Kenya Airways (KQ, Nairobi Jomo Kenyatta) Chief Executive Officer Allan Kilavuka has disputed reports the airline has defaulted on a USD841 million loan from EXIM Bank (United States of America) for the purchase of aircraft, as cited in the latest Annual Debt Management Report (2021/2022) of Kenya’s National Treasury.

Of the amount, the government had guaranteed USD525 million. “Kenya Airways defaulted on both the guaranteed portion of the loan amount as well as the non-guaranteed portion,” the National Treasury said. “The National Government is in the process of novating the debt to be finalised during the 2022/2023 fiscal year.” [Novation enables a lender to transfer its interest in a loan to another lender.] The Treasury said it would closely monitor contingent liabilities arising from state-owned enterprises, as they posed major risks to the economy.

ch-aviation approached Kilavuka for comment. He earlier told The East African newspaper that: “The value you quote for the US EXIM facility is not correct. USD485 million is what relates to the US EXIM guaranteed debt. I don’t have the context... maybe they have included other guarantees, not just the US EXIM facility." He said Kenya Airways had negotiated moratoria on loan repayments during Covid-19. “The airline is yet to get back to full operations and has requested GOK (the Government of Kenya) support on the guaranteed loan to avert the possibility of the loan going into default,” he said.

Kenya Airways’s loan from the EXIM Bank was meant for the purchase of seven aircraft and one engine, according to the Treasury report.

“The Covid-19 pandemic containment measures adversely affected the airline business globally including Kenya Airways. Government intervention included, among other financial support, the settlement of the guaranteed debt extended to Kenya Airways,” National Treasury’s director in charge of debt management, Haron Sirma told The EastAfrican.

In May, the government approved a state loan of KES20 billion shilling (USD173.9 million) to ease the loss-making flag carrier's cash flow and partially pay for its restructuring. In addition, the airline borrowed KES11.3 billion (about USD95 million) in the half-year ending June 30, 2022, according to its financial results. This followed loans of KES11 billion (USD95.2 million) in 2020 and KES14 billion (USD121.1 million) in 2021.

Kilavuka earlier told ch-aviation that current restructuring was aimed at making the airline profitable by 2024. It has not made a profit since 2012.

Restructuring the airline is focused on cutting costs and making the airline more efficient, including bringing down the fleet ownership cost, improving delivery to customers, cutting unprofitable routes, and looking for opportunities that will optimise network schedules and revenue. The airline has also renegotiated lease terms with its lessors.

According to the ch-aviation fleets module, the fleet currently comprises 32 aircraft, of which 15 are leased. The fleet includes: