National carrier Kenya Airways (KQ), has now opted for bridge financing from local commercial banks following a delay in an ambitious capital raising effort that seeks to mobilise at least $500 million (Sh64.58 billion) from a strategic investor.
Bridge finance or bridge loan is short-term facility used until longer-term financing is secured or an existing obligation is settled. It helps to settle urgent needs.
The airline’s top leadership said it has so far tapped a $50 million (Sh6.5 billion) from a local bank to help it ride through immediate working capital needs, including the heavy capital outlay required in securing spare parts and engine servicing.
KQ said that, as a means to diversify its funding options, it is also exploring what it terms as innovative bridge financing with international partners whose details it plans to disclose upon successful closure.
The airline says it is currently awaiting approval of its investment memorandum from the anchor shareholder, the government of Kenya which holds a 49 percent stake, before going to market with the same in search of a strategic investor for the Sh64.58 billion capital injection.
“We had hoped to close this (the scout for a strategic investor) in 2024, but are currently waiting for approval from the main shareholder on our investment memorandum on the same. We are not just sitting pretty as we await this approval from the government, we have opted for bridge financing to help us in the current environment”, the airline’s chief executive, Allan Kilavuka, said.
KQ slumped back into the red in the first half of 2025, with the airline registering a Sh12.15 billion loss after tax compared to a Sh513 million profit after tax reported in the same period in 2024.
In the period under review, the airline’s turnover declined by 18.6 percent to Sh74.5 billion in what management says is the reflection of a struggle with a capacity for the better part of the six months that ended June 2025.
Despite managing to place a firm lid on costs, which declined 4.6 percent to Sh86.7 billion, Kilavuka says that the airline’s performance suffered a major blow from the fact that 33.0 percent of wide-bodied aircraft remained grounded for the first six months of the year, owing to an acute shortage in parts and what he says is punitively steep cost in overhauling engines.
“Demand for original equipment spare parts is currently 10 – 20percent higher than the existing supply. Lead times for avionics parts have increased by 20percent with overall spare parts delivery disruptions affecting 40percent of airlines. This year, we expected to onboard four narrow bodies but have only managed to do one, a Boeing 737-800, due to a shortage in the global market. Our aircraft count has now increased to 42,” Mr Kilavuka said.
Last year, KQ rebounded to its first full-year profit in a decade, posting a Sh5.4 billion profit after tax for the 12 months ended December 2024, a turnaround from the Sh22.6 billion loss reported the year before.
The 2024 performance by the airline was significantly buoyed by considerable foreign exchange gains following the government’s decision to take up a Sh88 billion US dollar-denominated facility for on-lending to the airline in Kenya Shillings, thereby staving off the foreign exchange exposure the business had suffered.
“Supplementary Budget II Estimates indicate that in 2023/24, payment of Kenya Airways PLC guaranteed debt was converted to mainstream external public debt stock, and subsequently, entry of a new external commercial loan owed to Exim Bank USA/PEFCO was captured. Interest and principal payments for this new loan amounted to Sh14.3 billion and Sh20.9 billion in 2023/24 and 2024/25, respectively, with a further Sh21.3 billion and Sh10.7 billion in 2025/26 and 2026/27, respectively”, the National Assembly Privatisation and Public Debt Committee’s Report on Supplementary Budget II 2023/24 and 2024/25 Budget Estimates stated.
