The Cabinet on Friday, October 9, approved Ksh45.4 billion in new financing to support the turnaround of national carrier Kenya Airways. Kenyans.co.ke has established that the funds will cover urgent financial obligations, including aircraft maintenance and returning grounded planes to service.As of September, KQ had three aircraft undergoing major service after hitting 12 years. According to the Cabinet Dispatch, the financing will be disbursed in instalments with a repayment period of 10 years.“The government may also convert the funds into equity, subject to the necessary approvals,” the Cabinet said, in a move that could allow the national carrier to speed up its recovery strategy.Separately, the Cabinet approved a proposal to convert Ksh122 billion in government loans, plus interest, into a tradable instrument that could be converted into shares.Cabinet said the move, which was first mooted when Kenya Airways announced its 2025 financial results in March, is aimed at strengthening the airline’s balance sheet and supporting future capital raising. "The measure is intended to strengthen Kenya Airways' balance sheet and support future capital raising. Implementation remains subject to corporate, shareholder and regulatory approvals," Cabinet stated.In June, then CEO George Kamal told Kenyans.co.ke the company had received offers from investors, however, the Ksh122 billion in government loans remained a stumbling block. Kenya Airways has been in talks with the National Treasury on debt restructuring plans for the better part of the year, with President William Ruto’s administration signalling intent to strengthen the carrier. The government says the measures are part of the long-term turnaround plan to turn KQ into profits. In the year to June 30, KQ reported a 9 per cent jump in profits to Ksh81.25 billion, however, the company remains in the red due to deeper net losses largely driven by surging fuel and maintenance costs.“Implementation remains subject to the necessary corporate, shareholder and regulatory approvals,” Cabinet noted.
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