A Fresh Cheque: Cabinet Clears KSh 45.40 Billion for Kenya Airways

The Cabinet has put another KSh 45.40 billion behind Kenya Airways, and the planes that are not flying are the reason.

On 9 October the Cabinet approved $350 million, about KSh 45.40 billion at the rate the dispatch used, in new shareholder loans. The money is for urgent bills, aircraft maintenance, and getting grounded planes back in the air.

It will be paid in stages, over as long as 10 years, with the National Treasury watching the drawdowns. Treasury owns 48.9 per cent of the airline. The same note said the government may convert the new money into shares, if the corporate, shareholder and regulatory approvals come. That is a possibility, not a decision taken on Friday.

A second measure sits beside it. Cabinet endorsed a plan to turn KSh 122 billion in existing government loans, plus the interest on them, into a tradable instrument that could itself become shares. The idea was first floated when the airline published its 2025 results in March. Implementation still needs those same approvals. A loan that becomes a share stops being a debt the airline must repay on a date. It becomes a claim on whatever profit is left, if any.

Why the airline is back at the Cabinet table

Kenya Airways has been here before. The state has lent, guaranteed and, at times, talked about selling. First-half revenue reached KSh 81 billion, about $625.48 million, on stronger passenger numbers, and the loss still widened because fuel, maintenance and the dollar cost more.

A carrier that sells more seats and still loses money is not short of customers. It is short of cash for the work that keeps a jet legal to fly. Three aircraft were in major service by September after hitting 12 years. A plane on the ground earns nothing and still costs parking, crew and lease.

What a taxpayer is actually underwriting

The KSh 45.40 billion is not a gift in the note. It is a loan, unless it is converted. A 10-year clock means the airline has time, and the Treasury has a claim. If the conversion happens, the state's 48.9 per cent can grow, and other shareholders are diluted.

Cabinet also said the airline contributes more than $1.30 billion a year, about KSh 167.70 billion, to the economy. That is the argument for keeping it flying. It is not a promise that this cheque is the last one. A passenger cares whether the Monday flight leaves.

A taxpayer cares whether the next dispatch asks for another tranche.