Newsdeck

Kenya Airways May Pull Back From Boeing Plan in Favor of Airbus

By Bloomberg 12 March 2019
Caption
A Kenya Airways jet is parked at London's Heathrow International Airport. Photographer: SUZANNE PLUNKETT

Kenya Airways Plc may change its early-stage plans to buy Boeing Co.’s 737 Max jets after one of the planes crashed for the second time in five months, prompting airlines and regulators around the world to ground the aircraft.

Sub-Saharan Africa’s third-largest carrier could instead consider the larger 787 Dreamliner or acquire planes from rival Airbus SE, according to Chairman Michael Joseph. The carrier has yet to place firm orders for aircraft but has to expand the fleet to realize its growth strategy, he said.

“The number of aircraft we need in this range is not yet determined,” Joseph said. “As no decision has been taken yet, we will carefully follow the developments around the 737 Max. Studies may also show that we could enlarge our 737-800 fleet and of course as a responsible buyer, we also look at the Airbus options.”

A switch to Airbus could follow a similar move by Indonesia’s Lion Air, which plans to drop a $22 billion order for 737 Max jets in favor of planes made by Boeing’s arch rival, a person with knowledge of the proposal said earlier on Tuesday. One of Lion Air’s own Max planes crashed on Oct. 29, killing 189 people. An Ethiopian Airlines jet followed on Sunday, and 32 of the 157 who died were Kenyan citizens, the most from a single country.

In a dramatic day of developments following the Ethiopian Airlines crash, the European Union Aviation Safety Agency suspended all flights by the 737 Max while investigators probe the incident. Flights were halted across the globe from China to Argentina, leaving Boeing sweating on the fate of thousands of plane orders for the former best seller.

Read More: Boeing Reels as Europe Joins Global Backlash Against 737 Max

The Kenyan carrier last year revived long-shelved plans to expand its network by proposing to buy as many as ten 737 Max aircraft as part of a five-year strategy. The jets appealed because of better aerodynamics and fuel efficiency, which would help Kenya Airways start more long-haul routes, an executive from the company said at the time.

“We wish to state that no Kenyan air operator has in their fleet the affected aircraft type known as the Boeing 737 Max,” Kenyan Transport Secretary James Macharia said in a statement on Tuesday. “In addition, no foreign carrier is currently operating the aircraft type in Kenyan airspace,” he said in the statement.

Kenya Airways has 39 aircraft including eight 787 dreamliners and eight 787-800s, according to information on its website. The carrier completed a reorganization in 2017 that resulted in the Kenyan government increasing its stake to 48.9 percent from 29.8 percent, and Air France-KLM shrinking its shareholding to to 7.8 percent from 26.7 percent. DM

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