By.philes isaboke
The Cabinet has approved a major financial rescue package for Kenya Airways in a bid to save the struggling national carrier.
In a dispatch released after a Cabinet meeting chaired by President William Ruto at State House on Friday, the government approved USD 350 million, approximately Ksh 45.4 billion, in shareholder financing.
According to the statement, the funds are intended to meet urgent financial obligations, including aircraft maintenance and efforts to return grounded planes to service. The financing will be disbursed in tranches under the oversight of the National Treasury, with a repayment period of up to ten years and a clause allowing for possible conversion into equity.
In a second intervention, Cabinet endorsed the proposed conversion of Ksh 122 billion in existing government loans, together with accrued interest, into an equity-qualifying tradable instrument. The move is designed to clean up Kenya Airways’ balance sheet and improve its ability to attract strategic investors.
“The interventions form part of the airline’s long-term turnaround plan,” the dispatch read.
The government defended the bailout, noting that Kenya Airways contributes more than USD 1.3 billion annually to Kenya’s Gross Domestic Product through tourism, trade, and regional connectivity.
The approvals are not yet final. Both measures remain subject to corporate, shareholder, and regulatory approvals.
The national carrier, which is majority-owned by the government, has been loss-making for over a decade and is currently seeking fresh capital from strategic investors.
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