Nairobi, Kenya: Kenya Airways has warned shareholders and investors to exercise caution following government approval of a $350 million (approximately KSh45.15 billion) shareholder loan and an in-principle restructuring of KSh122 billion in existing government loans and accrued interest. In a material-information notice dated 9 October and published on 12 October, the airline said both measures remain subject to outstanding transaction documents, shareholder approvals where required and regulatory clearances.
The new loan is intended to cover immediate operational obligations, including aircraft maintenance and returning grounded aircraft to service. The proposed facility carries a 10-year repayment period, although earlier repayment may be agreed. The government could also convert the loan into equity, subject to the necessary approvals. Funds will be released in tranches under National Treasury oversight, according to the government’s announcement.
Separately, the government has approved in principle the conversion of approximately KSh122 billion in existing shareholder loans, together with accrued interest, into an “equity-qualifying tradable instrument”. Kenya Airways said the proposal is intended to restore the company from negative equity to a positive equity position, strengthen its balance sheet and creditworthiness, and support its planned capital-raising programme and efforts to attract strategic investors. The restructuring is not a completed debt conversion, and the final terms remain undetermined.
The airline’s cautionary notice states: “Shareholders and investors are advised to exercise caution when dealing in the securities of the Company until the outstanding terms are determined and announced to the market.” The notice will remain in force, subject to renewal at intervals of no more than 60 days, until a further announcement is issued or it is formally withdrawn. Kenya Airways said it would disclose material developments once the outstanding matters are sufficiently determined.
The financial intervention comes as the carrier struggles with rising costs and worsening losses. Kenya Airways reported a pre-tax loss of KSh15.92 billion in the first half of 2026, compared with KSh12.17 billion in the same period a year earlier. Fuel costs rose 72% year on year, accounting for about half of total expenses, while maintenance delays and spare-parts shortages constrained aircraft availability. The airline had reported its first profit in more than a decade in 2024, but the recovery has since faltered.
Kenya Airways is also seeking at least $1.5 billion (approximately KSh194 billion) in fresh capital to strengthen its finances, restore operational capacity and support expansion. Chairman Kiprono Kittony said in August that the airline had received “interest from local and international investors”, including potential parties from the United States, China, South Africa and Singapore. He said the company was pursuing both a capital-raising partner and an aviation-industry strategic partner. However, no definitive investor agreement had been announced in the reports reviewed.
The Kenyan government holds a 48.9% stake in the national carrier and remains its largest shareholder. At the end of 2025, Kenya Airways had total borrowings of KSh151.3 billion against cash reserves of KSh5.3 billion, according to reports. The latest measures are intended to address immediate liquidity requirements while preparing the airline for a wider capital restructuring. Their effectiveness will depend on the completion of the required approvals, the return of grounded aircraft to service and the airline’s ability to secure new investment and improve its financial performance.
