Regional
KQ saves Sh11bn on new aircraft leasing terms
![image](webadmin/images/allan.jpg-20220418075113000000.jpg)
Kenya Airways saved Sh11 billion in the
last financial year on aircraft ownership fees after changing the lease terms
on its fleet from fixed costs to hourly rates.
The national carrier reached a deal with the lessors
last year to only pay when they fly leased aircraft following the grounding of
its services on the back of Covid-19, which saw planes remain idle.
The new arrangement has seen the cost of maintaining
its fleet drop from Sh28.5 billion in 2020 to Sh16.6 billion last year.
The new deal, which has saved the airline billions
in leasing fees, has seen KQ only pay the lessors when the aircraft is flying,
a departure from the previous agreement where KQ would still pay the lease
amount even if a plane is idle.
“Last year, we negotiated with our lessors and we
were able to make very significant savings of over Sh10 billion,” said KQ chief
executive Allan Kilavuka.
The national carrier has a fleet of 36 aircraft — it
owns 19 of these while it has leased 17 from the lessors including Nordic
Aviation Capital and GECAS. Embraer forms the bulk of its fleet with 15
aircraft.
Mr Kilavuka also said they returned some of the
aircraft that they had leased such as the Boeing 737-700, which helped them to
save at least 50 percent of the cost in early termination.
The carrier has negotiated for a productivity-based
method of payment with its lessors to avoid the fixed cost and cut expenses
involved in fleet management at the time the airline is struggling with low
passenger demand.
The carrier has also extended the lease of its two
Boeing 777-300 aircraft to Turkish Airlines, a move that will earn it an extra
income.
Kenya Airways leased two of its idle planes to a
Congo carrier last year in a deal that will see KQ save more than Sh100 million
annually on maintenance costs and earn additional revenue from hiring the
crafts.
The national carrier has leased two Embraer jets
that remained parked at the Jomo Kenyatta International Airport in Nairobi
after it cut routes and frequencies on the back of low numbers of passengers in
the last two years.
The carrier has been trying to cut costs to remain
afloat amid the challenges of the Covid-19 pandemic and legacy problems.
Kenya Airways narrowed its net loss for the year
ended December by 56.58 percent on higher revenue as travel picked up with the
easing of Covid-19 restrictions.
The national carrier reported a net loss of Sh15.8
billion in the review period compared to a net loss of Sh36.2 billion the year
before when travel restrictions hit operations hardest, grounding its planes
for months.
Source: www.businessdailyafrica.com