COST OF LEASING

Leasing planes is not main problem for KQ

In Summary

• Kenya Airways spends nearly Sh15 billion annually leasing 20 planes.
• KQ's low-cost subsidiary JamboJet is profitable and keeps better time.

KQ flight at Moi Airport Mombasa
KQ flight at Moi Airport Mombasa
KQ flight at Moi Airport Mombasa
KQ flight at Moi Airport Mombasa
Image: FILE

kq
kq
Kenya Airways Plane.Photo/File
Kenya Airways Plane.Photo/File

Kenya Airways lost Sh8.6 billion in the six months of 2019, double what it lost in 2018 but half of what it lost in 2017.

Last week investors were told that this was partly due to the Sh14.7 billion spent annually on leasing 20 planes. This led to speculation that leasing is the root cause of KQ's problems.

Leasing is in fact completely normal in the airline industry. Even the largest airlines lease planes. Leasing is common elsewhere, including for Kenya police and government vehicles.

 
 

Leases are fine in principle, although they can still be inflated.

KQ's problems are more systemic. Its timekeeping is not as good as its competitors and it is pricey even compared to European airlines.

Yet KQ's low-cost subsidiary JamboJet is profitable and keeps better time.

Earlier this year Kenya Airways chairman Michael Joseph told MPs that an alternative path would be to turn KQ into a low-cost airline like JamboJet. It sounded like a bad thing but maybe it would be a good thing.

If KQ flew on time at a lower cost, it might get more passengers and come closer to profitability.

Quote of the day: "Infinite growth of material consumption in a finite world is an impossibility."

E. F. Schumacher
The German-English economist died on September 4 , 1977

Kenya Airways Plane.Photo/File
Kenya Airways Plane.Photo/File
Kenya Airways Plane.Photo/File
Kenya Airways Plane.Photo/File
kq
kq