NAIROBI — The Cabinet has approved $350 million (Sh45.4 billion) in financing for Kenya Airways (KQ) to cover urgent financial obligations, including aircraft maintenance and returning grounded planes to service, as the government moves to shore up the struggling national carrier.
According to a Cabinet dispatch released on Friday, the financing will be released in instalments under the Treasury’s supervision, with a repayment period of up to 10 years.
“To support the turnaround of national carrier Kenya Airways, Cabinet approved $350 million (Sh45.4 billion) in shareholder financing to meet urgent financial obligations, including aircraft maintenance and returning grounded planes to service,” the dispatch reads.
“The funds will be disbursed in tranches under National Treasury oversight, with a repayment period of up to 10 years and the possibility of conversion into equity, subject to the necessary approvals.”
Debt-to-Equity Conversion
The Cabinet also backed a plan to convert Sh122 billion in government loans to KQ, together with accrued interest, into an instrument that could be converted into shares.
“The meeting also endorsed the proposed conversion of Sh122 billion in existing Government loans, plus accrued interest, into an equity-qualifying tradable instrument to strengthen the airline’s balance sheet and support future capital raising,” the dispatch reads.
The move is intended to ease the airline’s debt burden and improve its chances of attracting new investment.
Key Details Still Unclear
The dispatch did not specify when the first financing instalment would be released, how many grounded aircraft could return to service, or when the proposed debt restructuring would be completed.
Both measures remain subject to the necessary corporate, shareholder and regulatory approvals.
“Implementation remains subject to the necessary corporate, shareholder and regulatory approvals,” the dispatch reads.
Economic Significance
The government is presenting the measures as part of its broader plan to support the airline’s recovery.
According to the dispatch, the airline contributes more than $1.3 billion (Sh168.6 billion) annually to Kenya’s gross domestic product through tourism, trade and regional connectivity.
The funding decision comes as Kenya Airways continues to navigate financial turbulence, with a portion of its fleet grounded due to maintenance and operational challenges. The national carrier has long been a critical piece of Kenya’s transport infrastructure and a key driver of the country’s tourism and trade sectors.
The Cabinet meeting was chaired by President William Ruto at State House in Nairobi on June 30, 2026, according to the dispatch.
