Kenya Airways has secured government approval for a US$350 million (Sh45.15 billion) shareholder loan to support aircraft maintenance, return grounded planes to service, and stabilise operations amid mounting financial pressure.
In a public announcement dated October 9, 2026, the national carrier said the funding would help meet urgent operational obligations as it implements a broader turnaround plan aimed at returning the airline to sustainable profitability.
The government has also approved in principle the conversion of approximately Sh122 billion in existing shareholder loans, together with accrued interest, into an equity-qualifying tradeable instrument to strengthen the airline's balance sheet.
“The Government of Kenya has agreed to provide the Company with a shareholder loan of US$350,000,000 (Sh45.5 billion), to enable the Company to meet immediate and non-deferrable operational obligations and support continuity of operations as it implements its broader long-term turnaround plan and return to sustainable profitability,” Kenya Airways said.
The government may convert the proposed 10-year facility into equity, subject to the necessary approvals, or repay it earlier under terms to be agreed between the airline and the government.
The financing comes as Kenya Airways continues to grapple with aircraft availability challenges caused by global shortages of engines and spare parts, which have delayed maintenance and reduced the number of planes available for commercial flights.
In August 2025, the airline reported that three Boeing 787-8 Dreamliner aircraft had been temporarily grounded, representing 33 per cent of its wide-body fleet at the time. The disruption reduced its available seat capacity and affected passenger numbers and revenue.
The challenge persisted into 2026, when the airline reported that global supply-chain constraints and shortages of critical spare parts continued to affect aircraft availability and operational reliability.
In its half-year results released on August 25, 2026, Kenya Airways reported a nine per cent increase in revenue to Sh81 billion for the six months ended June 30, despite operating with nine per cent less capacity.
However, the carrier recorded a Sh16.1 billion after-tax loss, compared with Sh12.2 billion in the corresponding period in 2025. Fuel costs rose 32% year-on-year, while total operating costs rose 14%, putting pressure on its finances.
The airline said the return of additional aircraft to service was expected to improve network resilience and enable it to take advantage of passenger demand. A Boeing 787-8 Dreamliner resumed operations in mid-July 2026, while a Boeing 777-300ER was also returned to service.
Alongside the new financing, the government has approved in principle the conversion of existing shareholder loans worth approximately Sh122 billion, plus accrued interest, into an equity-qualifying tradeable instrument.
The proposed transaction aims to move Kenya Airways from negative equity to positive equity, improve its creditworthiness, and strengthen its ability to attract additional investors.
KQ said the restructuring would also support a planned capital raise through the market and the onboarding of strategic partners.
The measures follow a difficult financial year in 2025, when Kenya Airways reported a net loss of Sh17.2 billion, reversing a profit recorded in 2024. Revenue fell 14 per cent to Sh161.5 billion, while reduced aircraft availability lowered passenger and cargo capacity.
Kenya Airways cautioned shareholders and investors that the proposed financing and debt restructuring remain subject to outstanding approvals and definitive agreements.
The airline said implementation would require negotiating and executing transaction documents, shareholder approval where necessary, and relevant approvals or no-objections from the Capital Markets Authority and the Nairobi Securities Exchange.
Other statutory and third-party consents may also be required before the company can complete the measures.
The company will continue updating shareholders and the investing public as material details are determined. It also advised investors to exercise caution when dealing in its securities until it finalises and announces the outstanding terms.
The cautionary notice will remain in force until a further announcement is issued or it is formally withdrawn, with renewals at intervals not exceeding 60 days, or as otherwise required by regulations.