Cabinet approves Ksh 45B to help Kenya Airways reinstate grounded aircrafts

The Kenyan government has allocated a capital injection of Ksh 45.2 billion to Kenya Airways, with the aim of reviving the flag carrier's grounded aircraft. This significant financial support will enable the airline to address urgent financial obligations, including aircraft maintenance, which will subsequently result in the return of grounded aircraft to service.

The approval was made during a Cabinet meeting chaired by President William Ruto, allowing the National Treasury to disburse the funds in tranches with a repayment period of up to 10 years, and the option of conversion into equity, subject to necessary approvals.

In 2025, Kenya Airways faced a net loss of Ksh 17.2 billion, which was attributed to the challenging economic environment experienced during the year. The airline cited global supply-chain constraints, shortages of critical spare parts, and grounded aircraft as key factors that affected aircraft availability and operational reliability.

The government's decision to endorse the proposed conversion of Ksh 122 billion in existing Government loans, plus accrued interest, into an equity qualifying tradable instrument is aimed at strengthening the airline's balance sheet and supporting future capital raising.

The measures taken by the government form an integral part of Kenya Airways' long-term turnaround plan, which is designed to safeguard the airline that contributes over $1.3 billion annually to Kenya's GDP through tourism, trade, and regional connectivity. The restoration of grounded aircraft, including the Boeing 787-8 and Boeing 777-300 ER, is expected to improve fleet capacity for the airline.

In the first six months of 2025, Kenya Airways' revenue rose to Ksh 81 billion, despite the challenging fuel environment, which now accounts for 32% of total operating expenses and 52% of direct operating costs.

Dr. George Kamal, Ag. Group Managing Director and Chief Executive Officer of Kenya Airways, highlighted that the airline grew revenue by 9% to Ksh 81 billion in the first six months of 2025, even while operating with 9% less capacity. The improvement in cabin factor and the strength of average coupon values demonstrated that demand for the airline's network remains resilient.

The Cabinet-approved measures are anticipated to further enhance the airline's capacity, strengthen its network, improve operational flexibility, and enable the capture of additional demand as market conditions improve.