Kenya Airways Plc is looking to reduce jet-leasing costs by more than a third as the carrier targets break even by 2024.
Negotiations with lessors has so far led to a 19% cut in overall rental costs, Chief Executive Officer Allan Kilavuka said last week during a virtual briefing. The move is part of a wider restructuring following years of losses and state bailouts.
“There’s a significant amount of money that we owe the lessors,” Kilavuka said without providing a figure. “We wanted to have discounts on arrears to begin with, and then permanent reduction in rentals.”
The airline, in which the Kenyan government has a 48.9% stake, expects the National Treasury to settle debts owed to lessors, he said.
“We will need a financier and the financier at the moment is going to be government, to be able to overall improve the health of the balance sheet,” the CEO said. “Equity conversion or extra funding” are both options, he said.
KQ, as the carrier is known, reported a loss of 9.89 billion shillings ($82.4 million) in the six months through June compared with 11.5 billion shillings a year earlier. Revenue during the period grew 76% as the number of passengers surged 85%, bouncing back from the pandemic-era slump in air travel.
“The focus at the moment is for us to focus on improving our current operations to make us a lot more profitable and grow so within the next two years we stabilize then we can start growing,” Kilavuka said.