavirus, and the industry is expected to burn through as much as $61 billion worldwide in the second quarter alone, IATA predicted.