Accrued government loans to Kenya Airways (KQ) rose by Sh3.1 billion in 2024 to hit Sh108.3 billion, driven by unpaid interest and principal, deepening the national carrier’s dependence on its largest shareholder.
The airline disclosed in its 2024 annual report that the government – its biggest creditor – granted a waiver on interest and principal repayments through June this year, following years of financial strain that have left the carrier unable to service its loans.
“As of 31 December 2024, the Group and Company had not made payments of interest on the Government of Kenya loan as set out in the loan agreements,” the Nairobi Securities Exchange-listed firm reported.
“The GoK granted the company a deferral of payment of interest on the loans until June 2025” it added.
KQ’s total loans stood at Sh142.7 billion by the end of 2024, up from Sh141 billion a year earlier, mainly due to accrued interest on government and aircraft loans. Of the government debt, Sh99.9 billion is principal while Sh8.4 billion is accumulated interest.
Part of the debt relates to a 12-year loan KQ took in 2017 from US lenders Citibank and JP Morgan to acquire new aircraft. The government, which had guaranteed part of the loan, took over a fraction of it in 2020 when the airline defaulted amid business disruptions due to the Covid-19 pandemic that grounded global aviation.
The remaining part was converted into equity for the lenders, who now own 38 percent of the flag carrier, the second largest after the Treasury.
Another Sh19.3 billion loan from eight local banks was also taken over by the Treasury after KQ defaulted. The banks rejected a proposed 6.5-year bond as payment, forcing taxpayers to cover the amount in March this year.
The national carrier, which has been loss-making for nearly a decade, has failed to service most of its debt. As a result, the government has converted part of its guarantees into equity, raising its stake in KQ from 30 percent a decade ago to 48 percent currently, or 2.8 billion shares.
Although KQ posted a profit in 2024 for the first time in nearly 10 years, it remains unclear whether it will resume servicing its loans to the government when the current waiver expires.
KQ’s acting chief financial officer Mary Mwenga said continued waivers will depend on the outcome of ongoing efforts to attract new capital into the airline.
“There are ongoing discussions regarding capital restructuring, and the Government of Kenya as the principal shareholder is fully involved. The outcome of this discussion will determine the need for waiver or otherwise,” she told Business Daily in emailed responses.
The government is in talks with several strategic investors globally for a possible investment in the KQ to help recapitalise the national carrier.
