KQ optimistic on turnaround, remains tight-lipped on aircraft sale proceeds

Mr Ngunze confirmed that the sale was made but declined to discuss any further details.

Tuesday January 19 2016

A KQ Boeing 777-300ER arriving at JKIA on

A KQ Boeing 777-300ER arriving at JKIA on October 25, 2013. The airline is selling seven of the Boeing 777 fleet in a turnaround bid that is expected to see it return to profitability. FILE PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By EDWIN OKOTH
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Kenya Airways has remained tight-lipped about proceeds from the recent sale of aircraft meant to aid the carrier’s turnaround bid even as the management exuded confidence that it is on the path to recovery.

Chief Executive Mbuvi Ngunze confirmed to the Nation only that the sale was made but declined discuss any further details.

“We have signed the sale agreement for two (aircraft). We do not discuss the cost of buying or selling aircraft. At the moment this remains confidential. The plan is to sell or lease 7 (the B777 fleet) as part of our turnaround strategy,” the CEO said in response to queries.

The airline’s turnaround plan detailed a planned sale of seven aircraft following a nosedive into losses in 2015.

The struggling national carrier now says the five remaining planes are still earmarked for sale and details will be divulged "in due course".

Kenya Airways has been struggling amid competition from low-cost carriers from the Middle East and strong rivals in the long-haul business.

The carrier’s situation was compounded in 2015 when it posted a net loss of Sh25.7 billion after its fleet-expansion and fuel-hedging plans drained finances.

SALE AGREEMENTS

Last week’s sale agreements with Omni Air International for two of its Boeing 777-200ER aircraft comes months after the airline decided to shrink its fleet size from 52 to 45.

Omni Air International is a US-based airline providing wet leases and charter programmes. This is a lease in which the lessor provides the aircraft, complete crew, maintenance and insurance.

Queries on the type of the other redundant aircraft left for sale and their prospects also went unanswered as the airline maintained its non-disclosure stance.

The airline, which sees a better outlook for 2016, will, however, be expected to reveal the proceeds from these sales as shareholders await the 2015/2016 full-year results.

Mr Ngunze also promised to provide details of the turnaround progress as the carrier traces its flight path to profitability amid turbulence from more low-cost carriers like FastJet, which has since been authorised to operate in Kenya.

“We remain optimistic. Our turnaround plan is taking shape and we will be able to share better insights later this quarter. The next 18 months are crucial for Kenya Airways,” the KQ boss said.

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