State bails out Kenya Airways again with $350m loan

Kenya’s government has come to the rescue of Kenya Airways (KQ) with a $350m shareholder loan. President William Ruto’s office said in a statement that the funds would help KQ meet urgent financial obligations ⁠as it executes its turnaround plan.

The financing will be disbursed in tranches under the oversight of the finance ministry, with a repayment period of up to 10 years. The arrangement also allows for the option of converting the financing into equity, subject to the necessary approvals.

On top of the new shareholder loan, Kenya’s cabinet also endorsed a proposal to convert Sh122bn ($940m) in existing government loans, together with accrued interest, into an equity-qualifying tradable instrument.

KQ has been in a precarious financial position for several years. A tentative revival in 2024, when it posted its first profit in more than a decade, appears to have foundered.

The company sank deeper into losses in the first half of this year following a spike in fuel prices triggered by the Middle East crisis. It reported a pre-tax loss of Sh​15.92bn ($122.74m) compared with a ​loss ​of ⁠Sh12.17bn ($93.82m) ​in the ​same ⁠period last year.

KQ reliant on government

KQ’s inability to operate profitably has made it chronically reliant on loans from the government, which is its largest shareholder with a 48.9% stake.

The company’s total borrowings stood at Sh151.3bn ($116.64m) at the end of 2025, against a cash reserve of Sh5.3bn ($40.86m). Around 90% of KQ’s loans are held directly by the state.

The government is keeping the airline afloat in the hope of attracting a strategic investor. The airline’s board chairman, Kiprono Kittony, maintains that they have received “interest from local and international investors”. However, no definitive agreements have materialised. Until a strategic investor is secured or KQ turns a profit, the cash-strapped airline will likely continue relying on the state for support.

KQ’s other key shareholders include a consortium of 11 commercial banks who converted their debt into equity in 2017 when KQ once again faced a severe cash crunch. The lenders own between 36.3% and 38.1% of the company. This debt conversion diluted KLM Royal Dutch Airlines’ stake to 7.8% from a 26% strategic stake acquired during the airline’s privatisation in 1995. The public owns a small percentage of KQ through the Nairobi Securities Exchange (NSE), where shares temporarily traded higher on news of the government funding before giving up gains.