Kenya Airways (KQ) is seeking to raise up to $400 million (Ksh51.83 billion) to expand and modernise its aircraft fleet in the next five years with the aim of enhancing efficiency and competitiveness.

The plan comes after it failed to secure a strategic investor by the end of last year. Allan Kilavuka, the Chief Executive of the national carrier, stated that part of the expansion plans will see the fleet increased from the current 34 to 53 aircraft during the period, alongside the upgrade of its Information Technology infrastructure.   

“When you talk about capitalisation, our company right now needs additional funding, there is a need to have more equity to balance the ratio and ensure more business. We need to expand and modernise our fleet and business,” he said during a presser.

The outgoing Chairman, Michael Joseph, said the need for expansion is crucial to the company as they have three grounded aircraft as the issue of spare parts shortage continues to affect their optimum operations.  

He noted that they are now flying 20 per cent less than their capacity compared to previous periods, even as the demand by passengers continues to grow.  

“We have to be aware that finding a strategic investor for Kenya Airlines is not easy. First of all, you look at our balance sheet and you look at the package that’s available. So, we need the government to help us, to endorse us, to back us in finding strategic investors,” he said.  

“It would be much more attractive, in our view, if you could find a strategic investor, both for the airline and the airport, to make a lot more sense. But we do need a major shareholder, or the majority shareholder, to support us.” Kilavuka added.  

According to the KQ boss, the growing demand is characterised by the 85 per cent customer satisfaction ranking this year, compared to the previous year’s 82 per cent. At the same time, he noted that the airline is operating in a strained global aviation market mirrored by aircraft shortages, rising lease costs, and supply chain disruptions. “There is a huge shortage of aircraft and spare parts globally, and the backlog for new aircraft is stretching into years,” Kilavuka noted, adding: “This has significantly affected our ability to grow capacity and meet market demand.”  

Government bailouts

The airline’s top management also refuted the claims that the national carrier is reliant on government bailouts, clarifying that the funds from the state have been pumped in the form of loans and not grants.

Most notably, a government-backed loan for Dreamliner purchases in 2017 was recently “novated” to protect KQ from currency volatility.  

“We haven’t received any new government money outside the Covid-19 period. What’s often labelled as a bailout is actually structured debt,” Kilavuka maintained.  

Acting Chief Financial Officer Mary Mwenga explained that converting the debt from dollars to shilling terms has helped reduce foreign exchange risk, a move that has positively impacted KQ’s 2024 results.

The press briefing also marked the final appearance of Joseph as board chairman after a nine-year tenure.

Reflecting on his tenure, Joseph said he hoped the airline would continue pursuing a strategic investor aggressively, stressing that scale and capital were vital for KQ’s future.  

“I came into this role not realising how complex aviation really is. It’s not a production line; it’s a business full of moving parts, and most important of those are the people,” he said.  

In his experience, Joseph acknowledged that the journey has been challenging and enjoyable in equal measure.