SkyEurope scrabbles to replace repossessed 737 fleet

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Central European budget carrier SkyEurope Airlines is hoping to finalise dry-leases on some Boeing 737s as it wrestles to restore its depleted 737-700 fleet.

US lessor GE Commercial Aviation Services (GECAS) has terminated leases on six of SkyEurope's 14 737-700s, causing operational problems as SkyEurope sought replacement capacity.

SkyEurope's fleet has sunk to as few as four 737-700s - two from Dubai Aerospace Enterprise and two of its own - and it is wet-leasing two Bulgarian 737-300s, two more from Air Slovakia and a Fokker 100 from Croatian carrier Trade Air.

Chief executive Jason Bitter tells ATI: "We should be announcing some dry-leases on aircraft, maybe [today]]. We're in negotiations with several parties. We're not just talking with one lessor - we've learned our lesson about having all our eggs in one basket."

He says there are good rates available, up to 70% lower than its previous contracts, owing to the market downturn and the time of year. The negotiations cover an undisclosed number of 737 Classics.

"We might just start with a couple," he says. "We are looking at this as an opportunity to lower our cost base further. We should get some Classics within three weeks."

SkyEurope is also looking at alternative types. Bitter says: "This is an opportunity to see if smaller aircraft are feasible for our operation. We are talking to Bombardier and Embraer over the Bombardier CRJ900, CRJ1000 and Embraer 190." But he stresses: "We are just looking at it."

Bitter claims the airline has maintained all its destinations and is achieving an 87% on-time performance. "We have trimmed frequencies and doubled-up some flights, but we are sticking with our mantra of flying every passenger to their destination," he says.

SkyEurope, which turned in a net loss of nearly €60 million ($80 million) last year, is waiting for would-be investor Longstock SAPO to release funds from a €10 million bridging loan, but Bitter says the deadline has again been extended. He declines to give his views on whether the cash will ultimately arrive, the status of talks with alternative investors or how much the airline is seeking.

"We are trying to do the best we can without the investment," he says. "It is a strange market, with a lot of stress, and liquidity is tight. We are talking to who we are talking to and trying to turn the business around.

"The plan is to stabilise the business with a fleet of our own aircraft and get out of the wet-leases, keeping our people flying and lowering our cost base. We are working on the fundamentals of our business, because without the fundamentals it doesn't matter if we get financing because it won't carry through."

SkyEurope has 10 737-700s on order but financing is difficult to obtain, Bitter says: "It's hard enough for an airline which has good credit, so it's not an easy situation. We are making some progress."

Some of the airline's pilots are "not flying a lot", but he adds: "We are not letting anybody go." SkyEurope has placed some crews with Air Slovakia to operate the 737-300s leased from the carrier.

"We are also increasing the utilisation of our 737-700s and starting to transition and refresh our crews on the Classics," says Bitter. The airline's cabin crew are also working on the wet-leased aircraft.