Kenya’s Cabinet has approved a $350 million rescue loan for loss-making national carrier Kenya Airways to support its turnaround strategy, restore grounded aircraft to service and improve operations as the government seeks to stabilise the airline’s finances and strengthen its competitiveness.
According to nation.africa, the loan will be released in tranches under the watch of the Treasury, will be repaid over 10 years, or converted into shares.
Cabinet also endorsed the conversion of Sh122 billion in existing government loans, including interest, into shares.
This will help cut KQ’s debts and clean its balance sheet as it pursues a strategic investor to quicken the turnaround plan.
The national carrier has received several multi-billion shilling bailouts from the State over the past decade, burdening taxpayers.
The Cabinet move comes after KQ returned to the red following a Sh17.16 billion net loss in 2025, reversing a Sh5.43 billion profit the previous year.
The airline’s revenue fell 14 per cent to Sh161.47 billion last year as available seat capacity shrank 18 per cent, largely because three Boeing 787-8 Dreamliners were grounded.
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The aircraft shortage cut the airline’s ability to carry passengers and goods, with cargo tonnage falling 8.5 per cent to 64,780 tonnes in 2025, according to its annual report.
“To support the turnaround of national carrier Kenya Airways, Cabinet approved $350 million in shareholder financing to meet urgent financial obligations, including aircraft maintenance and returning grounded planes to service,” the dispatch said.
“The measures form part of Kenya Airways’ long-term turnaround plan and are intended to safeguard an airline that contributes more than USD1.3 billion annually to Kenya’s GDP through tourism, trade and regional connectivity.”
The share conversion will grow the government’s stake in the carrier to more than half.
The government holds a 48.9 per cent stake in the national carrier through the National Treasury, with a consortium of banks identifying as KQ lenders holding 38.1 per cent, as Air France (KLM) holds 7.8 per cent.
KQ employees and other retail investors own a 5.2 per cent stake in the airline.
The grounding of three Dreamliners last year represented about a third of the carrier’s wide-body fleet, limiting capacity on long-haul routes that are important for international passenger traffic and revenue.
The disruption has persisted amid global supply-chain constraints, engine availability problems and delayed spare-parts deliveries, leaving maintenance schedules vulnerable to delays beyond the airline’s direct control.
KQ’s 2025 accounts show operating costs remained high despite reduced flying, with fleet ownership costs rising to Sh27.14 billion from Sh20.43 billion a year earlier.
The carrier also recorded finance costs of about Sh12.4 billion in 2025, reflecting the burden of borrowing, aircraft leases and currency-related expenses on its already strained finances.
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Its borrowings stood at Sh151.3 billion, against cash and bank balances of just Sh5.3 billion, leaving net borrowings of almost Sh146 billion at the end of last year.
The proposed financing follows another difficult period in 2026, with KQ reporting a 31.9 per cent jump in net losses to Sh16 billion in the first half, up from Sh12.2 billion a year earlier.
Fuel costs rose 72 per cent during the first half of 2026 amid the Middle East conflict, accounting for as much as half of the airline’s total costs.
The conflict also disrupted deliveries of spare parts and maintenance services, adding pressure to an airline already struggling to restore aircraft and take advantage of passenger demand.
The government remains KQ’s largest shareholder and has previously supported the carrier through loans and other interventions, including a settlement with local banks on its behalf in 2025.
The carrier connects Nairobi with international and regional markets, while its cargo operations support the movement of goods, including time-sensitive exports, linking airline capacity to wider commercial activity.
