The national carrier has signed a sale agreement to dispose two Boeing B777-200 planes to Oklahoma-based Omni Air International for an undisclosed amount.
Kenya Airways has announced the sale of two aircraft to a US-based carrier, boosting its bid to raise an estimated Sh14.6 billion from asset disposal.
The national carrier yesterday announced that it had signed a sale agreement to dispose two Boeing B777-200 planes to Oklahoma-based Omni Air International for an undisclosed amount.
KQ has also put on the market two Boeing B777-300 planes and a 30-acre piece of land in Embakasi.
The airline is counting on the mega assets sale to lift it from a Sh25.7 billion loss reported in the year to March 2014.
“The two aircraft will leave for their new home in the next two months after Kenya Airways completes their exit preparations,” KQ said in a statement announcing the deal.
“The first one will be transferred by the end of January.”
US carrier Delta Air Lines recently announced that it is in talks to buy a B777-200 plane for $7.7 million (Sh785 million), a fraction of its list price of over $250 million (Sh25.5 billion).
The price is, however, not a conclusive indicator of KQ’s disposal price of the planes, which were delivered new from Boeing between 2004 and 2007.
The loss-making carrier first announced its intention to sell four Boeing planes in November 2014, seeking to cut its debt and inject some much-needed cash into the business.
But the sale has been been delayed by a court case filed by KQ pilots who argued that the disposal could render them jobless.
High Court judge Monicah Mbaru last October lifted an order stopping the airline from selling the aircraft, arguing that sale of the planes has no bearing on the pilots’ employment status.
Some negotiations seem to have fallen through, further hindering the sale or lease of the planes.
Mbuvi Ngunze, KQ’s chief executive officer, in November told the Business Daily that the airline was in talks with Pakistani bidders over sale of the two Boeings.
“We announced our intention to rationalise our fleet in line with our current position more than a year ago. It has taken a while to find a good home for our B777-200,” Mr Ngunze said in yesterday’s statement.
“We are now satisfied with this sale and will make other important announcements on fleet rationalisation soon.”
KQ last year moved to sell property and aircraft in its quest to inject much-needed cash into the business, which has now posted losses for the past three-and-a-half years.
The airline says it expects to complete the sale of a 30-acre piece of land in Embakasi by the end of this month from which it expects to bank more than Sh2 billion.
The asset sale, from which KQ intends to raise a total of Sh14.6 billion, will complement a restructuring plan that is currently being implemented by American consultancy McKinsey.
KQ anticipates that the reorganisation of its business will yield a Sh20 billion boost to its bottom line.
Earnings from the plane disposals may suffer from a depressed international second-hand market.
Ascend, an international consulting firm, says the resale value of second-hand planes has dropped more than 14 per cent in the past year as old aircraft from Malaysia Airlines, Kenya Airways and TransAero became available for sale.
“The aircraft market is going to be ripe for Delta over the course of the next 12 to 36 months,” Delta Airlines chief executive officer Richard Anderson told Bloomberg in October.
“Prices are going to get lower.”
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