Kenya Airways signs deal to buy Boeing planes

Kenya Airways has reached an agreement to buy nine Boeing planes to boost its expansion targeting African routes.

The national carrier on Thursday signed the deal that will see Boeing deliver the 787-8 Dreamliners by the fourth quarter of 2013, with an opening to buy four more aircraft.

The new plans will support Kenya Airways plans to connect more African cities to the rest of the world through its Nairobi hub. The African routes generate 48 per cent of KQ’s profit.

“We can only achieve our expansion strategy with the right equipment and we are particularly pleased with Boeing that despite the delay experienced in the 787 programme, they have committed to the timelines that we have now signed on,” said Mr Titus Naikuni, the CEO of Kenya Airways.

The deal will add fresh impetus to the ongoing battle for African travellers pitting Kenya Airways, Ethiopia Airlines and South African Airlines.

It will also renew debate over the rivalry between Boeing and Airbus, which Kenya Airways was planning to turn to following delay in the delivery of the Boeing planes commonly known as Dreamliners.

Originally expected in the country in October last year, the orders for the nine planes have been delayed continuously with the first delivery expected in 2013.

Dreamliners consume 20 per cent less fuel than other planes of comparable size and also offers 45 per cent more cargo capacity.

This will come in handy at a time sky-high fuel prices are hurting profitability of airlines while the extra cargo capacity will fit in well with the airline’s diversification plans of cutting reliance on passengers—which account for more than 90 per cent of its sales.

KQ is planning to raise up to $250 million (Sh20 billion) this year, according to Kestrel Capital, to fund the acquisitions.

The airline has been facing major delays that have seen disgruntled customers threaten to sue the airline, in Rwanda, and the new planes will help sort out this challenge.

The management has attributed this to major factors like the state of airports in some of the destinations it flies to, mechanical and international concerns that have seen planes grounded for days.

Africa has remained Kenya Airways’ key market with growth during the third quarter increasing by 4.2 per cent to 439,555 passengers during the period on increased frequencies to West Africa and entry to new markets such as Juba.

“The 787 Dreamliner fits well with our expansion strategy, giving us an opportunity to expand our markets beyond the current offering,” said Mr Naikuni.

Profit increased 66 per cent to Sh1.4 billion in the six months to September on revenues of Sh41.21 billion.