Kenya Airways’ financial strain deepens after $65 million interest default, $132 million loss

Kenya Airways has defaulted on KSh8.5 billion ($65.6 million) in interest payments on a government-backed loan, highlighting pressure on the carrier. The payment, due June 20, 2025, remained unpaid six months later. Kenya’s National Treasury has since waived and deferred the obligation as part of support measures for the airline, according to Treasury statement.

The missed payment comes as the carrier reports losses, reversing a return to profitability. The airline posted a net loss of KSh17.16 billion ($132.3 million), compared with a profit of KSh5.43 billion ($41.9 million) in 2024, according to its latest financial results for the period under review the company said. The shift reflects tighter operating conditions after a brief recovery. 

Revenue declines on weak demand

Revenue also declined during the period, falling to KSh161.47 billion ($1.24 billion) from KSh188.5 billion ($1.45 billion) a year earlier. Management attributed the drop to weaker passenger demand and reduced capacity, as available seats were cut back. Passenger numbers fell 13 percent, while overall capacity contracted by 18 percent, weighing on earnings.

Costs and liabilities continued to build pressure on the balance sheet. Total liabilities rose to KSh315.3 billion ($2.43 billion), outpacing assets of KSh183.2 billion ($1.41 billion), leaving negative equity of KSh132.06 billion ($1.02 billion). Net finance costs also climbed to KSh12.32 billion ($95 million), reflecting the burden of servicing existing debt.

Operational disruptions added further strain. Three Boeing 787-8 Dreamliner aircraft were temporarily grounded due to engine shortages linked to global supply chain constraints. The reduction in fleet availability lowered available seat kilometers to 13,349 million, limiting the airline’s ability to fully serve high-demand routes.

Kenya limits airline bailout scope

Policy constraints are also shaping the carrier’s options. The Kenya Civil Aviation Authority has introduced stricter conditions around state support for airlines, tightening the scope for direct bailouts and debt guarantees. The changes align Kenya’s aviation policy with international competition rules and reduce flexibility for government intervention.

Despite its financial challenges, the carrier remains a central part of regional aviation. From its hub at Jomo Kenyatta International Airport, it operates a fleet of 40 aircraft serving 42 destinations, including 37 across Africa. As a member of SkyTeam Alliance, it provides connectivity to more than 1,060 destinations in 173 countries, carrying over 5 million passengers annually and transporting more than 70,000 tons of cargo.