Uganda Airlines secures $113 million for fleet expansion as Kenya Airways seeks $2 billion rescue

Uganda Airlines has secured Ush422.26 billion ($113.4 million) to expand its fleet, moving to strengthen operations as regional peer Kenya Airways struggles with mounting losses and seeks up to $2 billion from foreign investors to stabilize its balance sheet.

The funding for Uganda Airlines is part of a supplementary request of Ush1.696 trillion ($455.7 million) approved last year. The allocation is expected to finance the acquisition of 10 aircraft to boost capacity and strengthen the airline’s route network. In recent times, fleet shortages have disrupted long-haul operations, forcing the carrier to suspend some international flights.

Fleet shortages strain Uganda Airlines

Operating with a limited number of aircraft has left Uganda Airlines exposed to maintenance schedules and unexpected technical issues. To maintain long-distance operations, the airline recently leased a Boeing Dreamliner from Ethiopian Airlines, highlighting the urgency of expanding its fleet.

The funds were secured through borrowing and reflected in Uganda’s Ministry of Finance February Performance of the Economy report. The report showed government operations resulted in net borrowing of Ush1.22 trillion ($327.7 million), exceeding the programmed target of Ush985.85 billion ($266.6 million).

“This deviation was mainly driven by expenditure that exceeded projections, particularly on grants, including part payments to Uganda Airlines for the purchase of new aircraft, and interest payments,” the ministry said. It added that interest payments rose due to front-loaded domestic borrowing to align with spending needs.

Uganda fleet limits; Kenya seeks investor

Uganda Airlines’ expansion plans, including long-haul routes to Europe, Asia, and the Middle East, have been constrained by its small fleet. Limited aircraft reduce frequency and flexibility while increasing operational risk when planes are grounded for maintenance.

Meanwhile in Nairobi, the Kenyan government is seeking a strategic investor for Kenya Airways in a deal valued at up to Ksh258 billion ($2 billion). The Kenya National Treasury plans to issue an international expression of interest to attract investors willing to inject between Ksh154.8 billion ($1.2 billion) and Ksh258 billion ($2 billion).

Cabinet Secretary John Mbadi said the government is looking for a partner capable of strengthening the airline financially and restoring its balance sheet. The move follows Kenya Airways’ return to losses after a brief period of profitability.

Revenue drops on fewer passengers

The airline reported a loss after tax of Ksh17.16 billion ($132.3 million), compared with a profit of Ksh5.43 billion ($41.9 million) in 2024. Revenue fell to Ksh161.47 billion ($1.24 billion) from Ksh188.5 billion ($1.45 billion), reflecting lower passenger volumes and reduced seat capacity.

Passenger numbers dropped 13 percent after capacity shrank 18 percent. Operations were also affected by the temporary grounding of three Boeing 787-8 Dreamliner jets due to engine shortages and supply chain disruptions. Available seat kilometers declined to 13,349 million, underscoring the impact of reduced fleet availability.

Total assets increased slightly to Ksh183.2 billion ($1.41 billion) as of Dec. 31, 2025, from Ksh179.1 billion ($1.38 billion) a year earlier. Liabilities climbed to Ksh315.3 billion ($2.43 billion) from Ksh297.4 billion ($2.3 billion), pushing negative equity to Ksh132.06 billion ($1.02 billion) from Ksh118.25 billion ($911.8 million).