Kenya Airways Explains Cabinet-Approved Ksh 45 Billion Loan and Debt Plan

Kenya Airways has outlined plans to restructure Ksh 122 billion in government loans alongside a fresh Ksh 45.15 billion loan, in a financial rescue effort aimed at addressing its negative equity position and attracting new investors.

In a statement dated Friday, October 9, the national carrier said government approval covers both measures, which target different financial challenges, meeting urgent operational expenses and changing how existing state debt is treated on its balance sheet.

While fresh financing will support aircraft maintenance and efforts to return grounded planes to service, converting existing loans into an equity-qualifying tradable instrument is intended to improve Kenya Airways’ financial standing and create room for future capital raising.

Kenya Airways Details Ksh 45 Billion Loan Terms

The government has approved a Ksh 45.15 billion, million shareholder loan to help Kenya Airways meet immediate expenses that cannot be deferred.

Aircraft maintenance and returning grounded planes to service are among the priorities identified in the announcement.

Also Read: Kenya Airways to Get Ksh 45.3 B Lifeline as Govt Moves to Return Grounded Planes to Service

“The facility is earmarked to support the Company’s critical operational requirements, including aircraft maintenance, the return to service of grounded aircraft and other immediate critical operational obligations,” Kenya Airways said.

Proposed terms provide for a 10-year loan period.

The government may convert the facility into equity during a future capital restructuring, subject to required approvals, while earlier repayment is also possible under terms agreed between both parties.

Ksh 122 Billion Debt Conversion Targets Negative Equity

Separately, the government has approved in principle a proposal to convert approximately KSh122 billion in existing shareholder loans, together with accrued interest, into an equity-qualifying tradable instrument.

Unlike fresh financing, this measure would address debt already owed to the government rather than provide additional cash for daily operations.

Kenya Airways said the proposed conversion aims to move the company from negative equity to a positive position, improve its creditworthiness and support plans to raise capital through the market.

It would also help prepare the airline to bring in strategic partners and investors. In its statement, the company said the restructuring would facilitate the full capital raise process as well as the onboarding of suitable strategic partners and investors.

Also Read: Kenya Airways Names New Acting CEO Hours After Aviation Workers’ Strike

No investor was named, and the debt conversion has not been completed.

Implementation remains subject to definitive agreements and the necessary corporate, shareholder and regulatory approvals, including those involving the Capital Markets Authority and Nairobi Securities Exchange.

Kenya Airways has advised shareholders and investors to exercise caution when trading in its securities until outstanding terms are determined and formally announced.

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