Kenya Airways Chief Executive Officer Mbuvi Ngunze (right) at a past
press conference with then finance director Alex Mbugua. The airline has
disposed of two more redundant aircraft is its bid to fly her way to
profitability. PHOTO | DIANA NGILA | NATION MEDIA GROUP
Kenya Airways has disposed of two more redundant aircrafts in its bid to fly her way to profitability.
The flag carrier announced the two deliveries to Turkish Airlines and Oman Air in sub-lease agreements lasting between three and five years.
Turkish Airlines received a second Boeing 777-300ER aircraft while Oman Air got a second Boeing 787-8 as KQ implements its “Operation Pride” strategy.
The strategy is meant to rationalise its excess capacity through sub-leases and outright sales, while increasing aircraft utilisation.
Kenya Airways Group Chief Executive Mbuvi Ngunze said the move, though “a sad one”, was meant to assist the loss-making carrier complete a turnaround to profitability and reduce its debt burden.
REDUCE COST
“While it is sad to see brand new aircraft going to other airlines, it is important to understand the context in which we are taking these decisions. We need to close our gap in profitability and rapidly reduce our cost and debt structure,” Mr Ngunze said.
KQ had a deal to relinquish three aircraft to Turkish Airlines, two of which have been handed over so far. The third one is expected to be de-registered and transferred next week.
Oman Air received the first 787 in April, with the second one completing the sub-lease transaction, which is for three years.
The aircraft sub-leasing process took the airlines close to seven months as negotiations on agreements dragged on.
The transactions are expected to relieve KQ of over Sh700 million in monthly fleet costs.
Earlier in the year, Kenya Airways sold and delivered to Omni Air International two Boeing 777-200ERs.
The airline is supposed to get rid of seven redundant planes whose fleet management costs were instrumental in the Sh25.7 billion loss announced last year.
HEAVY INDEBTEDNESS
In March, KQ announced plans to lay off 600 employees.
The move was expected to save Sh2 billion to aid her take-off from the Sh25 billion loss and heavy indebtedness.
The huge financial woes prompted the airline to commission a forensic audit to review its operations, systems and internal controls as well as identify the sources and magnitude of her revenue losses, cash-flow leakages and areas of governance weakness.
Deloitte Consulting, the forensic auditor, has since given its preliminary findings to KQ, pointing out system and internal control weaknesses.
The airline said it had initiated disciplinary proceedings against staff found culpable in the report released early this week.
“These actions include the suspension of staff members in order to facilitate the successful completion of the forensic investigations.
“The company is also evaluating the findings with a view to further action against culpable staff, including potential criminal prosecution and recovery proceedings, as appropriate,” KQ said in a statement.
The flag carrier announced the two deliveries to Turkish Airlines and Oman Air in sub-lease agreements lasting between three and five years.
Turkish Airlines received a second Boeing 777-300ER aircraft while Oman Air got a second Boeing 787-8 as KQ implements its “Operation Pride” strategy.
The strategy is meant to rationalise its excess capacity through sub-leases and outright sales, while increasing aircraft utilisation.
Kenya Airways Group Chief Executive Mbuvi Ngunze said the move, though “a sad one”, was meant to assist the loss-making carrier complete a turnaround to profitability and reduce its debt burden.
REDUCE COST
“While it is sad to see brand new aircraft going to other airlines, it is important to understand the context in which we are taking these decisions. We need to close our gap in profitability and rapidly reduce our cost and debt structure,” Mr Ngunze said.
KQ had a deal to relinquish three aircraft to Turkish Airlines, two of which have been handed over so far. The third one is expected to be de-registered and transferred next week.
Oman Air received the first 787 in April, with the second one completing the sub-lease transaction, which is for three years.
The aircraft sub-leasing process took the airlines close to seven months as negotiations on agreements dragged on.
The transactions are expected to relieve KQ of over Sh700 million in monthly fleet costs.
Earlier in the year, Kenya Airways sold and delivered to Omni Air International two Boeing 777-200ERs.
The airline is supposed to get rid of seven redundant planes whose fleet management costs were instrumental in the Sh25.7 billion loss announced last year.
HEAVY INDEBTEDNESS
In March, KQ announced plans to lay off 600 employees.
The move was expected to save Sh2 billion to aid her take-off from the Sh25 billion loss and heavy indebtedness.
The huge financial woes prompted the airline to commission a forensic audit to review its operations, systems and internal controls as well as identify the sources and magnitude of her revenue losses, cash-flow leakages and areas of governance weakness.
Deloitte Consulting, the forensic auditor, has since given its preliminary findings to KQ, pointing out system and internal control weaknesses.
The airline said it had initiated disciplinary proceedings against staff found culpable in the report released early this week.
“These actions include the suspension of staff members in order to facilitate the successful completion of the forensic investigations.
“The company is also evaluating the findings with a view to further action against culpable staff, including potential criminal prosecution and recovery proceedings, as appropriate,” KQ said in a statement.
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