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KQ recalls leased Dreamliner ahead of direct New York flight

Saturday March 24 2018

The national carrier says the second aircraft will be returned in 2019 for use on a new route that management will announce later this year. FILE PHOTO | NMG

The national carrier says the second aircraft will be returned in 2019 for use on a new route that management will announce later this year. FILE PHOTO | NMG 

MUGAMBI MUTEGI
By MUGAMBI MUTEGI
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Kenya Airways #ticker:KQ has recalled two Dreamliner aircraft leased out to Oman Air in 2016 with one of them set to be deployed for the airline’s maiden flight to New York in October.

The national carrier, popularly known as KQ, says the second aircraft will be returned in 2019 for use on a new route that management will announce later this year.

The Dreamliners, the planes of choice for long-haul flights, were subleased to Oman’s national carrier as KQ sought to cut operating costs in the wake of slow revenue growth and mounting liabilities.

Dreamliners are preferred for long-haul routes because, on top of having high fuel capacities than smaller aircraft, it burns as much as 20 per cent less fuel, saving costs for airlines.

The aircraft, which is valued at over Sh25 billion each, also has more cabin space and better cabin pressure specifications making long flights more comfortable for customers.

KQ operates a fleet of 38 aircraft including seven Dreamliners.

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“The planes were initially to be returned later this year but we reached the decision to recall one early. It arrives in September,” Micheal Joseph (above), KQ’s chairman, said on Wednesday when releasing the airline’s nine-month financials.

KQ’s longstanding financial burden forced it to sub-lease two B787-8 Dreamliners to Oman Air, and three B777-300ERs to Turkish Airlines. It also sold one B777-200ER and returned two leased E170 aircraft to their owners following an agreement to terminate the leases early.

These lease agreements however proved costly to the business as it registered losses of Sh2.61 billion in the year to March 2017 as they yielded less rentals than the cost charged by the primary owners.

KQ, which successfully restructured its balance sheet in November, is now looking to expand to new routes, including to New York, therefore requiring the company to beef up its fleet.