Award winning loss making KQ put up her dreamliners on lease at a more loss

[Geza Ulole]

KQ now extends aircraft lease on lower rental fee
THURSDAY, JUNE 6, 2019 20:01
BY CHARLES MWANIKI

The Jomo Kenyatta International Airport. FILE PHOTO | NMG


Kenya Airways has extended the lease of three aircraft to Turkish Airlines for an additional three years, a move that will likely deepen sub-leasing losses on the planes that were bought new in 2013.

The airline’s chief executive officer Sebastian Mikosz told Business Daily that the lease extension for the three Boeing 777-300 aircraft was agreed on in November 2018.

The Turkish carrier, however, negotiated to pay a lower rental fee in order to make the deal. The initial leases were to expire in April 2020.

This means that KQ, as the airline is known by its international code, will likely deepen the Sh731 million sub-leasing loss it made last year —this being the difference between revenues earned from the sub-leasing contracts and payments made to primary lessors in the same period.

Mr Mikosz, who is exiting the airline in December, said KQ has no choice but to enter into the loss-making sub-lease agreements, having bought the planes at top price which translates into high monthly payments even as their value decreases over the years.

“There is also a larger number of Boeing 777s in the market so you can find the same plane for half the price.

We had a quite normal rate with Turkish for two-and-a-half years, but when we were negotiating for the lease extension they said we needed to lower the rate,” said Mr Mikosz.

“If we did an outright sale it will be an even bigger loss because we still have a loan to service. If we do sell we will have to repay the full loan promptly, and we would only likely get half price on them. It is too big an aircraft for KQ, and bringing them back to park them will cost up to Sh6.5 billion a year.”

He added that it is likely that Turkish Airlines will look to extend the lease further after three years once the new extension expires, with KQ also unlikely to bring them back into the fleet having shifted preference for long-haul service to the smaller, more economical Boing 787 Dreamliner.

The airline has been forced to shed capacity after hitting headwinds in its ambitious expansion plan dubbed Project Mawingu which it has been painfully trying to unwind in the last three years.

KQ now extends aircraft lease on lower rental fee

CEO Sebastian Mikosz says KQ has no choice but to enter into the deal.

www.businessdailyafrica.com

 

[Architect E.M]

Poleni saaannaa bandugu ba kunya.... sorry kenya

 

[Depay]

Now, Tell us about your blue and white Tuk Tuks

 

[Oii]

Now, Tell us about your blue and white Tuk Tuks

Hehee

 

[Chamoto]

Now, Tell us about your blue and white Tuk Tuks

In the next few months we're expecting to receive another Dreamliner.

 

[Tony254]

In the next few months we're expecting to receive another Dreamliner.

Chungeni msi-expand haraka bila kutafuta market kama sisi, mtapata hasara kama sisi.

 

[Chamoto]

Chungeni msi-expand haraka bila kutafuta market kama sisi, mtapata hasara kama sisi.

Usiwe na shaka, tupo na mwendo wa kobe, hatuna papara, tutaishi miaka mingi.

 

[pingli-nywee]

Unatukanganya bure. Hivi majuzi ulituambia kwamba KQ wana ndege tatu tu. Hizi tatu ambazo zimekuwa 'leased' kwa Turkish Airlines ni za nani? Au ndio zile zile tatu? Kwahivyo sasa hivi KQ hawana ndege? Hahaha! 😀 ATCL hoyeee!

 

[Mfiaukweli]

Chungeni msi-expand haraka bila kutafuta market kama sisi, mtapata hasara kama sisi.

The words you are looking for here are "....mtapata hasara mara 3 ya sisi".

 

[joto la jiwe]

Chungeni msi-expand haraka bila kutafuta market kama sisi, mtapata hasara kama sisi.

Jana nilikuambia, Maamuzi ya viongozi wa Kenya ni maamuzi ya ajabu sana, huwezi kuamini kama viongozi wa nchi wanaweza kuchunguza maamuzi kama viongozi wa Kenya, kweli ni jambo la kushangaza sana.

Ninaweza kusema kwa uhakika wa 95%, Lamu port itatengeneza hasara Mara tatu zaidi ya KQ. Sioni hatma(Future) ya Kenya kama itaimarika, viongozi wa Kenya wana uwezo mdogo sana wa kufikiria mambo kwa undani, wakenya wengi wanasukumwa na kutaka sifa zaidi kuliko kujali hali halisi ya maisha, ni jambo la kusikitisha na kuhuzunisha sana.

 

[joto la jiwe]

Unatukanganya bure. Hivi majuzi ulituambia kwamba KQ wana ndege tatu tu. Hizi tatu ambazo zimekuwa 'leased' kwa Turkish Airlines ni za nani? Au ndio zile zile tatu? Kwahivyo sasa hivi KQ hawana ndege? Hahaha! 😀 ATCL hoyeee!

Soma vizuri hiyo article, ninyi mliwakodisha waturuki kwa being ndogo kwa mwaka(sub-lease), kuliko bei mnayolipa kwa mwenye hizo ndege (primary leaser), tofauti yake ndiyo hasara mnayopata, zingekuwa ni Mali ya KQ msingepata hasara.

 

[Mkikuyu- Akili timamu]

Unatukanganya bure. Hivi majuzi ulituambia kwamba KQ wana ndege tatu tu. Hizi tatu ambazo zimekuwa 'leased' kwa Turkish Airlines ni za nani? Au ndio zile zile tatu? Kwahivyo sasa hivi KQ hawana ndege? Hahaha! 😀 ATCL hoyeee!

Moja ya hizo ndege 3 za KQ ni hii 777 ambayo imekodishwa Turkish

 

[pingli-nywee]

Soma vizuri hiyo article, ninyi mliwakodisha waturuki kwa being ndogo kwa mwaka(sub-lease), kuliko bei mnayolipa kwa mwenye hizo ndege (primary leaser), tofauti yake ndiyo hasara mnayopata, zingekuwa ni Mali ya KQ msingepata hasara.

Eti sasa wewe hapo ndio umesoma hiyo taarifa, na ukaielewa? Aisee, mwalimu alikuwa na kibarua kigumu.

 

[joto la jiwe]

Eti sasa wewe hapo ndio umesoma hiyo taarifa, na ukaielewa? Aisee, mwalimu alikuwa na kibarua kigumu.

Hahahahaha, acha kuendelea na ukaidi, lazima mkubaliane na ukweli halisi, mnaishi maisha ya kuingiza sana(Hyper inflated ego), this type of life is not sustainable, it will reach a point, everything shall go back to its original state, for Kenya, that time is here.

 

[mwaswast]

joto la jiwe Mumbai na Guangzhou tutafika lini na ATCL? Alafu minofu tutaanza kupeleka Dar kutoka Chato lini??😁

 

[Mkikuyu- Akili timamu]

KQ should just close down, dispose all their planes and start afresh with a new business model that is successful and has proven to work in Africa - (Ethiopian model) which ATCL is currently closely following with its own few modifications to avoid the pitfalls Ethiopian faced

 

[joto la jiwe]

joto la jiwe Mumbai na Guangzhou tutafika lini na ATCL? Alafu minofu tutaanza kupeleka Dar kutoka Chato lini??[emoji16]

So long as it makes profit internally, we don't care whether it goes Mumbai or Chato. Sisi tumeshavuka hatua ya ushamba wa kuanzisha routes za USA ambazo mwisho wa siku ni hasara na aibu

 

[Teargass]

I'll only listen to a Tanzanian fool on aviation matters the day ATCL will release its financial reports.

 

[Teargass]

So long as it makes profit internally, we don't care whether it goes Mumbai or Chato. Sisi tumeshavuka hatua ya ushamba wa kuanzisha routes za USA ambazo mwisho wa siku ni hasara na aibu

Ni lini ATLC ilimake profit?. I'm waiting for your reply.

 

[Kifaru_07]

KQ should just close down, dispose all their planes and start afresh with a new business model that is successful and has proven to work in Africa - (Ethiopian model) which ATCL is currently closely following with its own few modifications to avoid the pitfalls Ethiopian faced

That sounds stupid... sell your almost paid for planes and buy new more expensive planes so you can do what differently?

Ethiopian model is being government owned and paying little taxes, that I can agree will be the model ATCL may follow, maybe then it will get a profit because govt will take the losses of b787 unused planes rusting in hangars..