Slovakian low-cost carrier SkyEurope Airlines has been forced to sell two Boeing 737-700s before they were due for delivery, and admits it failed to comply with financial conditions attached to half of the 737-700s it has on lease from GECAS.
The carrier has lease agreements with GECAS for 12 737-700s, but says it failed to comply with conditions on six of these aircraft. The conditions state that SkyEurope "must maintain certain liquidity and net worth thresholds". SkyEurope, which more than halved its full-year net loss to €24.1 million ($31.5 million) and increased revenues by 27% to €236.2 million in the year to September 2007, says its cash and cash equivalents fell to €11.6 million from €41.8 million in the previous year.
The carrier is attempting to negotiate a reduction in its financial covenants with GECAS, but warns that any default allows the lessor to terminate the leases with immediate effect. "GECAS has indicated their intent to continually monitor SkyEurope's financial performance and has not indicated their intent to terminate the leases," says SkyEurope. The aircraft leased from GECAS formed part of SkyEurope's plan to increase its fleet to 32 737-700s. As of September 2007, the carrier operated 14 of the type.
The two owned 737-700s were sold to an unnamed third party ahead of their scheduled deliveries in October and November. SkyEurope says it used the proceeds from the sale to pay down part of a pre-delivery loan.
SkyEurope failed to comply with conditions on half its GECAS-leased aircraft
Source: Airline Business
