Loss making KQ denies borrowing Sh125 billion from government
Troubled and loss making national carrier Kenya Airways has denied reports that it received a loan from treasury amounting to Sh125 billion.
The carrier released the statement on Thursday in a reaction to a story published in a local daily suggesting that treasury borrowed Sh124.9 billion to help cash-strapped KQ settle another maturing loan.
“According to official data, Treasury refinanced the loan on behalf of Kenya Airways in the fourth quarter of Financial Year 2018/19. Refinancing is simply the use of one debt to repay another,” the article read.
But according to KQ, the last time they received money from the government was in the fiscal year 2015/2016.
“Kenya Airways has not received any new monies from Treasury since 2015/16 when GoK injected $217 million. All KQ operations during the turnaround period have been financed from KQ’s internally generated revenues,” reads part of their statement.
The carrier added that it was misleading that the media house could say that there has been an additional Sh125 billion from tax payers.
On Wednesday, the troubled national carrier’s half-year loss more than doubled to Sh8.56 billion, sinking shareholders into a deeper negative equity position of Sh16.18 billion.
The airline attributed the 112 percent widening of loss to increased operating costs in the wake of its expansion into new routes and the return of two Boeing 787 planes that had been sub-leased to Oman Air.
In April, Treasury took a new Sh20 billion loan to help KQ repay another loan it borrowed from African Export-Import Bank (Afrexim) two years ago.
Details of the new loan were disclosed in a report sent to Parliament by the Treasury.
The new 10-year loan was borrowed in June 2018 from Eastern and Southern African Trade and Development Bank (TDB) which replaced a similar-sized debt by Afrexim Bank that had fallen due.
The loan was among several transactions undertaken by the government and other creditors including debt-to-equity conversions to stave off collapse of the national carrier.
It will cost the government at least Sh2 billion in interest expenses and other charges, as per the terms of the debt.