Kenya Airways is set to incur an additional Sh3 billion ($30m) accounting loss from new aircraft sub-leasing contracts, representing the deficit between what it is earning on the deals and its payments to the primary lessors.
The national carrier disclosed the new onerous leases in its financial statements for the half-year ended September.
These follow the leasing of five Boeing airplanes to Oman Air and Turkish Airlines last year in a deal that left the Nairobi Securities Exchange-listed firm with a Sh4 billion ($40m) accounting loss in the year ended March.
KQ, as the airline is known by its international code, says the losses arise from leasing out aircraft at rentals lower than that charged by the primary lessors.
The leases are part of the company’s efforts to cut costs at a time when slow revenue growth and mounting liabilities have kept it in the loss territory.
The additional sub-leasing of aircraft involves the same carriers, with Oman Air taking two B787-8s and Turkish Airlines taking three B777-300ERs.This brings the total number of aircraft seconded to the Muscat-based carrier to four while those sent to the Istanbul-based airline rises to six.