KAA Profit Halves to Sh3.8 Billion as JKIA Faces New Debt Crisis

Kenya Airports Authority’s profit fell 41 percent to Sh3.8 billion for the year to June 2025, down from Sh6.5 billion the year before, according to newly released financial disclosures reported by Business Daily. The Sh2.7 billion earnings decline came from a mix of falling revenue, rising costs, and a near-total collapse in foreign exchange gains, just as the state corporation prepares to help finance one of Kenya’s biggest infrastructure projects in years.

It’s the second straight year of profitability for KAA, following its recovery from a Sh4.2 billion net loss in 2023, when the authority was forced to pay Chinese contractors compensation for a botched second-terminal tender at Jomo Kenyatta International Airport. But that recovery has clearly stalled, and the reasons behind the slowdown trace directly back to unpaid debts from the very airline that relies on KAA’s runways most.

Where the Money Went Missing

Three forces combined to squeeze the bottom line. Passenger service charge and airport fee collections fell short of what was needed to keep pace with rising operational costs. Foreign exchange gains, which had cushioned KAA’s books the previous year as the shilling strengthened, nearly vanished, dropping 96 percent to just Sh18 million. And bad debt provisions jumped by Sh800 million, weighed down almost entirely by one client: Kenya Airways.

The Sh6.3 Billion the National Carrier Owes

Kenya Airways and its subsidiary owe KAA Sh6.3 billion, a debt that has been building for years and, according to Auditor-General Nancy Gathungu’s report cited by The Standard, has not been attracting any interest to protect the authority’s interests. KAA charges airlines for landing, take-off, parking, and use of passenger facilities, and the national carrier’s failure to keep current on those fees has become one of the airports authority’s most persistent financial headaches.

The debt hasn’t stayed still. It rose by Sh1.6 billion in the year to June 2023 alone, according to earlier Business Daily reporting, growing from Sh4.29 billion to Sh5.9 billion before separately owed amounts pushed the total indebtedness to Sh6.36 billion. KAA isn’t the only agency owed money either. Gathungu’s report also flagged African Cargo Handling Limited owing Sh1.4 billion and the Kenya Revenue Authority owing Sh3 billion, painting a picture of an airports authority struggling to collect what it’s owed across multiple major clients.

KQ Also Tops the List of KCAA’s Unpaid Fees

The problem extends beyond KAA. Kenya Airways owed the Kenya Civil Aviation Authority Sh1.5 billion in unpaid service fees as of the end of the financial year to June 2025, according to Business Daily. That figure accounts for 65 percent of the Sh2.3 billion KCAA is owed collectively by all air operators, and nearly 90 percent of what domestic carriers alone owe the regulator, some of it outstanding for more than two years.

KQ’s Chief Financial Officer Mary Mwenga has said the airline has crafted a plan to clear the debt, though she gave no specific timeline. “We have strong and continuous, constant engagement with KCAA, and as far as I’m concerned, we’ve honoured those payment plans, and we’re good with KCAA,” she said. Whether that assurance holds will matter for KCAA’s own finances, given how concentrated its exposure to KQ has become.

Why Kenya Airways Can’t Pay Its Bills

KQ’s debts to KAA and KCAA aren’t happening in isolation, they’re a direct symptom of the airline’s own financial collapse. Kenya Airways posted a net loss of Sh17.2 billion for the year ending December 2025, a sharp reversal from the Sh5.4 billion profit it recorded in 2024, according to the airline’s own FY2025 annual report. Total income fell 14 percent to Sh161.5 billion, driven partly by the grounding of three Boeing 787 Dreamliner aircraft for maintenance in December 2025, which cut long-haul capacity by roughly 20 percent.

The airline’s current liabilities grew by about Sh10 billion to Sh62.6 billion during the year, and its accumulated losses have climbed to Sh206.8 billion, with negative equity now standing at Sh132 billion. KQ has also failed to pay Sh8.5 billion in interest owed to the government on guaranteed debt, forcing the National Treasury to waive and defer the obligation for the fourth consecutive year, according to The Eastleigh Voice.

How the Government Is Restructuring Around This

This financial pressure appears to be reshaping ownership structures across Kenya’s aviation sector. The Treasury has moved to secure a majority stake in Kenya Airways, a shift that, according to The Kenya Times, gives the government room to potentially merge KQ with KAA in future to share costs and build scale, rather than leaving each state entity to absorb losses separately.

Read also:KCB Launches Sh300bn Sustainability Bond Programme

Why KAA Can’t Fund JKIA’s Expansion Alone

With profit halved and one of its biggest clients unable to pay its bills, KAA doesn’t have the internal cash reserves to finance a new terminal on its own. That reality has pushed the government to restructure how the Sh154.2 billion JKIA expansion gets paid for, after cancelling the earlier Adani PPP concession for the project.

The new financing model, now being carried forward with China Road and Bridge Corporation, splits the cost two ways. Roughly 30 percent will come from the Air Passenger Service Charge Fund and the newly created National Infrastructure Fund, essentially securitising future passenger levy revenue. The remaining 70 percent will be raised through syndicated commercial loans. In effect, KAA is borrowing against tomorrow’s passenger traffic to build the terminal it can no longer afford to fund from current profits, or from the money Kenya Airways owes it.

What This Means Going Forward

KAA’s slowing profitability, Kenya Airways’ return to heavy losses, and the pivot to debt-financed airport expansion are three symptoms of the same underlying strain on Kenya’s aviation sector. Passenger revenue isn’t growing fast enough to cover rising costs, the national carrier is drowning in debt it owes to the very agencies that keep it flying, and the government is now leaning more heavily on borrowed capital and future passenger charges to build the infrastructure the sector needs to grow. Whether that combination holds up will depend heavily on Kenya Airways actually delivering on its promised debt repayment plan, something KCAA and KAA have both been waiting years to see.