Low-fare operator SkyEurope Airlines has sold two Boeing 737-700s, ahead of delivery this year, and is trying to renegotiate lease terms with GE Commercial Aviation Services after failing to meet conditions for half of its leased fleet.
The Central European carrier's fleet comprises 14 737-700s. It owns two of these but the other 12 are on operating lease from GECAS.
In its fourth-quarter financial statement the airline admits it has "failed to comply" with financial conditions attached to six of the 12 GECAS aircraft. These conditions require the company to maintain a certain liquidity and net worth.
SkyEurope says it is negotiating a "reduction in the financial covenants" with GECAS. It states that while a financial default would allow GECAS to terminate the leases, the lessor has not indicated any intention to do so. However, GECAS will continue to monitor the carrier's performance.
Lease of the aircraft was part of fleet-renewal programme for up to 32 737-700s. SkyEurope placed a firm order for 16 aircraft in 2005, comprising the 12 from GECAS and four ordered directly from Boeing. It also placed 16 options and has since firmed 10 of these.
SkyEurope says the timing of the deliveries for the two 737 it sold "was considered suboptimal", The sale leaves the carrier with an outstanding firm order for 10 aircraft and purchase rights on another six. It plans to take these 10 firm aircraft by 2010 and exercise the purchase rights in 2008 for delivery by 2011, giving the airline a total fleet of 30.
Source: Flight International
