Kenyan government has rejected Kenya Airways Plc’s appeal for emergency bailout after it grounded all international flights due to coronavirus.
Last month, KQ Chairman Michael Joseph said it would cost the airline about $5 million a month to manage its grounded fleet and retain a workforce operating on lower pay.
“You have these massive airplanes that cost an enormous amount of money whether they fly or not …we’ve asked the government for some assistance to take us through six months. Let’s see what they come back with.” he was quoted as saying by financial news terminal Bloomberg.
However, Kenya’s Treasury says it is looking for a long-term solution to the company which was already losing $8 million a month before the Covid-19 pandemic forced it to shrink its network.
Treasury Cabinet Secretary Ukur Yatani said the only option on table is the nationalization of Kenya Airways, and commitment at this stage was not an option.
“We are not making any commitments at this stage,” he said about the Sh7 billion bailout request.
“Kenya Airways need to remain afloat but it is also important to look at structural challenges because what is happening now is more than the business environment,” he added.
He added that a restructuring plan backed by the Treasury and Transport ministry is ready and would be unveiled in coming weeks.
Kenya wants to emulate countries like Ethiopia, which run air transport assets under a single company, using funds from the more profitable parts to support others.