Kenya Airways signs for 9 787's

Kenya Airways has signed a deal for the purchase of nine 787-8 Dreamliner planes with Boeing to replace part of its fleet and expand routes and flight frequencies, it said on Thursday.


Kenya Airways chief executive Titus Naikuni said six of the new planes would replace six of the company's aging fleet of Boeing 767's, while the rest would be for expansion on new routes.


The airline, partly owned by Air France-KLM, had been mulling the purchase of A330s from Airbus, after the delivery of the 787s was delayed from October 2010.


The first of the aircraft will be delivered in the last quarter of 2013, and the airline will have an option to buy a further four planes, he said.


"They have given us delivery dates that we are comfortable with. It is a super aircraft," Naikuni told media.


The A330 is an older generation of mid-sized Airbus passenger jet whose sales received a second lease of life as the carbon-fibre Boeing 787 Dreamliner ran into production problems, pushing it about three years behind schedule.


Airbus is developing a lightweight passenger jet called the A350 to compete with the 787. Both aircraft are designed to reduce fuel costs by using weight-saving carbon composite materials instead of traditional aluminum shells.


The size of Kenya Airways' fleet, which also includes Embraers for domestic and short regional routes, has been curbing its ambitions by limiting destinations and flight frequencies, even on routes with high demand.


Both firms did not disclose the value of the purchase, but the average list price of nine Boeing 787s is about USD$1.8 billion, depending on the type chosen.


Kenya Airways has announced plans to raise an unspecified amount of cash to fund expansion. The process is at the stage of seeking regulatory approvals, Naikuni said.


The rising oil price would force the company -- whose strategy hinges on connecting African travelers to the outside world through its Nairobi hub -- to increase fares to cushion its bottom line.


Fuel costs account for between 30 and 40 percent of the airline's total operating costs.


"It (oil prices) is impacting us quite a bit. We will have to increase our fares," said Naikuni, adding the jump in crude was so fast that hedging and fuel surcharges were not enough to deal with it.

(Reuters)