Kenya Government Provides $350M Loan to Struggling Kenya Airways

Kenya’s government has provided a $350 million shareholder loan to Kenya Airways (KQ) to help the airline meet urgent financial obligations as it executes its turnaround plan. President William Ruto’s office announced the funding, which will be disbursed in tranches under the oversight of the finance ministry.

The loan has a repayment period of up to 10 years and includes the option to convert the financing into equity, subject to necessary approvals. Additionally, the cabinet endorsed a proposal to convert Sh122 billion ($940 million) in existing government loans, along with accrued interest, into an equity-qualifying tradable instrument.

KQ has struggled financially for years, despite a brief revival in 2024 when it posted its first profit in over a decade. However, the airline sank deeper into losses in the first half of this year due to a spike in fuel prices caused by the Middle East crisis. It reported a pre-tax loss of Sh15.92 billion ($122.74 million), compared to a loss of Sh12.17 billion ($93.82 million) in the same period last year.

The airline’s inability to operate profitably has made it heavily reliant on government loans. As of the end of 2025, KQ’s total borrowings stood at Sh151.3 billion ($116.64 million), with around 90% of its loans held directly by the state. The government, which owns a 48.9% stake in the airline, is keeping it afloat in the hope of attracting a strategic investor.

While KQ’s board chairman, Kiprono Kittony, has stated that there is interest from local and international investors, no definitive agreements have been made. Until a strategic investor is secured or the airline turns a profit, KQ will likely continue to rely on state support.

Other key shareholders include a consortium of 11 commercial banks that converted their debt into equity in 2017, owning between 36.3% and 38.1% of the company. This dilution reduced KLM Royal Dutch Airlines’ stake to 7.8% from 26%. A small percentage of KQ is publicly owned through the Nairobi Securities Exchange (NSE), where shares saw temporary gains on news of the government funding before retreating.