Kenya Airways will receive a bailout of $283.7 million from the government in the current financial year to support its proposed restructuring plan and to wean them off annual government funding.
In a letter to the International Monetary Fund (IMF), managing director Kristalina Georgieva-Kinova and Treasury Cabinet secretary Njuguna Ndung’u said the financial support is contained in the supplementary budget that will be tabled at the National Assembly before the end of January 2023.
The IMF had entered into a 38-month programme with Kenya to help it deal with its debt vulnerabilities and had put the condition of restructuring of Kenya Airways as one of the conditions.
As part of restructuring, the airline is optimising its network to cut 12 loss-making routes and has already retired flights to 16 destinations globally. The carrier will also reduce its fleet size by terminating some aircraft leases and eyes negotiations with operating lessors to cut its annual lease costs.
KQ is also targeting to lay off staff to reduce staff costs and is eyeing further cuts in other costs including operations and maintenance, distribution costs, ticketing, procurement, and fuel costs.
Kenya Airways is already in debt of $835 million, in September 2022 the airline received $81.2 million from the Treasury to help service its debts. The airline has payables amounting to $357 million to aircraft lessors, operation, and maintenance costs, landing and rental fees, fuel costs, rent, navigation, handling charges, and taxes.