Kenya Airways officials appeared before the National Assembly Committee on Public Debt and Privatisation, chaired by Balambala MP Abdi Shurie, to explain the measures it has put in place to repay public funds used to cover its guaranteed debt.

In financial year 2023/24, the National Government disbursed Ksh14.3 billion and Ksh13 billion in  2024/25 towards the Exim Bank USA/PEFCO loan.

There was an additional Ksh17.96 billion projected for payment in  2025/26 under the same facility.

During the meeting, it was also noted that, in addition, during the financial year 2024/25, the Government covered Ksh19.69 billion in working capital requirements on behalf of KQ. through facilities secured from local banks but guaranteed by the State.

While giving the background on how the debt was accrued, the KQ CEO Mr. Allan Kilavuka, told the Committee that the unfortunate failure of Project Mawingu marked the beginning of Kenya Airways financial misfortunes and it negatively impacted the performance of the airline and eroded its equity further threatening its survival.

According to the CEO the failure was caused by downturns on traditional tourist sources for the Kenyan market following adverse terrorism advisories on Kenya in 2013, the JKIA fire in 2013, whose immediate aftermath saw KQ lose USD4Mn and countless disruptions and the Ebola pandemic in Western Africa in 2014.

“The delayed delivery of B787 aircraft whose entry into service per Project Mawingu plan was in 2013/14 but were delivered in 2014/2015 led to the sourcing of alternatives aircraft (B777) where 2 were delivered in 2013/2014, a much larger and more expensive alternative. This resulted in high fleet operational and maintenance costs,” he told the Committee.

Reacting to the presentation, Hon Kwenya Thuku (Kinangop) asked the total debt that KQ owed to the local banks and whether any valuation was done on the loans before being converted into shares.

In his response, Kilavuka disclosed that regarding local banks Ksh19.69 billion loans, the Government settled it in January 2025 to the various local banks owed by KQ but guaranteed by GoK.

“KQ could not settle this debt due to cashflow pressure attributed to the impact of COVID-19 pandemic. A shareholder loan agreement between the government and KQ is currently being finalized and should be signed within the next about two months,” the CEO said.

Shurie also wanted to know how KQ is ensuring adherence to PFM Act, “How will KQ ensure compliance with the PFM Act in relation to obligations owed to the government,” the Chairperson asked.

On this the CEO told the Committee that, all disbursements to Kenya Airways PLC by the Government of Kenya from the year 2020 are secured by shareholder loan agreement and the Airline remains committed to making repayments as required adding that they have signed up a shareholder loan agreement complete with a repayment schedule.

Kenya Airways plane. PHOTO/KQ.