KQ plane disposals down to two after Turkish lease

The leasing of a Boeing 777-300 Kenya Airways plane to Turkish Airlines now reduces to two the number of aircraft that the national carrier intends to hire out to the European airline.

The national carrier, known as KQ by its international code, on Friday announced that it had finalised the leasing out of the aircraft to Turkish Airlines, ending months of speculation about the transaction.

The deal now leaves KQ with a pair of Boeing 777-300 aircraft to lease to Turkish Airlines as part of plane disposal initiative through which it expects to save $84 million (Sh8.4 billion) annually.

“Subleasing and selling of aircraft will improve our fleet costs by over $7 million a month and is part of our strategy to turn KQ into profitability in the next 18 to 24 months,” said KQ’s chief executive Mbuvi Ngunze in a statement.

Earlier this year, KQ sold two Boeing 777-200 planes to US-based carrier Omni Air International. It has also delivered one of two Boeing 787 aircraft it is leasing to Oman Air.

The sublease (to Turkish Airlines) is part of the KQ’s Operation Pride strategy that seeks to rationalise its excess capacity through sub-leases and outright sales, the airline said.

Two weeks ago the Kenya Airline Pilots Association (Kalpa) alleged that the Turkish Airlines deal was not above board as KQ procurement department was allegedly not involved.

READ: Treasury seeks more stake in KQ after Sh20bn bailout

The pilots’ umbrella body, which includes about 500 KQ pilots, also complained that the long time it had taken since the planes were flown to Turkey would be expensive for the national carrier.

Kenya Airways however says the time taken to transfer the planes is influenced by the industry’s rigorous regulatory requirements. “Any decision relating to aircraft acquisition, sub-lease or disposal is made by the Board” said KQ in response to the Business Daily queries.

“Inducting aircraft into a new operator is a process that takes time. In this case,  the aircraft have been in Istanbul since March but they are not parked, they have undergone maintenance work as part of the normal check process, and change in paint/livery which is the major lead time item.  The maintenance rates are in line with market rates for similar work.”

KQ, which posted a Sh25.7 billion loss for the year to March 2015, announced its intention to sell four Boeing planes in November 2014 but the plan was delayed following a court injunction after pilots filed a case protesting the move.