Kenya Airways (KQ, Nairobi Jomo Kenyatta) is to receive KES10 billion Kenyan shillings (USD91.3 million) in COVID-19 state aid less than a year after securing a KES5 billion (USD45.6 million) loan from the Treasury.

This has emerged from supplementary budget estimates of further sums required for the year ending June 30, 2021, which were tabled in the Kenyan Parliament on February 9. Business Daily Africa reported this revealed the airline was to receive KES8 billion (USD73 million) directly from the Treasury and KES2 billion (USD18.2 million) from the Transport Ministry to ease the effects of the pandemic.

“KES8 billion is for Kenya Airways to enable the airline to sustain basic operation during the COVID-19/post-COVID-19 pandemic,” Treasury Cabinet Secretary Ukur Yatani said. “KES2 billion (is) for (a) cash injection for Kenya Airways to cushion against the impact of the COVID-19 pandemic which grounded its operations.”

The Transport Ministry supplementary estimate also shows an amount of KES2.6 billion (USD24.4 million) for air transport, of which KES225 million (USD2 million) for a Kenya Aviation Modernization Project.

Kenya Airways was already struggling before the COVID-19 outbreak, posting a loss of almost KES13 billion (USD118.7 million) in 2019. The national carrier needs money for the maintenance of grounded planes, payment of staff salaries, and settlement of utility bills like security, water, electricity, and parking.

The Treasury did not indicate if the funds were in the form of equity or a state loan. According to Business Daily Africa, the renewed state aid marked a departure from the Treasury’s earlier position that it would reject a bailout for Kenya Airways in favour of a long-term solution anchored on the planned nationalisation of the airline.

The government is in talks to buy out Kenya Airways' minority investors, including lenders and Air France-KLM, in a move to nationalise the struggling airline. A law to pave the way for the nationalisation, which had been proposed before the pandemic, is being reviewed by Parliament.

Bloomberg last year listed Kenya Airways amongst those airlines running the risk of bankruptcy unless saved by state intervention. The carrier has already laid off hundreds of employees, slashed salaries, and has reduced its network to remain afloat. It also plans to offload undisclosed assets.

First-half pre-tax losses for the period to June 2020 were KES14.36 billion (USD131 million) compared to a KES8.56 billion (USD78.2 million) loss in the same period a year earlier. Turnover in the review period plummeted 48% to KES30.21 billion (USD276 million).

Kenya Airways resumed domestic flights in mid-July 2020 after the government cleared local air travel, and international flights on August 1, 2020.