Kenya’s government agreed to swap loans it provided to Kenya Airways Ltd. for equity, a conversion that may give the state a controlling stake in the national carrier, Treasury Secretary Henry Rotich said.

The government will also guarantee 77 billion shillings ($745 million) of the airline’s debt to lessors and domestic banks, enabling Kenya Airways to extend its loan repayments to 10 years, Rotich told reporters Tuesday in the capital, Nairobi. The government has yet to decide what amount of loans it will swap, he said.

“We will be deciding whether we want to increase our debt to equity, that means the government may own more” of the airline, Rotich said. “If we convert the loans that we have, probably it may be over 50 percent or so, but that decision is yet to happen. If everything turns around we will just retain our shareholding as it is.”

Sub-Saharan Africa’s third-biggest airline announced a $690-million reorganization last year aimed at returning the company to profit, after recording the biggest loss in Kenyan corporate history. It appointed PJT Partners Inc. to advise on how to restructure its balance sheet and raise long-term financing. Since the plan was announced, the airline has reduced its fleet, cut jobs and canceled unprofitable routes.

Kenya Airways had total debt of $1.9 billion at the end of its financial year in March and has been seeking to renegotiate loan terms to free up cash. The government owns 29.8 percent of the airline, while Air France-KLM holds 26.7 percent, according to data compiled by Bloomberg.

“As a major shareholder, we are keen to secure the airline’s future and ensure it has a healthy liquidity profile and remains operational,” Rotich said in an emailed statement. “The proposed restructuring of the airline will generate concessions from all stakeholders and the re-capitalization of the business.”

The government will support the company in accessing future financing by providing contingent guarantees, according to the statement.

“With a healthier liquidity, and at no cash cost to the government, the airline will be in a better place to continue with its operations serving Kenya and the region at large,” Kenya Airways Chairman Michael Joseph said.