Kenya Airways (KQ) has been granted waivers and deferrals on unpaid interest on Ksh.25 billion (USD217 million) worth of loans from the Kenyan government, advanced in the past two years to enable the airline to sustain operations during and after the COVID-19 pandemic.
According to the airline’s recently-released annual report and financial statements for the year ending December 31, 2021, KQ has not made any interest payments on the government loans as set out in the loan agreements, which required payment of interest by June 20 every year.
“The group sought and was granted waivers and deferrals on the unpaid interest on the shareholder loan,” the financials read.
The Ksh. 25 billion includes a first tranche of Ksh.11.1 billion (USD96.2 million) in 2020 and a second tranche of Ksh.14.4 billion (USD124.8 million) in 2021.
“The loans are repayable after five years and attract interest at the rate of 3% per annum, the accrued interest being payable by June 20 each year,” according to the financial report.
In addition, KQ also obtained waivers from commercial financiers before the end of 2021 on several facilities for the purchase of aircraft and the funding of pre-delivery deposits, the report reveals.
This was in line with the group’s contractual right to defer payment for at least 12 months. Consequently, the balances were not classified as current liabilities in the financial report. The facilities are held with African Export-Import Bank, Citibank, JP Morgan Chase Bank, and the Kenyan government.
According to the annual report, the Kenyan government has committed, through a letter of support, to continue to provide the required financial support to the Kenya Airways Group to enable it to implement its restructuring plan and meet its financial obligations as they fall due, for at least the next 12 months from December 31, 2021.