South African Airways has taken Kenya Airways to court over approximately US$1.37 million in unpaid codeshare funds, adding to the Kenyan carrier’s growing legal challenges amid a separate dispute with US-based Aero Industrial Supply over outstanding financial obligations.
According to newsaero.info, South African Airways alleges that the Kenyan carrier breached codeshare and revenue-sharing agreements by failing to repay disputed surcharges and commissions. According to reports from the South African newspaper Sunday Times, Kenya Airways owes USD 1.12 million in unpaid YR and YQ carrier-imposed ticket surcharges for codeshare sectors flown between July 2022 and May 2024. YQ denotes fuel surcharges, while YR covers other operational expenses.
Additionally, an audit of credit memos from August 2022 to May 2024 revealed an overpayment of USD 256,342 in codeshare commissions due to the use of inward-billing data instead of outward-billing data. South African Airways requested the South Gauteng High Court in Johannesburg for permission to serve proceedings on Kenya Airways abroad via email or through the South African High Commission in Nairobi.
South African Airways other Financial Concerns
The dispute stems from a Special Prorate Agreement signed in November 2021 and extended to November 2024. SAA states that Kenya Airways began rejecting billings in January 2023 after shifting its calculation methods. Kenya Airways has not publicly reacted to these accusations, while SAA has admitted to having launched the legal proceedings, while refraining from revealing the details. The two partners had announced a project to create a pan-African company, but SAA ultimately gave up.
The South African national airline has other financial concerns. Concurrently, SAA faces roughly 1 billion rands, equivalent to USD 62.48 million, blocked in Zimbabwe. South African Airways has deferred salary payments for September and October in order to preserve its cash flow in the face of rising fuel costs. Despite reporting a 155 million rand (USD 9.5 million) profit for the 2024/25 fiscal year, the Auditor-General noted lacked sufficient profitability evidence.
Cross-Litigation for Kenya Airways
At Kenya Airways, SAA’s action adds to another legal concern. In parallel, KQ and U.S.-based Aero Industrial Supply (AIS) have engaged in reciprocal legal proceedings in Kenya and the United States. AIS filed a lawsuit on June 2, in the U.S. District Court for the Eastern District of New York, seeking at least USD 1,130,502.30 from Kenya Airways for unpaid delivered aircraft parts and accumulated interest.
In response, Kenya Airways sued AIS before the High Court of Nairobi, accusing the U.S. supplier of breaching a 2016 agreement that authorized AIS to resell surplus aircraft parts on behalf of the Kenyan carrier. KQ claims approximately USD 11.84 million for failure to account for parts, remit sales proceeds, or return unsold inventory, or alternatively, a complete inventory audit.
Kenya Airways’ Financial Challenge
These cases come as Kenya Airways has been in financial difficulty for several years. According to the latest public debt management report from the Kenyan Treasury, Kenya Airways ranks as the second-most indebted state corporation to the government, holding 122.9 billion Kenyan shillings (USD 945.85 million) in outstanding public debt.
To address urgent operational needs, the board announced on October 9 that the Kenyan government approved a 10-year shareholder loan of 45.15 billion shillings, or USD 350 million. Furthermore, the state agreed in principle to convert approximately 122 billion shillings, or USD 939.18 million, of shareholder loans including accrued interest into an equity-like instrument.
