Kenya Agrees US$350m Loan for Kenya Airways

KENYA · AVIATION · MARKETS

Kenya Airways says it is at an advanced stage of talks with prospective investors, days after Kenya’s government agreed to lend the loss-making national airline US$350 million (KSh 45.15 billion). The airline said on Tuesday, 13 October, that it will issue an information memorandum for investors once regulators approve it, The Standard reported.

It did not name the investors, the size of the planned raise or a timetable. The KSh 45.15 billion is the airline’s own figure, and other amounts in Kenyan shillings (KSh) are converted at 129.6 per US dollar, the 14 October 2026 rate from the market-data provider EODHD.

What Was Announced

Kenya’s Cabinet approved the shareholder loan at State House in Nairobi on Friday, 9 October. The same day, the airline’s board informed shareholders, the Capital Markets Authority (CMA, the market regulator) and the Nairobi Securities Exchange (NSE) in a formal notice.

The new money is earmarked for aircraft maintenance, the return of grounded aircraft to service and other urgent operating bills. According to the notice, the loan has a proposed repayment term of 10 years and may be converted into equity at the government’s option, or repaid early on terms still to be agreed.

The Cabinet said the money will be paid out in instalments under the oversight of the National Treasury, Kenya’s finance ministry. It also endorsed converting about KSh 122 billion (about US$941 million) of existing state loans, plus the interest owed on them, into an “equity-qualifying tradeable instrument”.

The airline says that conversion is meant to move it from negative to positive equity and to prepare a capital raise through the market, based on an investment memorandum. It also issued a cautionary notice, telling investors to take care when dealing in its shares until the terms are settled.

The Numbers

Kenya Airways reported a loss after tax of KSh 16.1 billion (about US$124 million) for the six months to 30 June 2026, against KSh 12.2 billion (about US$94 million) a year earlier. Revenue rose 9% to KSh 81 billion (about US$625 million), even though the airline flew 9% less capacity.

Fuel made up about 32% of operating costs as tensions in the Middle East lifted jet fuel prices, and total operating costs climbed 14%. Shortages of spare parts also kept aircraft on the ground, the airline said in its half-year results on 25 August.

For 2025 as a whole, the airline lost KSh 17.2 billion (about US$133 million) on revenue of KSh 161.5 billion (about US$1.25 billion), after a profit of KSh 5.4 billion (about US$42 million) in 2024. Its equity stood at minus KSh 132 billion (about US$1.0 billion) at the end of 2025, which means its liabilities exceeded its assets, Business Daily reported.

Why It Matters

The National Treasury owns 48.9% of Kenya Airways, according to a statement by the airline in April. KQ Lenders Company 2017, which holds the shares that Kenyan banks received for their loans in a 2017 rescue, owns 36.3%.

KLM, the Dutch airline that is part of Air France-KLM, owns 7.76%, and staff hold 2.44% through a share scheme. Business Daily noted that KLM would be diluted if the new loans are converted into shares.

The new loan covers only part of what the airline says it needs. Management said in June that it wants at least US$1.5 billion (about KSh 194 billion) from a strategic investor, and the Treasury told Parliament that it aims to finish that process by December 2026, Business Daily reported.

The government has also told the International Monetary Fund that direct cash injections will stop once a new investor is in place. Until then, it has pledged to help the airline meet its pressing obligations, according to the same report.

Market Reaction

Kenya Airways shares rose about 7% to KSh 6.20 (about 4.8 US cents) on Monday, 12 October, after the Cabinet decision, according to data from EODHD and African Markets. They eased to KSh 6.02 (about 4.6 US cents) on Tuesday.

At Tuesday’s close the stock was up roughly 70% since the start of 2026. Trading on the NSE resumed in January 2025 after a suspension that began in July 2020.

What It Means for US Readers

For US investors in frontier markets, the main question is dilution, because converting KSh 122 billion (about US$941 million) of state debt could change the share count sharply. The airline says the terms are still to be negotiated and that definitive agreements have not been signed.

Kenya Airways flies nonstop between Nairobi and New York and describes itself as the only African carrier in the SkyTeam alliance, which includes Delta Air Lines. Its fleet problems therefore matter to US travellers and tour operators who use the link to East Africa.

Three of the airline’s Boeing 787-8 Dreamliners were grounded in 2025 amid global shortages of parts, Business Daily reported. One returned to service in mid-July 2026, and a Boeing 777-300ER was redelivered, the airline said in August.

Our Kenya Airways company profile sets out its ownership and finances. Our earlier report on the airline’s Wi-Fi plan and widening losses covers the half-year results, and the Kenya Pipeline share sale shows how the state has handled another asset.

What Is Not Known

Kenya Airways has not named the prospective investors or said how much new capital it will seek from them. No interest rate, instalment schedule or date for the first payment of the US$350 million has been published.

The structure of the “equity-qualifying tradeable instrument” has not been explained, including whether it carries votes or turns into ordinary shares. Parts of the plan need shareholder approval, and the airline has given no date for a vote.

The loan is far smaller than the US$1.5 billion the airline says it needs. Whether the wider plan works will depend on the investor deal that the Treasury wants to complete by December.

More: Kenya news in English, every day from The Rio Times.

Frequently Asked Questions

How Much Is the Kenya Airways Shareholder Loan?

The government agreed to lend US$350 million, which the airline puts at about KSh 45.15 billion. The loan has a proposed 10-year term and may be converted into shares at the government’s option, subject to approvals.

Who Owns Kenya Airways?

The National Treasury owns 48.9%, KQ Lenders Company 2017 holds 36.3% and KLM holds 7.76%, according to the airline’s April 2026 statement. Staff and other investors hold the rest.

Which Investors Is Kenya Airways Talking To?

The airline has not named them. It says it is at an advanced stage of talks and will issue an information memorandum once regulators approve it.

Are Kenya Airways Shares Still Trading?

Yes, the shares trade on the Nairobi Securities Exchange and closed at KSh 6.02 (about 4.6 US cents) on 13 October 2026. The airline has asked investors to take care when dealing in its shares until the terms are announced.

Sources: Kenya Airways, announcement of material information and cautionary notice (9 October 2026); Kenya Airways, half-year 2026 results release (25 August 2026); Citizen Digital, Cabinet approval (9 October 2026); The Star, shareholding statement (8 April 2026); Business Daily (9 October 2026); Business Daily (16 August 2026); The Standard (14 October 2026); African Markets, Kenya Airways share data; EODHD market data. All accessed 14 October 2026.