Khalifa Airways is battling to keep its operations on track as manufacturers seek the return of leased aircraft from the Algerian airline.

Khalifa's operations have been hit by the financial problems at its parent group's key unit, the Khalifa Bank. Officials from Algeria's state bank have been installed to temporarily manage the bank, and the knock-on effect of the bank's problems has blocked the airline's ability to meet lease payments. Consequently lessors have taken back most of Khalifa's 30-plus fleet.

As well as returning some of its Boeing and Airbus aircraft, Khalifa has also been asked to send back two of its 12 ATR 42/72 turboprops to ATR.

ATR says the action is a "precautionary measure" after Khalifa experienced difficulties making lease payments.

Earlier this month the carrier was forced to temporarily suspend bookings while it reshuffled its fleet after Turkish carrier Pegasus Airlines ended a lease agreement covering Boeing 737s. Pegasus had leased up to six 737-400/800s to the Algerian carrier since 1998.

The airline's two ex-British Airways Boeing 777-200s, which it leased from Boeing in January, are reportedly parked at Frankfurt having never entered service, and London Luton Airport confirms that Khalifa's single Boeing Business Jet (BBJ), is stored there. Boeing declines to discuss the situation.

An agreement with Lufthansa, which had been leasing three Airbus A319s and an Airbus A320 to the airline, has also been put on hold.

Source: Flight International