Danish aviation firm demands Sh120m from Kenyan carrier

Corporate News

Danish aviation firm and Kenyan Western Airways in row over leasing of aircraft. PHOTO | FILE 

By BRIAN WASUNA

In Summary

• Nordic Aviation Capital sued the Western Airways in 2011, claiming it was yet to receive any money for leased aircraft.
• The firm said Western has refused to pay the sum, but the Kenyan carrier said the deal was to see it buy the aeroplane, not lease it.

A Danish aviation company wants the High Court to compel a Kenyan-based carrier, Western Airways, to pay it Sh120 million ($1.24 million) in accumulated arrears for a plane it leased to the firm between 2006 and 2011.

Nordic Aviation Capital sued the Western Airways in 2011, claiming it was yet to receive any money for the leased aircraft, despite a guarantee from one of Western’s directors that he would settle any outstanding amounts from his personal estate.

The Danish firm said Western has refused to pay the sum, but the Kenyan carrier said the deal was to see it buy the aeroplane, not lease it.

Western said it paid $400,000 (Sh38 million) before a takeover of the Danish firm saw its new owners change their stand on the agreement.

“In breach of the lease agreement, Western has failed to settle the lease payments under the agreement. Despite demand being made and notice of intention to sue having been given, Western has refused to settle the outstanding amount,” said Nordic Aviation in court papers.

The Kenyan firm said Nordic Aviation breached the sale agreement terms by repossessing it before the final payment date was due, and selling it to a third party without Western’s consent.

Third party

Western said the Danish firm was trading as NAC Nordic Aviation Contractor. It adds that Nordic Aviation sold the aircraft to a third party at $500,000 (Sh48 million), a gross undervaluation of its $1.2 (Sh116 million) price tag.

Douglas Odhiambo, Western’s owner, adds that he plans to lodge a counter claim for damages resulting from Nordic Aviation’s breach of contract.

“Following the collapse of an intended lease, Nordic Aviation and Western Airways agreed verbally on an outright sale of the aircraft for $1.4 million (Sh135 million) to be paid over a period of six years. The aircraft got involved in an accident and the plaintiff repossessed and sold it secretly,” he added.

Nordic Aviation has in its filings said it repaired the plane at its own cost after Western failed to settle the accrued lease payments. It wants the claimed damages to be calculated with interest at court rates from June 11 until the full debt is settled.