Kenya's Cabinet has approved USD350 million in shareholder financing for Kenya Airways (KQ, Nairobi Jomo Kenyatta) to meet urgent financial obligations, including aircraft maintenance and returning grounded aircraft to service, according to a Cabinet statement.

The funding 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, the October 9, 2026 statement said.

The cabinet also endorsed the proposed conversion of KES122 billion shilling (USD940.6 million), plus accrued interest, in existing government loans into an equity-qualifying tradable instrument. The measure is intended to strengthen the airline's balance sheet and support future capital raising.

The implementation remains subject to the necessary corporate, shareholder and regulatory approvals.

"The measures form part of Kenya Airways' long-term turnaround plan and are intended to safeguard an airline that contributes more than USD1.3 billion annually to Kenya’s GDP through tourism, trade and regional connectivity," the statement said.

Kenya Airways confirmation

In a separate statement, Kenya Airways acting group managing director and CEO, Habil Waswani, confirmed the funding would address the airline's "immediate recapitalisation, liquidity, and balance sheet restructuring requirements".

He said the shareholder loan would enable the airline to meet critical, immediate, and non-deferrable operational obligations including aircraft maintenance and the return to service of grounded aircraft.

"The proposed conversion is intended to restore the company from its current negative equity position to a positive equity position, strengthen its balance sheet and creditworthiness, support the company's planned long-term capital raise initiatives to be undertaken through the market by way of an investment memorandum, and facilitate the full capital raise process as well as the onboarding of suitable strategic partners and investors," he elaborated.

The backstory

The state financing comes as Kenya Airways seeks at least USD1.5 billion in fresh capital from a strategic investor to support its turnaround. The process was targeted for completion by December 2026, while the airline's chairman indicated in August that the fundraising could conclude in the first quarter of 2027.

The government's stake in the Nairobi Securities Exchange-listed airline rose to 50.1% in 2026 following the winding up of its employee share ownership scheme.

The airline earlier indicated it intends to have its grounded fleet reactivated by early 2027.

About a third of Kenya Airways' fleet, totalling eleven out of 34 aircraft, is currently grounded, including two long-haul B787-8s, according to ch-aviation data.