Kenya Airways cancels Terra Avia capacity deal and pursues long-term B777F lease

# What happened Kenya Airways (KQ) has ended a capacity agreement with Terra Avia (T8). Acting CEO George Kamal told ch-aviation the termination was driven by soaring fuel costs. At the same time, Kenya Airways is pursuing a long-term lease for a Boeing 777 freighter (B777F). Discussions are ongoing and contingent on technical and financial evaluations.

# Why this matters now Kenya Airways is managing multiple operational and financial pressures. Fuel price swings increase operating expense for wet-lease or third-party freighter arrangements, which likely made the Terra Avia deal unsustainable under current cost conditions. A long-term leased B777F would give KQ direct control of capacity and potentially lower per-ton costs if the technical and commercial terms stack up.

# What Kenya Airways said Acting CEO George Kamal confirmed the B777F talks and framed the decision as conditional: the outcome depends on technical suitability and financial terms. He characterized other specifics — such as the source of the aircraft and the exact variant — as premature to disclose.

# How this fits the carrier's wider programme Kenya Airways has other parallel initiatives that shape the freighter decision:

• Fleet recovery: The airline told ch-aviation it expects to restore its entire grounded fleet by early 2027. Having more of its own fleet back in service affects cargo capacity planning and the case for leased freighters.

• MRO strategy: KQ is developing in-house heavy maintenance capability. The carrier reported potential savings of up to KES1 billion (about USD7.7 million) per Boeing 787-8 by performing D-checks internally rather than outsourcing. Lower maintenance costs and faster turnaround can change fleet-utilisation economics and the need for third-party capacity.

# Practical implications If Kenya Airways secures a long-term B777F lease and technical/financial checks are positive, expect the following outcomes:

• More predictable cargo capacity under KQ's operational control compared with short-term or capacity-agreement arrangements.

• Higher upfront lease commitments but potential lower marginal cost per cargo flight relative to expensive wet-lease arrangements when fuel is high.

• Interaction with the fleet recovery timetable: as passenger and freighter availability improves, KQ will be able to re-evaluate route frequency, fleet mix, and interline/cargo partnerships.

# What remains uncertain

• The identity of the lessor or aircraft source and the precise B777 variant under consideration.

• The lease length, lease rate, and whether the deal would include crew, maintenance, or insurance (i.e., ACMI) elements.

# Bottom line Kenya Airways cancelled a capacity agreement with Terra Avia because fuel costs pushed the deal beyond workable economics. The airline is negotiating a long-term B777F lease to regain and stabilise cargo capacity, but the decision hinges on technical suitability and financial terms. The outcome will interact with the carrier's effort to reinstate its grounded fleet and reduce maintenance costs through an expanded in-house MRO capability.