State bails out Kenya Airways again with $350m loan

Kenya's government has provided a $350 million loan to Kenya Airways (KQ) to assist the struggling airline in meeting its critical financial obligations while implementing a turnaround plan. The funds will be released in stages under the supervision of the finance ministry, with a repayment window of up to ten years. The loan may be converted into equity shares if necessary, pending approval.

Earlier this year, Kenya's cabinet also approved a plan to transform $940 million in existing government loans, including accrued interest, into an equity instrument that meets trading standards. The turn of events comes after KQ saw its first profit in over a decade in 2024, but the momentum has since failed to continue.

The airline has been grappling with financial challenges for several years, only posting losses in the first half of 2025. The pre-tax loss amounted to Sh15.92 billion ($122.74 million), up from Sh12.17 billion ($93.82 million) in the same period the previous year. KQ's reliance on government loans has become a recurring issue, with the company's total borrowings reaching Sh151.3 billion ($116.64 million) at the end of 2025.

The government holds a 48.9% stake in KQ, while its total debt is estimated at Sh151.3 billion ($116.64 million), against a cash reserve of Sh5.3 billion ($40.86 million).

KQ's chief shareholder, Kiprono Kittony, maintains that the company has received interest from both local and international investors. However, no definitive agreements have been finalized yet. Until a strategic investor is secured or KQ generates a profit, the financially strained airline will most likely continue to rely on the state for support.

The airline's other major shareholders include a group of 11 commercial banks that converted their debt into equity in 2017 during another financial crisis. This move diluted KLM Royal Dutch Airlines' strategic stake to 7.8%, down from a previous 26% stake acquired during KQ's privatization in 1995. The public still holds a small percentage of KQ shares on the Nairobi Securities Exchange, where prices briefly rose following the news of government funding before dropping back to pre-announcement levels.