Kenya Airways (KQ, Nairobi Jomo Kenyatta) is negotiating with Boeing to extend the validity of purchase options to safeguard KES310 million Kenyan shillings (USD2.2 million) in deposits it has paid for B737s and B787s and accompanying engines, according to its annual report for the financial year ending December 2022.
The airline has made a KES310 million provision in the 2022 financial year to cover the liability in case Boeing does not extend the options when they expire.
"The deposits relate to [the] lease of aircraft and engines of Boeing 737s, 787s and Embraer E190s and are carried at [an] amortised cost. The deposits paid towards [the] acquisition of [the] aircraft represent amounts paid to Boeing Corporation for the option to purchase or lease aircraft in the future. A provision of KES310 million was made in the year as a result of [the] expiry of a purchase option the company had in place with Boeing Corporation. The company is, however, in talks with Boeing to further extend the validity of the options," according to the financial statements.
In total, Kenya Airways paid deposits of KES3.7 billion (USD27.4 million) in FY2022 and KES2.7 billion (USD20 million) in FY2021 for leased aircraft in addition to the KES310 million in FY2022 towards the acquisition of aircraft.
During FY2022, additional deposits were paid to lessors as part of lease restructuring. The airline paid KES3 billion (USD22 million) at the start of FY2022 versus KES3.7 billion (USD27 million) at the beginning of FY2021. Additional deposits in FY2022 totalled KES4.1 billion (USD30.3 million) (versus KES295 million (USD2.1 million) in FY2021). Refunds of KES3.2 billion (USD23.7 million) were negotiated in FY2022 (compared to KES1 billion (USD7.4 million) in 2021). The refunds mainly relate to deposits that were held for a B777-300(ER) whose lease was terminated, the airline said.
