The National Treasury’s multi-billion-shilling bailout of Kenya Airways (KQ) is under fire after the Auditor-General’s 2023/2024 report revealed that the government extended over Ksh 55.3 billion to the national carrier without a clear loan recovery plan.
- •Between 2019 and 2023, the Treasury disbursed Ksh 41.3 billion in ‘on-lent’ loans to Kenya Airways, followed by an additional Ksh 10 billion in the 2022/2023 fiscal year, and Kshs 12.3 billion to settle the airline’s defaulted debt with a foreign bank.
- •Despite this massive financial lifeline, the audit found no formal loan agreements, no repayment framework, and no collateral to secure the government’s exposure.
- •The national carrier announced a KSh 513 million net profit in the first half of 2024, after a streak of losses over more than a decade.
“The recoverability of the loans to Kenya Airways Limited amounting to KSh 55,374,969,781 could not be confirmed,” the Auditor General said.
The audit report states that the Treasury had not provided any evidence, including documents, that they had entered into a formal agreement with the carrier over the repayment of the KSh 12.3 billion. Moreover, there was no indication the airline had provided any security to the government.
Kenya Airways’ return to profit is attributed mainly to a reduction in finance costs — after the government, which is the principal shareholder in the company (48.9%), took over KSh 83 billion in loans to buoy the company’s restructure plan.
In October 2024, the government offered a KSh 19bn bond swap to several of KQ’s lenders, in the latest in a long running push to revive the airline. This follows several attempts to reduce the airline’s debt stock over the years, including one that saw local lenders switch debt for equity, becoming the airline’s second largest shareholder.
The airline’s share price was at KSh 5.46 on Monday’s close.
