Air J to sell its two A320s

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Air J to sell its two A320s

Unread post by bimjim » Fri Feb 20, 2009 ... A___S_.asp

Air J to sell its two A320s
Ingrid Brown
Friday, February 20, 2009

AIR Jamaica will be selling the only two planes it owns as the struggling national carrier seeks to raise much-needed funds to finance its new business plan.

The airline's president and chief executive officer, Bruce Nobles, told Parliament's Public Administration and Appropriations Committee at Gordon House in Kingston Wednesday that US$135 million will be needed to offset the airline's losses over the next six months as well as to pay transition cost to put this business plan in place.

Outside of the US$75-million already identified in commercial loans, which will require government support, Nobles said the other sources of finance will include the sale of the company's two A320 aeroplanes which were acquired under capital lease. Under capital lease Air Jamaica owns the aircraft on the completion of the lease payments.

The lease on one of the planes, Nobles said, recently ended, while the lease on the other is expected to end next month.

An offer is already on the table, according to Nobles, for one of the aircraft, while ownership of the second plane will be transferred to one of the major lessors for a portion of outstanding amounts owed on other leased aircraft.

"These are some of the things we are working on to generate the cash flow," Nobles said.

He told the Observer in an interview immediately following the sitting of the House committee that Air Jamaica could get as much as US$13 million for the aircraft which were configured to carry 150 passengers, while the price of the one to be transferred to the lessor will be negotiated at market value.

In addition, he said the company may return some of the other leased aircraft and restructure the amount of money owed.

Asked why the planes were being sold instead of retaining them and returning some on lease, Nobles said that could not be done.

"We can't just give back aircraft when we have an agreement that we are going to lease the aeroplanes for 10 years, so the process of returning an aircraft is a little complicated," he said.

Nobles said the lease on two other aircraft ends later this year and Air Jamaica has already indicated its intention to return them six months early. Fortunately for the airline, the aircraft owners want to have them even earlier, which will further reduce the amount Air Jamaica would be required to pay to get out of the lease early.

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