The government of Kenya has refused to commit itself to Kenya Airways’ request for a KES7 billion shilling (USD65 million) emergency bailout as its already diminished finances sustain further damage during the coronavirus pandemic.

Ukur Yattani Kanacho, secretary of the National Treasury, said that the state needed a long-term solution to the carrier’s problems that was anchored in its planned nationalisation, the country’s Daily Nation newspaper reported on May 26.

As previously reported, the flag carrier, in which the government holds a 48.9% stake, made its appeal for government funding earlier in May, arguing that the money was needed for the maintenance of its grounded aircraft, to pay staff, and to settle utility bills.

The country halted international passenger flights on March 22, and Kenya Airways operated a scaled-back domestic schedule from its Nairobi Jomo Kenyatta base to Kisumu and Mombasa for a further few days.

“We are not making any commitments at this stage,” he said about the requested bailout. “Kenya Airways needs to remain afloat, but it is also important to look at structural challenges because what is happening now is more than [being just about] the business environment.”

A restructuring plan backed by the Treasury and the Transport Ministry was ready, he added, and would be unveiled in the coming weeks.

Also on May 26, Kenya Airways posted a KES12.9 billion (USD120 million) loss for the financial year ending December 31, 2019, up 71% on the previous year, the Daily Nation reported, despite a 12.4% rise in revenues.

The carrier expects to resume commercial passenger flights in June, but demand may not recover for another year, its chairman Michael Joseph said in a statement.

At a briefing on May 27, Joseph commented, according to Bloomberg, that setting up a holding company to combine the airline and the airport operator - a move the government is currently working on - “is definitely the way forward. [...] Hopefully, depending on how the situation goes, we’ll see fruition in this coming year.”

Chief executive Allan Kilavuka added: “We are not going to invest in any new routes, going forward. In some cases, we will stop flying to those destinations, in other cases, we will reduce frequencies, and in other cases, we will suspend. In other cases, we might decide to increase.”