KQ to receive Ksh.26.5 billion bailout from Treasury

KQ rehires laid-off employees on higher ticket demand

The National Treasury presented the state budget supplementary estimates to parliament with a new grant of Ksh.26.5 billion to the national carrier, Kenya Airways (KQ).

Allocation to KQ constituted the highest of the Treasury’s extra spending, most of which was drawn from a reduction in marine transport projects at Ksh.15 billion.

“The reduction is on account of rationalisation of slow-moving projects,” Yatani said, adding that KQ allocation is to help cater to the airline’s expenditures.

Further Ksh.29.4billion was allocated to fuel subsidy while for this year’s general election the grant rates at 9.1 billion and 8.5 billion for the COVID-19 vaccines.

This has however resulted in a 3.3 percent increase in the national budget compared to the previous budget plan in April last year.

While speaking in parliament yesterday Treasury cabinet secretary Ukur Yattani indicated that the increase of expenses is as a result of elections ,the covid 19 expenditures that involve Ksh.1.3 billion for the building of a vaccine plant and the bailouts.

As a result, the budget deficit which was initially at 7.5 percent of the gross domestic product (GDP) now stands at 8.1 percent thus prompting additional borrowing to mend the financial gap.

KQ has however acquired the largest corporate bailout as the Treasury grant rated at Ksh.53.4 billion in direct support for the financial year that ends in June 2022.

Further details reveal that KQ requires finances for the maintenance of grounded planes, payment of salaries and also the settling of required utility bills like security, water, electricity and parking and ease the effects of the covid 19 pandemic that has affected travelling in the world.

The airline was at a risk of running out of funds in the future following the reluctance of banks in lending funds to African airlines.

This eve as the government dropped the airline’s nationalization talks leaving it to rethink on howit would return to profitability.

The state was to take over the KQ liabilities— to the tune of over Sh240 billion and a Ksh.184 billion debt as of June 2021—and ease the burden on the entity’s daily operational needs.

But that remains suspended until further notice after the state withdrew the bill which was anchoring the transition of Kenya Airways into a wholly-owned parastatal.

The National Aviation Management Bill, 2020, sought to put in place an aviation council chaired by the President and a holding entity to manage the airline.

The National Aviation Council and the Kenya Aviation Corporation were set to be the key decision-making organs for the entity’s operations.

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