What you need to know:
- Airline announced Sh10bn loss in the half year, the worst in Kenya’s corporate sector.
- Airline to lease remaining three aircraft as it eyes Middle East carriers like Qatar and Emirates in a cash-for-equity deal.
Editor's note appended below:
Kenya Airways is to receive three more Dreamliners this year on a sale and lease back basis after signing an agreement with AWAS Aviation Trading Limited, an Ireland-based leasing company.
The three B787-8 planes, one set for delivery this month, a second in June and a third in July, will bring to an end the national carrier’s multibillion project to modernise its aircraft.
Contrary to the reporting in Sunday Nation, which inadvertently implied that the national carrier was ditching the Dreamliner, it is the mode of acquisition that is changing from outright purchase to lease.
Signing the deal, Mr Ngunze said the transaction would be beneficial to the company’s balance sheet as it seeks to improve its liquidity.
“Given our current financing, we must be prudent in finding innovative financing solutions while keeping with our growth ambition. The new aircraft will be important additions to our fleet as we strive to give our guests the experience,” he added.
Huge debts have been a key player in the matrix that brought the national carrier to its knees. Most of this debt was acquired to finance the purchase of Dreamliner jets as part of a fleet modernisation project launched by former CEO Titus Naikuni.
The decision to rescind its intention to buy all the nine new Dreamliners midway and instead run three of those on a lease agreement could significantly prop the company’s financial standing.
After announcing a Sh10 billion loss in the half year, the worst performance in the history of Kenya’s corporate sector, the company said it would contract a financial advisor to help restructure its debt.
But it is yet to contract one.
Analysts predict that the airline could report a bigger loss in the full-year results, given that most of the factors it blamed for the poor half-year performance have not significantly changed.
The airline had blamed its huge loss on cancellation of flights to West Africa after the outbreak of Ebola and reduced passenger numbers due to travel advisories issued against Kenya in the wake of high insecurity.
The airline has yet to resume its West African flights while the security situation in the country is still wanting.
This story has been amended to correct an inadvertent error on a previous version implying Kenya Airways was ditching the Dreamliner.