Kenya approves US$1.3B rescue package for Kenya Airways
The intervention follows a difficult first half of 2026.
KENYA – Kenya’s Cabinet has approved a US$1.3 billion financial support package for Kenya Airways, combining US$350 million in new shareholder financing with the conversion of US$940.3 million in government loans into quasi-equity, according to the National Treasury.
The Treasury will disburse the new financing in instalments under its supervision, with a repayment period of up to 10 years and terms allowing conversion into equity.
It is intended to cover urgent financial obligations, fund aircraft maintenance, and return grounded planes to service.
Debt conversion and ownership implications
The two components serve distinct functions. The US$350 million shareholder loan injects fresh capital into the airline, while the debt conversion brings no new money; it restructures existing obligations to reduce the carrier’s debt burden and improve its balance sheet.
The Treasury currently holds a 48.9% stake in Kenya Airways. As the new shareholder loan may convert into equity, the government’s stake could increase further, potentially reshaping the shareholder structure ahead of any strategic investor’s entry.
The precise conversion terms have not been disclosed and will determine how the intervention affects ownership and the airline’s subsequent recovery phase.
The package comes close to the US$1.5 billion that Kenya Airways said it needed to raise in June 2026.
At the time, the airline outlined options, including selling an equity stake to a strategic investor, partnering with other airlines, or seeking further government support. The Cabinet’s decision indicates that the government opted for the third option.
Operating performance and remaining gaps
The intervention follows a difficult first half of 2026. Kenya Airways’ net loss widened to KSh 17.12 billion (US$132 million) from KSh 12.2 billion (US$94 million) a year earlier, with the six-month loss already approaching the full-year 2025 figure.
Revenue rose 9.1% to KSh 81.25 billion (US$625 million), but operating costs increased by 13.8% to KSh 91.9 billion (US$707 million), outpacing revenue growth.
Board chairman Kiprono Kittony said jet fuel costs rose by 66% due to Middle East tensions, driving a 32% increase in the airline’s fuel expenses to approximately KSh 29 billion (US$223 million). Acting CEO George Kamal said fuel accounted for nearly one-third of total operating costs.
Three Boeing 787-8 Dreamliners remain grounded due to engine and spare parts shortages, while other aircraft are withdrawn for maintenance. The new financing is intended, in part, to return these aircraft to service.
Lastly, the debt conversion improves the balance sheet but does not address the cash burn that led to the half-year loss.
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