Kenya Airways gets Sh45.4bn lifeline in Cabinet-approved financing

Cabinet meeting at State House on October 9, 2026/ PCSThe Cabinet has approved $350 million (Sh45.4 billion) in shareholder financing for Kenya Airways to meet urgent financial obligations, including aircraft maintenance and the return of grounded planes to service, as the national carrier pursues a long-term turnaround plan.

In a statement issued after a Cabinet meeting at State House, Nairobi, on October 9, 2026, the government said the funds would help support the airline’s recovery and strengthen its financial position.

The financing will be disbursed in tranches under the oversight of the National Treasury, with a repayment period of up to 10 years. The arrangement also allows for the possibility of converting the financing into equity, subject to the necessary approvals.

Cabinet also endorsed a proposal to convert Sh122 billion in existing government loans, together with accrued interest, into an equity-qualifying tradable instrument.

The proposed conversion is intended to strengthen Kenya Airways’ balance sheet and support future capital raising.

However, implementation of the measures remains subject to the necessary corporate, shareholder and regulatory approvals.

The government said the interventions form part of the airline’s long-term turnaround plan, aimed at safeguarding a national carrier that contributes more than $1.3 billion annually to Kenya’s gross domestic product through tourism, trade and regional connectivity.

The financing comes as the government seeks to address the airline’s immediate financial obligations while supporting its longer-term recovery.

Kenya Airways plays a role in connecting Kenya to regional and international markets, with its contribution to tourism and trade forming part of the economic considerations behind the proposed support.

The approved financing is expected to address urgent operational requirements, particularly aircraft maintenance and efforts to return grounded planes to service.

The decision also includes a broader balance-sheet measure through the proposed conversion of existing government debt into an instrument that qualifies as equity, potentially supporting the airline’s future efforts to raise capital.

Cabinet’s approval, however, does not conclude the process, as the proposed arrangements must still secure the required approvals before implementation.

In a separate decision, Cabinet approved the settlement of 28,726 verified government pending bills worth Sh23.74 billion, offering relief to suppliers and contractors, some of whom have waited for payment since 2005.

The approved bills, each valued at Sh50 million or below, represent 98 per cent of the 29,257 claims recommended for settlement following a review by the Pending Bills Verification Committee.

The committee received 115,617 claims worth KSh664.8 billion. After verification, it recommended 29,257 claims valued at Sh155.34 billion for settlement.

The National Treasury will oversee the payments, with priority given to micro, small and medium enterprises, particularly businesses owned by women, young people and persons with disabilities.

The government said the payments would ease cash-flow pressures, protect jobs and restore confidence among suppliers and contractors affected by delayed payments.

The remaining verified bills exceeding Sh50 million will be settled progressively.