The exits of Allan Kilavuka and Michael Joseph as CEO and chairman of Kenya Airways, respectively, have thrown off the national carrier’s search for a strategic investor.
The National Treasury, the airline’s single largest shareholder, has said the priority has moved from the search for a strategic investor due to the leadership vacuum created.
Mr Kilavuka left Kenya Airways last week, after six years at the helm, ahead of the expiry of his tenure in April 2026. Michael Joseph retired as the chairman of KQs board in June. He is yet to be replaced.
Treasury CS John Mbadi says the government is focused on filling the leadership positions left by the duo before onboarding a strategic investor.
“I want to reserve my comments on KQ (Kenya Airways) because a lot has been happening and right now, we are looking at governance. I would not want to pre-empt the discussions on a strategic investor,” he said last week.
KQ’s chief operating officer George Kamal has been appointed as the acting CEO pending a competitive recruitment process to appoint a substantive successor to Mr Kilavuka.
The national carrier has been seeking a strategic investor since 2024 to clear hundreds of billions of shillings worth of debt and set the airline on a sustainable path. The search is yet to bear fruit as the government weighs various funding options including merging the airline with the Jomo Kenyatta International Airport (JKIA).
The government previously froze the approval of a consultant to help identify an equity partner as it weighed a variety of turnaround options. “What is very critical in that repayment process is the strategic investor. When funding comes in, we need to review the balance sheet so we can address that process,” Ms Kilavuka said in a previous interview.
“We have been having formal discussions (with potential strategic investors), but these discussions need to be formalised and approved by the principal shareholder. The wait is concerning for us because this process needs to be fast tracked.”
KQ ended 2024 with Sh142.7 billion total loans which rose slightly from Sh141.7 billion in 2023.
The government reached a deal earlier in the year to pay down a Sh58 billion credit facility which is due in October 2028. The carrier is expected to pay other loans including Sh45.7 billion guaranteed debt by the government, Sh62.5 billion other State loans and two facilities owed to local banks –a Sh1.7 billion loan due in 2028 and a dollar-denominated Sh19.7 billion revolving facility.
KQ revealed a Sh6.5 billion ($50 million) bridge financing from a local bank in August to help it fund immediate working capital needs.
A bridge loan refers to a short-term facility taken ahead of the availability of long-term financing to settle urgent needs. Immediate funding needs for KQ cover the securing of spare parts and engine servicing.
KQ slumped back to the red in the six-months period to June, registering a Sh12.15 billion net loss compared to a net profit of Sh513 million a year earlier after its capacity fell from the grounding of some of its aircrafts on parts shortages.
The airline closed June 2025 with a negative equity position of Sh129.5 billion, deteriorating from negative Sh118.2 billion in June 2024.
The government holds a significant 48.9 percent stake in KQ through the National Treasury which gives it high leverage in the appointment of the airline’s management including chief executive officer and board chairman.
Local banks including Equity Bank, KCB, Co-operative Bank of Kenya, NBK, DTB, SBM, NCBA, I&M and Ecobank hold a 38.09 percent stake in the airline through the KQ Lenders Company 2017 Limited –a special purpose vehicle (SPV) created following a financial restructuring. The restructuring saw the local banks convert most of their claims in KQ to equity.
Other major KQ shareholders are the Royal Dutch Airlines (KLM) which holds a 7.76 percent stake and Kenya Airways staff who hold a 2.44 percent stake through an employee share ownership scheme.
