Kenya is preparing to place Kenya Airways (KQ) on the table for foreign investors in a potential transaction valued at up to Sh258 billion, as the Treasury scrambles to steady the loss-making airline. The Cabinet Secretary for the National Treasury announced that an international expression of interest will soon be issued to attract a strategic partner willing to inject between Sh154.8 billion and Sh258 billion. To make the offer more appealing, the government may bundle additional assets with the deal, given that the airline is technically insolvent, with liabilities outweighing its assets.
The proposed investor would be required to commit at least $1.2 billion and up to $2 billion. The State has already absorbed Sh63.1 billion under the Tsavo facility and is servicing that obligation, with the option of converting the amount into equity once a new partner is secured. Details of the transaction structure remain undisclosed.
Reviving Kenya Airways has long been a fiscal headache and was among Kenya’s commitments under its programme with the International Monetary Fund, which urged the government to secure a capital partner. Plans to unveil such an investor last year failed to materialise, leaving one of the programme’s conditions unmet.
In 2017, the State and a consortium of 11 banks, including KCB Bank Kenya, Equity Bank Kenya, Co-operative Bank of Kenya and NCBA Bank Kenya, converted a portion of debt into equity. That restructuring lifted the government’s stake to 48.9 percent from 29.8 percent, while banks took 38.1 percent through a special purpose vehicle. Air France-KLM saw its shareholding diluted from 26.7 percent to 7.8 percent.
Analysts argue that sweeteners may be necessary to lure credible bidders, possibly by pairing the airline with airport assets. Some recommend prioritising an equity investor over additional borrowing to avoid worsening the debt burden. There had previously been talk of linking the airline’s revival to the upgrade of Jomo Kenyatta International Airport, positioning the carrier as an anchor tenant in a model loosely inspired by Dubai International Airport, where Emirates and the airport operate under the same state ownership. However, Kenya has since dropped a separate proposal that would have seen India’s Adani Group upgrade JKIA through a public-private partnership.
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Market speculation around a possible Middle Eastern suitor has buoyed the airline’s shares on the Nairobi Securities Exchange, with the stock climbing 42.7 percent since January to Sh5.04, giving it a market capitalisation of Sh28.6 billion. Still, the fundamentals remain bruised. In the six months to June 2025, the airline’s negative equity deepened to Sh129.5 billion from Sh118.2 billion, as it posted a half-year loss of Sh12.15 billion, reversing a Sh634 million profit recorded in the same period a year earlier. Total liabilities stood at Sh309.9 billion against assets of Sh180.3 billion.
Kenya Airways is also seeking at least $500 million in fresh capital to modernise and expand its fleet. Recent losses were partly attributed to reduced revenue and passenger numbers after three Boeing 787-8 Dreamliners were grounded for maintenance. Although it briefly returned to pre-tax profitability in early 2024, its first such performance in over a decade, the airline’s structural weaknesses persist. Since slipping into insolvency in 2018 following an ambitious but debt-heavy expansion, it has depended heavily on State support, including the government’s settlement of a Sh19.4 billion loan last year.
The renewed hunt for a strategic partner follows the recent departures of chief executive Allan Kilavuka and chairman Michael Joseph, signalling yet another turning point in the airline’s long and turbulent restructuring saga.
