KQ writes down aircraft value by Sh3bn over disposals and repairs
The national carrier said the more than tenfold increase in depreciation from Sh214 million in the previous year was due to a significant write-down on its owned fleet.
Kenya Airways has reported a sharp rise in aircraft depreciation to Sh2.96 billion last year, driven by lower market value of planes the airline intends to sell and an overvaluation of those that underwent major repairs.
The national carrier said the more than tenfold increase in depreciation from Sh214 million in the previous year was due to a significant write-down on its owned fleet.
The impairment charge, which reflects a permanent drop in asset value, reached the highest level in four years and dented the company’s balance sheet.
Acting chief financial officer Mary Mwenga explained that Sh1.8 billion of the impairment charge came from aircraft that had undergone major overhauls but are now worth less than previously recorded.
“The impairment charges reflect adjustments based on current market valuations rather than their operational status,” she said.
“Regular overhauls and maintenance are standard practices in the industry to extend the lifespan and maintain the value of the aircraft,” Mwenga added.
KQ said the overhauls initially raised the book value of the aircraft, but current market prices no longer support those valuations.
Although the affected planes remain in operation, their recorded worth was cut to reflect what they would fetch if sold.
The airline also incurred a Sh1.1 billion impairment on aircraft it plans to dispose of at amounts lower than their current book values.
“The other Sh1.1 billion was related to certain aircraft that the airline had intended to dispose of at lower amounts than their book values, necessitating the impairment,” Mwenga said.
This marks the biggest impairment on its owned aircraft since 2020 when the airline took a Sh7.04 billion hit due to grounded planes during Covid-19 lockdowns.
Kenya Airways operates a fleet of 35 aircraft, including leased and owned planes.
Most of its aircraft are owned, but the airline leases Boeing 737s, 787s, and Embraer E190s.
In 2024, KQ paid Sh5.2 billion for leasing and placed a Sh6 million deposit with Boeing for future purchases.
Its owned aircraft were valued at Sh58 billion as of December 2024, with a cumulative depreciation of Sh82.3 billion since their acquisition.
In February, the airline added a 170-seater Boeing 737-800 to its fleet through a lease from a US-based firm.
Despite the value write-down, KQ emphasized that the aircraft remain safe and fit for continued use.
