The government of Kenya has pledged ongoing financial support to Kenya Airways (KQ, Nairobi Jomo Kenyatta) to implement its "Plan 2028" five-year recovery programme and enable it to meet its obligations for at least another year after the approval of its annual financial statements for the year ending December 31, 2023.

Consequently, the directors have prepared its financial statements on a "going concern basis", according to the group's 2023 annual report signed off on March 26, 2024, and seen by ch-aviation.

The report said that the government "has committed, through a letter of support, to continue providing the required financial support to the group" so it can "implement its recovery programme and meet its financial obligations as and when they fall due, for at least the next 12 months from the date of approval of the annual financial statements."

This appears to be a turnaround from the government's Draft 2023 Budget Policy Statement, which said that "to support the aviation industry", it "will develop a turnaround strategy for Kenya Airways. A critical plank of this strategy will be a financing plan that does not depend on operational support from the Exchequer beyond December 2023."

No budget allocation to Kenya Airways is mentioned in the 2024 Budget Policy Statement. The only mention is that the National Treasury guaranteed about KES170.2 billion shillings (USD1.3 billion) worth of loans to three state-owned enterprises as of June 30, 2023, "amongst which are the Kenya Airways loans, which were as a result of novation of the company's loans taken over by the Government".

Kenya Airways CEO Allan Kilavuka said recently that Kenya Airways had not received direct state support over the last year and that this trend was expected to persist. He emphasised that financial constraints prevented immediate funding despite the government's belief in the airline's strategic importance.

"If the government could, they would have already given that funding because they believe in the strategic importance of the airline. They will not be doing that because of the stretched fiscal position," he said in an interview with China Global Television Network.

In a statement released along with the financial report last month, Kenya Airways said: "The Government of Kenya, in its capacity as a major investor in Kenya Airways, has indicated their continued strong support for the company's operational and capital structure optimisation process and are closely involved throughout the transaction process and intend to remain major stakeholders in the company over the long term".

This comes as Kilavuka disclosed that Kenya Airways was in discussions with various airlines about a strategic equity partnership aiming to raise between USD1 billion and USD1.5 billion to recapitalise the flag carrier, eliminate its negative equity, settle loans, and foster future growth. As a member of Skyteam, Kenya Airways maintains ties with Air France-KLM, which holds a 7.12% share in the carrier from a previous privatisation initiative. According to the 2023 annual report, it has also been working to foster closer relations with South African Airways, and Delta Air Lines. Kilavuka told Citizen TV that numerous potential investors had shown an interest in Kenya Airways and expressed optimism that the airline could seal a deal before the end of 2024.

Meanwhile, according to its FY 2023 annual report, Kenya Airways managed to terminate the leases of its last of its three B777-300ERs, which it had sub-leased to Turkish Airlines (TK, Istanbul Airport). The aircraft are TC-LKB, formerly 5Y-KZY (msn 41819) which was leased from BOC Aviation and TC-LKA, formerly 5Y-KZZ (msn 41818), which was leased from CDB Aviation. TC-LKC, formerly 5Y-KZX (msn 42097), was leased from Tsavo Aircraft Financing Ltd, a Special Purpose Vehicle (SPV), incorporated by financiers JP Morgan Chase Bank, Citibank, and Afreximbank, in 2010 to facilitate the acquisition of the one B777-300ER and six B787s, according to ch-aviation research.