Kenya Airways is set to receive a USD 350 million (KSh 45.15 billion) shareholder loan from the government as part of a broader financial restructuring plan aimed at stabilising the national carrier and supporting its long-term recovery.
The government has also granted in-principle approval to convert existing shareholder loans worth approximately KSh 122 billion, including accrued interest, into an equity-qualifying tradeable instrument, in a move expected to strengthen the airline’s balance sheet and address its negative equity position.
In a public announcement dated October 9, 2026, Kenya Airways Acting Group Managing Director and Chief Executive Officer Habil Waswani said the two measures were intended to support the airline’s operational needs and ongoing turnaround strategy.
The announcement was issued in compliance with the airline’s disclosure obligations to the Capital Markets Authority (CMA) and the Nairobi Securities Exchange (NSE).
Government loan to support aircraft recovery
The USD 350 million loan will help Kenya Airways meet urgent operational expenses that cannot be deferred, including aircraft maintenance, returning grounded planes to service and settling other critical operational obligations.
The funding is expected to support efforts to restore fleet capacity, improve flight reliability and strengthen the airline’s ability to meet passenger and cargo demand.
Under the proposed terms, the loan will have a repayment period of 10 years.
However, the government may opt to convert it into equity, subject to the necessary shareholder and regulatory approvals, as part of a future capital restructuring.
Alternatively, the loan may be repaid earlier under mutually agreed terms.
The financing comes as the national carrier continues to grapple with high operating costs, aircraft availability challenges and mounting financial pressures that have complicated its recovery efforts.
State moves to restructure KSh 122 billion debt
Separately, the government has approved in principle the conversion of approximately KSh 122 billion in existing shareholder loans, inclusive of accrued interest, into an equity-qualifying tradeable instrument.
The proposed transaction is intended to improve Kenya Airways’ financial position by addressing its negative equity, strengthening its balance sheet and improving its creditworthiness.
Negative equity occurs when a company’s liabilities exceed the value of its assets, potentially limiting its ability to secure additional financing on favourable terms.
If completed, the debt restructuring could also help position the airline for a planned capital raise through an Investment Memorandum and support efforts to attract strategic investors and business partners.
However, the conversion is not yet final. It remains subject to corporate, shareholder, regulatory and transactional approvals, alongside the negotiation and execution of definitive agreements.
The CMA and NSE are among the institutions whose approvals or clearances may be required before the proposed measures are completed.
Kenya Airways posts KSh 16.08 billion half-year loss
The latest financial support comes against the backdrop of continued losses at Kenya Airways, which reported a net loss of KSh 16.08 billion in the first half of 2026.
The loss widened from KSh 12.15 billion recorded during the corresponding period in 2025, reflecting the pressure of rising operating expenses despite growth in total income.
The airline’s total income increased by 9 per cent to KSh 81.25 billion. However, operating costs rose faster, climbing 13.8 per cent to KSh 91.9 billion.
This left the carrier with an operating loss of KSh 10.64 billion, highlighting the challenge of translating revenue growth into improved financial performance.
Cargo operations offered some relief, with cargo revenue increasing by 18 per cent to KSh 8.77 billion.
However, passenger traffic declined by 9 per cent, with rising fuel prices, foreign exchange volatility and aircraft availability constraints weighing on performance.
The results underscore the financial pressures facing the airline as it seeks to rebuild capacity while controlling costs and improving operational efficiency.
Airline seeks strategic investors
Beyond government financing, Kenya Airways is pursuing potential strategic investors and cost-reduction measures as part of its broader recovery programme.
The airline’s priorities include restoring aircraft availability, improving punctuality, strengthening revenue generation and reducing its debt burden.
The planned capital raise is expected to form part of efforts to secure additional investment and create a more sustainable financial structure.
However, the success of the restructuring will depend on the completion of the proposed transactions, the terms ultimately agreed upon and the airline’s ability to improve its operating performance.
For the government, the measures represent a further commitment to supporting the national carrier while seeking a more sustainable financial footing for the business.
Investors warned as restructuring talks continue
Kenya Airways has cautioned shareholders and the investing public against making investment decisions based on incomplete information while the terms of the proposed transactions remain under negotiation.
The airline said the cautionary notice would remain in force and be renewed at intervals not exceeding 60 days until a further announcement is made or the notice is withdrawn.
It also committed to keeping shareholders, the CMA, the NSE and the public informed of material developments.
The proposed loan and debt conversion could provide Kenya Airways with financial breathing room, but they do not, on their own, guarantee a return to profitability.
The carrier’s longer-term recovery will depend on its ability to restore operational capacity, manage expenditure, improve passenger and cargo revenues and implement the planned restructuring successfully.
