Kenya Airways has reversed employee pay cuts after MPs approved a new KSh20 billion, clearing the way for the National Treasury to release the money.
The carrier had last month returned pay cuts of up to 25% in cash preservation efforts after the Treasury delayed wiring the bailout billions.
The release of the KSh20 billion will ease the national carrier’s cash flow hitches and set the stage for its restructuring.
Besides salaries, the airline also needs the cash to settle utility bills, including electricity, security, maintenance of grounded planes, and parking. It also needs to the impact of the global coronavirus on global travel.
Under the new bailout terms, KQ will be required to reduce its network, operate a smaller fleet, and possibly lay off more staff.
The bailout comes as the State dropped the airline’s nationalisation plan approved by lawmakers in July 2019, which would have led to the delisting of the airline from the Nairobi Securities Exchange (NSE).
The huge accumulated losses have seen KQ slip into negative equity, meaning it is technically insolvent. KQ’s negative equity deepened to KSh83.4 billion at the end of 2021 from KSh64.2 billion the previous year.
The airline last made profit in 2012 when it closed with net earnings at KSh1.66 billion.