Kenya Airways' liabilities exceed its assets by KES 132 billion. On 9 October 2026 it told the market the government had agreed to lend it another US$350 million, about KES 45.15 billion, and to turn about KES 122 billion of old government loans into an equity-type instrument.
Taxpayers are the lender in both cases. Together that is KES 167 billion of public money, already lent or approved, subject to agreements and approvals: more than the airline's whole income for 2025.
The Afronomics verdict: In our view the state is no longer just Kenya Airways' biggest shareholder but its lender of last resort: it has taken over the airline's guaranteed aircraft loan, has approved US$350 million more and plans to turn KES 122 billion of loans into shares, before KQ has shown it can follow its 2024 profit with another.
What happened
FactsIn a notice dated 9 October 2026 and published on the Uganda Securities Exchange on 12 October, Kenya Airways said the government had approved "two related measures intended to support the Company's planned turnaround".
FactsThe first is a shareholder loan of US$350,000,000, "equivalent to approximately Kes45.15 billion", to meet "immediate and non-deferrable operational obligations". The notice says it is earmarked for aircraft maintenance and the return to service of grounded aircraft. Its proposed tenor is 10 years. Subject to approvals, it may be converted into equity at the government's option, or repaid earlier.
FactsThe second is in-principle approval to convert "existing Government shareholder loans of approximately Kes122 billion, together with accrued interest, into an equity-qualifying tradeable instrument". The airline says the aim is to move it "from its current negative equity position to a positive equity position" and to prepare a capital raise. Both measures still need definitive agreements, shareholder approval and the consent of the Capital Markets Authority and the NSE. The notice tells investors to exercise caution until the terms are announced.
What the numbers show
FactsKenya Airways' audited results for 2025, signed on 24 March 2026, show:
| Kenya Airways group | 2025 | 2024 |
|---|---|---|
| Total income | KES 161.5bn | KES 188.5bn |
| Operating profit or loss | −KES 5.6bn | KES 16.6bn |
| Finance costs | KES 12.4bn | KES 11.2bn |
| Profit or loss after tax | −KES 17.2bn | KES 5.4bn |
| Total assets | KES 183.2bn | KES 179.1bn |
| Total liabilities | KES 315.3bn | KES 297.4bn |
| Total equity | −KES 132.1bn | −KES 118.3bn |
Source: Kenya Airways summary audited group results for 2025, as filed on the Uganda Securities Exchange.
FactsThe company's own explanation: 2025 was "severely impacted primarily by the temporary grounding of three of the wide body fleet, Boeing 787-8 Dreamliner aircraft", which it says was "driven by the global supply chain constraints and limited engine availability". Capacity fell 18% and passenger numbers 13%; revenue fell 14%, or KES 27 billion.
FactsFor the first half of 2026 the airline reported revenue of about KES 81.2 billion and a loss after tax of about KES 16.1 billion, against KES 12.2 billion a year earlier, according to tech-ish and Kenyans.co.ke. The figures are unaudited. The filed copy we found is a scanned image we could not read, so we have not checked these figures against the filing.
AnalysisNegative equity means the airline's liabilities are bigger than its assets. At the end of 2025 the gap was KES 132.1 billion. If booked at face value, converting KES 122 billion of loans would cover about 92% of that gap as it stood in December 2025, before the accrued interest the notice mentions but does not put a number on, and before this year's losses.
AnalysisThe two measures together come to KES 167.15 billion (122 + 45.15). Kenya Airways' total income for all of 2025 was KES 161.5 billion.
What taxpayers have already paid
FactsThe Treasury's Annual Public Debt Management Report for FY2024/25 says the government guaranteed a loan for "seven (7) aircrafts and one (1) engine" in 2017, for US$525 million. The lender was the Private Export Funding Corporation (PEFCO) of the US, backed by Exim Bank of the US, which was in turn guaranteed by the Government of Kenya. The loan runs to FY2027/28.
FactsThe Treasury says the guarantee was called in FY2021/22 "as a result of loan payment defaults". The Cabinet approved paying the arrears and moving the loan balance onto the government's books, and the report says that process has been concluded.
FactsKenya Airways has disputed the Treasury's account of this loan before. When the Treasury's FY2021/22 debt report said the airline had "defaulted on both the guaranteed portion of the loan amount as well as the non-guaranteed portion" of a US$841 million loan, its chief executive at the time, Allan Kilavuka, said: "The value you quote for the US EXIM facility is not correct. USD485 million is what relates to the US EXIM guaranteed debt," ch-aviation reported. He said the airline had asked the government for support on the guaranteed loan "to avert the possibility of the loan going into default". The figures in the table below are the Treasury's.
| Year to June | Paid by the government on KQ's guaranteed loan | Source |
|---|---|---|
| FY2022/23 | KES 12.3bn (KES 10.6bn principal, KES 1.7bn interest) | Debt report FY2022/23 |
| FY2023/24 | Not in the reports we read | |
| FY2024/25 | KES 19.7bn principal | Debt report FY2024/25 |
AnalysisOn the Treasury's figures, that is at least KES 32.0 billion in two years (12.3 + 19.7), not counting FY2023/24 or the interest in FY2024/25. A separate government guarantee on Kenya Airways' local bank loans still stood at KES 9.7 billion in June 2025, according to the same report.
Who owns the airline
FactsKenya Airways said on 8 April 2026, as reported by The Star, that the National Treasury holds 48.90%, KQ Lenders Company 2017 Limited 36.30%, KLM 7.76%, the staff share scheme 2.44% and other investors 4.60%. It was responding to a report that the state's stake had passed 50%, which it called "not factual".
AnalysisSo the taxpayer is the largest shareholder, the lender of the KES 122 billion and of the new US$350 million, and, on the Treasury's account, the payer of the guaranteed aircraft loan. Turning loans into shares changes the label on that money. It does not, by itself, bring any of it back.
Our verdict
OpinionIn our view the state is no longer just Kenya Airways' biggest shareholder but its lender of last resort: it has taken over the airline's guaranteed aircraft loan, has approved US$350 million more and plans to turn KES 122 billion of loans into shares, before KQ has shown it can follow its 2024 profit with another.
The case for the deal is real. An airline with negative equity cannot easily raise money from anyone else, and grounded Dreamliners earn nothing. Fixing the balance sheet first is the obvious step before asking private investors in.
But the order matters. Kenya Airways made KES 5.4 billion in 2024 and lost KES 17.2 billion in 2025, and press reports of its unaudited results put its half-year loss for 2026 above the year before. The airline puts 2025 down mainly to the grounding of three Dreamliners, which it says was driven by global supply chain constraints and limited engine availability. The government is being asked to commit fresh cash and give up its claim as a lender before the airline has shown what it earns with its full fleet flying.
The price of the conversion, the value of the new instrument and what other shareholders give up are not yet public. Until they are, nobody outside can say what the taxpayer is getting for KES 167 billion. The Treasury could publish one number that would settle a lot: the total it has put into Kenya Airways, every year, in one table.
What would change our mind
A full-year profit in 2026 or 2027 with all Dreamliners back in service. Conversion terms that give the state a priced, tradeable stake with a clear exit. And a private investor putting in real cash on the same terms as the government.
Information, not advice.