When Kenya Airways (KQ), the country’s national carrier, reported a profit after tax of Sh513 million in the first half of the financial year ending June 30, 2024, as compared to a loss of Sh21.7 billion loss in the previous period, for the first time in eleven years, the revival of KQ, the pride of Africa, was on.
However, the revival is already facing challenges. According to Allan Kilavuka, KQ CEO, the airline has spent a staggering Sh8 billion on aircraft repairs over the past four years. The airline also finds itself embroiled in a complex financial tangle with the government, as it is owed Sh3.5 billion.
The Parliament and other state agencies such as the Kenya Revenue Authority (KRA) have failed to settle their outstanding dues, creating a significant cash flow crisis for the already struggling airline.
KRA owes the national carrier Sh2.7 billion in VAT refunds, while various other state agencies owe a total of Sh840 million as of September 2024. Some of the agencies include the Ministry of Foreign affairs, which owes KQ Sh294 million in unpaid air tickets (Sh213 million remains unpaid in less than 91 days while Sh81 million remains remains so even after the time period has lapsed).
The Parliament, which is one of KQ’s biggest customers also owes the airline, with the National Assembly yet to clear Sh242 million, the Parliamentary Service Commission has an outstanding debt of Sh191 million, the Parliamentary Joint Services owes Sh30 million and the Directorate of Immigration Services has an unpaid amount of Sh32 million.
“We invoice them but the debt remains unpaid. The government should support us in the collection of outstanding amounts from various State agencies totalling Sh840 million as of September 2024 as well as the payment of the VAT refunds totalling to Sh2.7 billion as of August 2024,” Allan Kilavuka said.
Even though some of these financial woes faced by Kenya Airways are not unique to the carrier, as the global aviation industry has been grappling with the aftermath of the COVID-19 pandemic, the added burden of unpaid government debts compounds the airline’s challenges.
As a result, it is undermining KQ’s ability to invest in fleet upgrades, route expansion, and other critical initiatives. The airline is in dire need of this cash flow to meet its operational expenses and continue its recovery efforts.
With the government having committed to revive the national carrier and make it a leading player in the African aviation landscape, this revelation of unpaid debts raises questions about the government’s commitment to supporting the airline’s recovery.
There is a need to tackle this issue swiftly and transparently in order to restore confidence in the airline and ensure its long-term sustainability.
The air travel industry in Kenya and the wider region is poised for growth, with increasing demand for both business and leisure travel. However, for Kenya Airways to capitalize on these opportunities, it will need the unwavering support of the government and a robust financial footing.
