Kenya Airways Faces “Imminent Collapse,” Planes At Risk Of Being Repossessed

Kenya Airways Faces “Imminent Collapse,” Planes At Risk Of Being Repossessed

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Well, it looks like you can add Kenya Airways to the list of airlines on the verge of collapse. They’re in good company, between airberlin, Alitalia, and South African Airways. I’ve known for a while that Kenya Airways is in bad shape, but I didn’t realize just how bad their current situation was.

Kenya’s Standard Digital has the story of how overseas banks have apparently carried out inspections of Kenya Airways’ planes in preparation for repossessing them, should new financing not come through for the airline. Per the story:

In a civil application filed at the Supreme Court of Kenya last month, KQ wants three banks opposed to the debt restructuring process to be compelled to change their mind because it is ‘just and necessary to safeguard the rights and existence’ of the airline.

“Whilst these lenders are supportive of the company’s restructuring proposal, these secured lenders have made preliminary preparations such as airline inspections to repossess such aircraft should the implementation of the company’s restructuring be delayed” KQ claimed in the court papers.

Per Kenya Airways’ finance director:

“I confirm that the failure to determine this application and to set aside the orders granted to the first applicant (Equity Bank) will mean that the airline will in all likelihood imminently cease to operate as the financial accommodation it has been receiving from its creditors was on the basis of the restructuring being completed by end of August 2017.”

The airline also claims that it faces “imminent collapse:”

KQ adds that it faces imminent collapse, with catastrophic consequences to the economy including job losses, creation of an air transportation crisis, loss of Kenya’s status as regional transportation hub, and systemic disruption in the banking sector.

Unfortunately Kenya has faced some stability issues over the years (terrorism, ebola in the region, etc.), and while Ethiopian Airlines has been growing, Kenya Airways has been shrinking, and also performing worse financially. The airline presently has debt of Sh142.34 billion, which is equivalent to roughly 1.4 billion USD.

Several years ago Kenya Airways was planning a huge global expansion. For example, in 2011 they published a 10 year plan which saw them more than doubling their destinations and flying to six continents by 2021. Here’s what they expected their routemap to look like:

Instead the airline has been leasing planes to other airlines (including Oman Air), cutting routes, and is on the verge of going out of business.

At the same time Kenya Airways is apparently planning on launching flights between Nairobi and New York. The DOT just granted them permission to fly to the US. As if they weren’t losing enough money already…

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  1. Morris Guest

    let me confirm to you all that as a KENYAN, KQ is here to stay and not to disappear. The problem began when the KQ board initiated the 'project mawingu' which dealed with replacing the B767 with 9 new B787 and also adding more new destinations so as to compete with Ethiopian airlines and SAA. But now after the board was implemented and began its financial restructuring plan KQ is back to action profitability. After...

    let me confirm to you all that as a KENYAN, KQ is here to stay and not to disappear. The problem began when the KQ board initiated the 'project mawingu' which dealed with replacing the B767 with 9 new B787 and also adding more new destinations so as to compete with Ethiopian airlines and SAA. But now after the board was implemented and began its financial restructuring plan KQ is back to action profitability. After around 2yrs KQ will be much far and fully competing in the air market... as you are aware KQ stopped its flights to Hong Kong and Hanoi so as to increase capacity in African market and also begin serving the US by the second quarter of Next year with New York the first US destination. This invasion to the US confirms strongly that KQ is still flying and flying till the world ends and one day it will be the Best Airline in Africa ....

    @lucky. Have you ever flown the KQ business class it has nice J and Y class both hard and soft products far much better than Ethiopian airlines.. Just try and you will get to know coz you have flown Ethiopian

  2. Anengiyefa Guest

    I flew on the KQ flight a 787 from NBO to LHR and I hated it. Conversely, a KQ flight on a 767 from Nairobi to Paris qualified as the most enjoyable flight I'd ever been on at that point. Its interesting that Ben urges that we avoid Oman's 787s leased from Kenya Airways..

  3. Frog Guest

    I use KQ to travel between Amsterdam and East Africa and have always been happy with their service (in J and Y). Would be a real pity (and a pain travelwise) if they went under.

  4. Captain ‍✈️ Guest

    Kenya airways is here to stay sorry mate I bet you enjoy sarcastic writing this airline has beat many odds including surving Two crashes !

  5. Leo Guest

    Being informed by expedia that my KQ flight from hkg to bkk in Apr 2018 will be cancelled and being changed to ticket of HX. So seems a bargain to me for using usd 153 for round trip econ ticket in excellent time slot.

  6. W Gold

    Not really collapsing, or even close, but Garuda is in financial trouble as well. https://asia.nikkei.com/Business/AC/Garuda-Indonesia-cuts-back-again-as-expansion-plan-fizzles

    They're considering cutting First Class entirely, and with it, will also go beverage options in International Business class. Economy passengers are also getting meals with less stuff on it in general. I've always firmly believed that the 777-300ER was the wrong plane for Garuda: too big, too heavy, and not efficient enough. The 787-9 is much more compatible.

    Not really collapsing, or even close, but Garuda is in financial trouble as well. https://asia.nikkei.com/Business/AC/Garuda-Indonesia-cuts-back-again-as-expansion-plan-fizzles

    They're considering cutting First Class entirely, and with it, will also go beverage options in International Business class. Economy passengers are also getting meals with less stuff on it in general. I've always firmly believed that the 777-300ER was the wrong plane for Garuda: too big, too heavy, and not efficient enough. The 787-9 is much more compatible.

  7. Christopher Guest

    I hope this doesn't happen. I have flights on KQ next spring.

  8. David S Gold

    Oh no. Looks like many substandard African airlines will be our only alternative ig KQ goes under.

    I am not relishing flying on Sudan Airways

  9. Mohammad Saleem Guest

    So Kenya's possible collapse is being covered but not Monarch's confirmed cessation of operations (which affects many more people) isn't?

  10. Melissa New Member

    Ben, Ford is planning our trip to Uganda/Zanzibar.. we have flights from the states to NBO.. we were going to take Kenya airways regionally. What do you recommend now?

  11. tda Guest

    My first instinct regarding the Ebola comment was the same as many others here, but perhaps Ben was referring to the ebola outbreak in northern DRC this year that prompted the Kenyan government to declare an alert? I'd consider that to be in the region.

  12. Kev Guest

    @Aegon
    Ebola never affected Kenya but Kenya Airways flies (or flew) to many destinastions in West Africa meaning they were losing alot of feed. Remember that most of West Africa esp the big countries like Nigeria and Ghana, does not have national airlines and this is where Kenya Airways and Ethiopian come into place.

    I really hope that Kenya Airways doesn't close. I've used them severally from Amsterdam to Nairobi and they have great service even in economy.

  13. henry LAX Guest

    @"Sean M." : thanks for the correction.

  14. No Name Guest

    @PDS

    Considering that Monarch was 1/4 the size of Air Berlin and had retired/sold all of their long haul fleet in 2015 it's not strange that most people outside the UK (that includes Europeans) would have no idea who this airline was.

    Doubt most Europeans would know or care if say SunCountry suddenly were to die, the airlines were about the same size and both had Sun and Sand destinations as their bread and butter.

    ...

    @PDS

    Considering that Monarch was 1/4 the size of Air Berlin and had retired/sold all of their long haul fleet in 2015 it's not strange that most people outside the UK (that includes Europeans) would have no idea who this airline was.

    Doubt most Europeans would know or care if say SunCountry suddenly were to die, the airlines were about the same size and both had Sun and Sand destinations as their bread and butter.

    The reason Monarch went belly up was the their prime markets was Turkey and Egypt beach destinations, let just was demand was either down or blocked by the UK Gov for safety reasons.

  15. Sean M. Diamond

    @henryLAX - Comair is not "owned" by BA. It merely franchises the BA brand for part of its operation - the majority of operation actually runs under its own Kulula brand.

  16. henry LAX Guest

    if KQ collapses, SkyTeam would have no airlines in Africa, and oneworld would barely have a tiny feeder link in the form of Comair of South Africa (owned by BA)

  17. Sean M. Diamond

    Good riddance. Kenya's protectionist policies in defense of a failing KQ have held back the aviation industry in that country for the last decade. Let KQ fail and let the thriving local private sector replace it.

    KQ has become so unreliable over the last few months with delays and cancellations more the rule than the exception.

  18. Aditya New Member

    I have travelled thru KQ many times to Africa (Accra, Freetown being frequent) (although in economy) from Mumbai.
    They last upgraded me to Business from ACC to NBO and that was my first time in business although the aircraft was 737.

    Ebola had hit KQ ceasing operations to FNA and ROB . They have their flights full for this sector.
    Also I could get miles on my Jetprivilege thru KQ and this...

    I have travelled thru KQ many times to Africa (Accra, Freetown being frequent) (although in economy) from Mumbai.
    They last upgraded me to Business from ACC to NBO and that was my first time in business although the aircraft was 737.

    Ebola had hit KQ ceasing operations to FNA and ROB . They have their flights full for this sector.
    Also I could get miles on my Jetprivilege thru KQ and this is why it remains my preferred airline for Africa.

    I will miss KQ if it ceases it's operations.

  19. Tomas Guest

    Yes, I care about Kenya Airways!
    I have flown KQ:
    KGL-NBO
    AMS-NBO
    NBO-BOM
    NBO-BKK 787 Dreamliner Svc.
    NBO-JNB
    NBO-ZNZ-NBO
    CAI-KRT-NBO

  20. Ben L. Diamond

    "Unfortunately Kenya has faced some stability issues over the years (terrorism, ebola in the region, etc.)"

    Africa's a pretty big place. The 2014 Ebola outbreak occurred on the other side of the continent. No country within 1,500 miles of Kenya reported a case, and the vast majority of cases/deaths were in countries over 3,000 miles away. I suppose it's possible that a West African outbreak impacted revenues at an East African carrier, but I'd be...

    "Unfortunately Kenya has faced some stability issues over the years (terrorism, ebola in the region, etc.)"

    Africa's a pretty big place. The 2014 Ebola outbreak occurred on the other side of the continent. No country within 1,500 miles of Kenya reported a case, and the vast majority of cases/deaths were in countries over 3,000 miles away. I suppose it's possible that a West African outbreak impacted revenues at an East African carrier, but I'd be curious to know what evidence leads you to this conclusion.

  21. TravelinWilly Diamond

    "...ebola in the region...?"

    Just to be clear, Ebola has only impacted the "region" if we can agree that the "region" is Africa, which is a huge continent.

    Ebola has not impacted East Africa in the slightest, though it may have impacted flights to West Africa, where it is endemic.

  22. FabinhoBP Guest

    @FredM - I am just having fun to kick off the weekend Fred, no need for personal attacks. We all are in great need of more fun and love and less hate. I hope you at least agree with me on that.

  23. Kory Guest

    Kenya Air is my preferred carrier for intra-Africa travels (Ethiopian and SAA are definitely a step below Kenya. This would be a shame. @Fabinho, many people care about how an airline like Kenya is doing...its a travel blog and it’s filled with many people who travel throughout Africa.

  24. PDS Guest

    @Ben did you not notice the UK's 5th biggest airline, and country's largest ever to collapse earlier this week?

  25. Tom Guest

    Wonder if one of their Chinese partners in Skyteam would take them over?

  26. FredM Guest

    FabinhoBP whines about the Kenya Airways article and expects others to join the chorus, yet he can't distinguish right (sic) from write.

  27. FabinhoBP Guest

    I meant write and not right obviously !!! LOL

  28. Jeff Guest

    Yeah we care about Kenya Airways if we are transiting Kenya or need intra-Africa flights. Some of us have flown Kenya Air coming to and from Africa for safari trips and more.

  29. Aegon Guest

    You never had ebola in this region : last outbreaks were in western africa (opposite side of the continent FYI) and DR Congo in places KQ or any other company was flying to.

  30. FabinhoBP Guest

    Ben, are you bored and do not have anything better to do than right about Kenya Airways ? C'Mon Man, does anyone really cares about Kenya Airways ???

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Morris Guest

let me confirm to you all that as a KENYAN, KQ is here to stay and not to disappear. The problem began when the KQ board initiated the 'project mawingu' which dealed with replacing the B767 with 9 new B787 and also adding more new destinations so as to compete with Ethiopian airlines and SAA. But now after the board was implemented and began its financial restructuring plan KQ is back to action profitability. After around 2yrs KQ will be much far and fully competing in the air market... as you are aware KQ stopped its flights to Hong Kong and Hanoi so as to increase capacity in African market and also begin serving the US by the second quarter of Next year with New York the first US destination. This invasion to the US confirms strongly that KQ is still flying and flying till the world ends and one day it will be the Best Airline in Africa .... @lucky. Have you ever flown the KQ business class it has nice J and Y class both hard and soft products far much better than Ethiopian airlines.. Just try and you will get to know coz you have flown Ethiopian

0
Anengiyefa Guest

I flew on the KQ flight a 787 from NBO to LHR and I hated it. Conversely, a KQ flight on a 767 from Nairobi to Paris qualified as the most enjoyable flight I'd ever been on at that point. Its interesting that Ben urges that we avoid Oman's 787s leased from Kenya Airways..

0
Frog Guest

I use KQ to travel between Amsterdam and East Africa and have always been happy with their service (in J and Y). Would be a real pity (and a pain travelwise) if they went under.

0
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