Senators to probe KQ aircraft lease deals, partnership

The lawmakers will further probe KQ, South African Airlines partnership

In Summary
  • Khalwale noted that airlines such as Ethiopian Airlines have been at the same level with KQ for a long time, but doing pretty well.
  • Faki regretted that KQ has been making loses over the years which has become a burden to taxpayers.
Kenya Airways flight at JKIA.
Kenya Airways flight at JKIA.

Senators have launched a probe on the sustainability of a leasing programme by national career, Kenya Airways.

Nandi senator Samson Cherargei, who requested the probe, wants the government to state measures put in place to address the shortage of aircraft experienced by KQ, as the airline is known by its international code.

He wants the investigations to disclose details of current, planned leases of aircraft and also their terms of operation and the commercial viability of hiring such aircraft.

“Disclose the details of the signed strategic partnership framework between KQ and South Africa Airways, which is under receivership, explaining the potential impact of the partnership and whether it would result in a merger of operations of the two airlines,” he stated.

The Standing Committee on Roads, Transportation and Housing regarding the sustainability of Kenya Airways.

The current KQ fleet consists of a mix of owned and leased planes, including wide-body jets like the Boeing 787, narrow-body jets such as the Boeing 737, Embraer regional jets, Bombardier Dash 8-400 jets, and Boeing 737 freighters.

Reports have indicated that KQ has leased 35 aircrafts comprising 18 (finance lease) and 17 (operating lease).

In the last financial year, the airline said that it saved Sh11 billion after changing aircraft leasing agreements from fixed costs to hourly rates.

Mombasa senator Mombasa Faki regretted that KQ has been making losses over the years which has become a burden to taxpayers.

“If you look at the ticket from Nairobi to Mombasa, it is not less than Sh15,000. We are left to wonder whether the high cost is because of fuel, cost of running the company, or the debts the airline is supposed to repay,” he said.

Kakamega Senator Boni Khalwale noted that airlines such as Ethiopian Airlines have been at the same level with KQ for a long time, but doing pretty well.

“We are to blame. I am not a big sympathiser of the former President, Uhuru Kenyatta. Nonetheless, when he advised the last Parliament to allow KQ to operate Jomo Kenyatta International Airport, he was learning from the best international practices. Bole International Airport in Addis Ababa, Ethiopia is operated by Ethiopian Airlines and it is profitable,” he explained.

He said KQ should be fixed urgently since the airline has become a cash cow for some individuals.

“There are some owners of shares within KQ, who know that every financial year, they will be benefiting from the cash which is normally injected in,” he explained.

In May, Cherargey asked the government to state measures it is taking to arrest losses by national carrier Kenya Airways, which stood at Sh38.26 billion by December 2022.

It sunk into a loss of Sh21.7 billion in the six months to June 2023.

He said the government should further apprise the House on the current operational and financial status of the airline.

A month later, an umbrella association for pilots in Kenya expressed doubts that the management of Kenya Airways could turn around the fortunes of the loss-making airline.

Appearing before the Standing Committee on Trade, Industrialisation and Tourism of the Senate, Kenya Airline Pilots Association (KALPA) said plans by the current management to return to profitability are unlikely to bear fruits.

KQ fleet size has been dropping since 2015, a period that has seen the airline struggle to return to profitability after making steep losses in 2014, causing some of its engineers and pilots to seek greener pastures.

It had 52 airplanes in 2015 and the fleet dropped to 39 in 2017 before rising to 42 in 2021.

The South African Airline on the other hand went into business rescue in December 2019.

The following year, when the Covid-19 lockdowns were imposed, and the rescue practitioners could not get more funding from the government, all flights were halted in May 2020.

The airline exited business rescue in April 2021 and restarted commercial flights on a much smaller scale in September 2021.

SAA is no longer technically insolvent, officials announced in February this year.

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