National carrier Kenya Airways is seeking to raise at least $1.5 billion (Sh194.4 billion) from a strategic investor to be selected through an international tender expected to open in the coming months.

The $1.5 billion target is lower than the $2 billion initially disclosed by the National Treasury, the airline’s largest shareholder.

The capital-raising exercise is expected to conclude by the first quarter of 2027, with the airline betting on fresh funding to support operations weighed down by years of losses and a heavy debt burden.

KQ, as the carrier is known by its international code, says the fundraising initiative remains the most viable route to restoring its financial health.

The government, which holds a 48.9 percent stake in the airline, is expected to support the capital raise, with its involvement seen as a guarantee to potential investors.

KQ has not settled on the structure of the fundraising but says it will consider all options, including equity, debt and strategic partnerships.

“We are looking at about $1.5 billion (Sh194.4 billion) in new capital,” said Kenya Airways chairman Kiprono Kittony.

“The idea is we would like to run an open transparent process that will be informed by the information memorandum. Thereafter, we will sit down as a board to determine what sort of capital we should be looking at. Is it going to be equity? Debt? An airline strategic partner? Local or foreign funding? There are all these considerations to take.”

Read: Shift as KQ now eyes investor pool to grow its fortunes

The Treasury said in February that it would offer the carrier to foreign investors in a deal worth up to Sh259.3 billion ($2 billion) to help turn around the airline and attach other assets to sweeten the transaction for a company operating with negative equity.

State support

The Treasury is also expected to meet any pressing financial needs at the airline throughout 2026 as the search for a strategic investor continues.

The government had told the International Monetary Fund (IMF) that it would no longer provide direct cash injections to the airline once a new investor is secured.

KQ disclosed that the government had pledged to help it meet financial obligations that may arise during the year, signalling a continued burden on taxpayers in keeping the national carrier operational.

“The Government of Kenya has committed, through a letter of support, to continue providing the required support to the group to enable it to implement its recovery programme and meet its financial obligations as and when they fall due, for at least the next 12 months from the date of approval of the annual financial statements for the year ended December 31, 2025,” KQ said in its latest annual report.

The airline’s equity position worsened to negative Sh132 billion last year from negative Sh118.2 billion previously as losses widened.

KQ’s liabilities exceeded its assets by a significant margin, with total liabilities standing at Sh315.2 billion against assets of Sh183.2 billion. This means shareholders would recover nothing if the airline were liquidated.

Investors have been waiting for positive developments in the search for a strategic investor but have nevertheless lifted the airline’s market value to Sh34.5 billion on the Nairobi Securities Exchange (NSE).

KQ has been among the best-performing stocks this year, gaining 68.2 percent to Sh5.94 per share at Thursday’s close from Sh3.53 at the end of last year.

The national carrier had previously considered a structure under which the investor tapped to operate and upgrade Jomo Kenyatta International Airport (JKIA) would also take a stake in KQ and use the airline as an anchor tenant, modelled on the relationship between Dubai International Airport and Emirates.

→ kmuiruri@ke.nationmedia.com

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