Facts:
1) The old aircraft have not been sold. So they continue 'depreciating' in value as they wait to be sold.
Depreciated has to be provided and unless there is real obsolescence the values are carrying book values, depreciation is to ensure prudence in reporting and management is not bound to sell the aircraft at depreciated values if going market rates are higher. The sale if actualized will generate the much needed cash flow -it may be at a gain compared to the already depreciated/book values
Depreciation is an ongoing expense until the aircraft are sold. Could be higher or lower vs Book Value. Depreciation is a non-cash item but a cost nevertheless. Just like a car, the REALIZABLE worth of planes drop with age. Planes are a-plenty in the market but lower fuel prices has helped make older, less efficient planes more attractive.
2) The debts are not going anywhere. They need to be serviced. True, but cash flows from the disposals if actualized can help
When the sales happen. That may bring in 18-25bn. Sales in USD so better realization in KES since KES has weakened. Nevertheless, there's still 100+bn left to service. BTW, other planes coming in FY 2015-6.
3) Has the land been sold? What value is the land being carried at in the books?? I suppose Fair value has been used since land is meant for sale otherwise historical cost.
So no major 'gain' to book from this sale. I do hope KQ gets more than they show as the value.
4) Lower fuel prices. Good news for Emirates that doesn't hedge.. What’s was the duration for the hedges, the hedge positions are periodically reviewed (may have reduced), this according to a past CEO’s TV interview (citizen)
3 months to 2 years after they have shortened the duration of the hedges i.e. more hedges but for shorter time frames. Apparently, some run into 2016. The bank (Citi, GS) always wins despite what KQ's CFO says.

In the meantime, my KK released 1H results...

1) Not selling assets (excluding normal PPE disposals) anymore [Stations acquired in Rwanda and Burundi are being rehabbed]
2) Debts reduced [Gearing Ratio down to 50% despite selling 8% more volume] as have interest costs [down 43%]
3) Lower fuel prices means higher GPM (no hedging) in 2H
4) Did I mention that KK could hit 3bn PBT for 2015?

I suppose these are the people that Kiyosaki dismissively calls "Managerial Capitalists; with no skin in the game."

I suppose these are the people that Kiyosaki dismissively calls "Managerial Capitalists; with no skin in the game."