Budget 2022/23: Yatani proposes KQ restructuring to cut costs

National Treasury Cabinet Secretary Ukur Yatani on Thursday proposed several measures for Kenya Airways to meet its restructuring costs.

The move comes at a time when the airline faces severe cash-flow constraints following global lockdowns triggered by the COVID-19 pandemic.

Apart from putting in place a number of measures in the last two years to remain afloat, including downsizing its staff, the CS proposed a number of steps the airline should take in its bid to bounce back to profit.

They include:

• Trimming of its 32 network
• Rationalization of frequencies of flights.
• Operating a smaller fleet.
• Rationalize its staff complement. 

Kenya Airways plays a major and catalytic role in the economic development of this country but since 2014, it has failed to record a profit.

The losses have compounded the huge debts the airline took to buy a fleet of new Boeing planes, pushing it into negative equity territory.

Its total assets are currently valued at Sh155.5 billion against a total liability (non-current and current liabilities) of Sh157.9 billion.

KQ now depends on the government for a bailout.

Last year, the National Treasury committed to bailing out the airline after shelving plans to nationalize it. 

According to a plan presented to the International Monetary Fund (IMF) last year, the exchequer said it was helping the airline source for reputable consultants to come up with a viable turnaround plan. 

The Kenyan government agreed to assume $827.4 million of KQ's debt and provide financial support in FY2022 and FY2023.

In February, KQ said it will for the second time work with Seabury Consulting, a subsidiary of professional services giant Accenture to reorganize the company. 

The consultancy firm will spearhead Kenya Airways' debt restructuring, which is estimated to cost upwards of $1 billion.