Skip to content

Kenya Airways drops extra plane in cost-cutting plan

By JAMES ANYANZWA

Kenya Airways has diminished its fleet by two extra plans as a part of cost-cutting measures in search of to regular the loss-making airline.

Newest knowledge exhibits that the nationwide provider’s fleet measurement narrowed within the final 9 months to 41 plane from 43 in December 31, 2021, after two leased Embraer 190 plane have been surrendered following expiration of lease.

Of the 41 plane, 18 are owned/financed by the airline itself whereas 23 are on lease association.

The Kenya authorities is pushing for restructuring of the airline on the again of a multimillion greenback bailout plan the place the struggling airline is required to cut back its community, function a smaller fleet and presumably cut back its workforce.

Kenya Airways (KQ) has centered on restructuring its fleet, together with promoting plane and sub-leasing to different airways in an try to return to profitability.

Its fleet measurement dropped to 39 in 2017 from a excessive of 52 in 2015, earlier than rising to 43 in 2021.

commercial

The airline is renegotiating plane lease contracts with lessors as a part of a string of austerity measures to cut back working prices.

Others are engagement with principal shareholders for monetary assist, engagement with key suppliers and financiers for moratorium, freeze on non-critical spending and implementation of short-term wage cuts for employees.

It has additionally elevated concentrate on cargo enterprise and has already transformed two passenger plane to cargo freighters to extend capability.

Cut back price

In a press release final week, the airline stated its board of administrators and the administration have been participating with the lessors to cut back the general price of plane leases.

“Typically, the prices are inside the prevailing market charges on the time negotiating the transactions,” the airline stated.

In 2021, KQ’s fleet possession price declined by 41 % to Ksh16.63 billion ($138.58 million) from Ksh28.57 billion ($238.08 million) in 2020, whereas within the six months to June 30 the fleet possession price remained at Ksh321 million ($2.67 million).

Corporations that KQ offers with in its leasing plan embody the Dubai Aerospace Enterprise, AERCAP, Financial institution of China Aviation and China Improvement Financial institution.

Others are Macquarie, Aviation Capital Group, Goshawk, Nordic Aviation Capital, Azzora, and Montrose.

improved efficiency

The airline, which is surviving on a state bailout, narrowed its half yr loss to Ksh9.88 billion ($82.33 million) from Ksh11.48 billion ($95.66 million) in the identical interval in 2021.

Working prices declined by 53 % to Ksh53.11 billion ($442.58 million) from Ksh34.62 billion ($288.5 million)

Its whole loss for the yr ended December 31, 2021 stood at Ksh15.87 billion ($132.25 million) in comparison with Ksh36.21 billion ($301.75 million) in 2020.

The federal government has additionally taken over an $868.7 million debt owed by the airline in a determined transfer to breathe life into the loss-making nationwide provider that could be a topic of a botched State-takeover.

The Worldwide Financial Fund, by means of its nation report for Kenya No 22/232 dated July 2022, stated the federal government is in discussions with KQ collectors in regards to the proposed debt acquisition.

The airline disclosed by means of its 2021 report that the State, by means of a letter of assist, has dedicated to proceed offering the required monetary assist to allow the provider implement its restoration program and meet its monetary obligations.

KQ is 48.9 per cent owned by the Kenyan authorities and a bunch of 10 native banks that personal 38.1 per cent of the shares.

Different shareholders embody KLM Royal Dutch Airline (7.8 per cent), staff (2.4 per cent) and different shareholders at 2.8 per cent.

.

Leave a Reply

Your email address will not be published. Required fields are marked *