Transmile Air Services has agreed to sell four Boeing MD-11 freighter aircraft to FedEx for $68 million, or $17 million per aircraft on average.
Proceeds from the sale will be used by the carrier's parent Transmile Group to partially repay its lenders. The outstanding debt obligations as at 30 September 2010 was approximately 529 million ringgit ($172.2 million) and the sale would allow the company to reduce its debt by up to 39% to 320.1 million ringgit.
Transmile has been struggling to repay its debt since an accounting scandal broke out at the carrier in 2007. It is now in the process of coming up with a financial regularisation plan after Malaysia's High Court granted an order to restrain all proceedings against the airline temporarily.
Transmile Group outstanding debt comprise of $115 million syndicated term loan of Transmile Air, a 1.0% guaranteed convertible bonds due 2010 issued by Transmile Group and 150 million ringgit medium term notes.
Two aircraft, MSN 48444 and 48446, were built in 1991 and are powered by PW4162 engines. The remaining two (MSNs 44485, 44486) are 1992-vintage aircraft and are powered by PW4160 engines.
"The idling of the aircraft will continue to be a financial burden to the company due to the fixed parking, storage and maintenance costs and other expenses of approximately 1.18 million ringgit per annum that need to be incurred," says Transmile.
It expects to complete the four-aircraft sale by the second quarter of 2011.