Govt Tells IMF Of Plans To Restructure Kenya Airways By End Of This Month

President William Ruto’s administration has announced that its Cabinet is set to receive plans for consideration in terms of restructuring the national airline Kenya Airways (KQ).

In its submissions to the International Monetary Fund (IMF), the National Treasury revealed that it would come up with strategic options to reform KQ which it would submit to the Cabinet by end of this month.

The National Treasury, while addressing the Bretton Woods Institution, also disclosed that it allocated extra time to consider a possible strategic investor.

"By end-November, the authorities are expected to submit to the Cabinet strategic options for restructuring KQ given additional time needed for consideration of a potential strategic investor and resolution of some of the outstanding critical reforms at the airline (proposed rescheduling of the SB from the end-April to end-November 2024)," read part of the IMF report.

This follows the airline company's comeback as it reported a half-year profit for the first time in a decade.

For the first half of the financial year ending June 30, 2024, KQ achieved a profit after tax of Ksh513 million, from the Ksh21.7 billion loss reported in the similar previous period. This was the first time the airline reported a profit after tax since 2013.

However, the National Treasury revealed to the IMF that "The airline reported a net profit for the six months ending in June 2024, for the first time in over a decade, but its indebtedness remains high. Its guaranteed FX-denominated debt is being serviced by the government."

While reporting its Half-Year results, KQ attributed the growth to its strategic turnaround plan, Project Kifaru, which emphasises customer obsession, operational excellence, financial discipline, innovation, and sustainability. 

Project Kifaru is Kenya Airways’ post-pandemic strategic recovery plan and is viewed as the antidote to KQ’s problems past and present. It is executable in two phases.

The first phase of Project Kifaru concentrated on the stabilization of the business, particularly after the COVID-19 turbulence. Stabilization is in three principal areas: operational efficiency, customer excellence and people development.

Phase Two will focus on sustainability and overall company growth, with the airline revealing that this will be achieved through the injection of capital following the process of identifying suitable investors to inject funding into KQ.

The airline's stability is anchored on strengthening the balance sheet and ensuring that the cash flows and revenues are stable, something KQ hopes will be achieved in three years.

"The impressive performance reaffirms the operational viability of our business and underscores the effectiveness of the collective efforts by our board, management, and staff," said Kenya Airways Chairman, Michael Joseph during a virtual presentation of KQ's half-year results.

He added: “This achievement underscores the strength and resilience of Kenya Airways as we move forward on our path to sustained profitability.”