KUALA LUMPUR: SKS Airways Sdn Bhd has travelled all the way to the Middle East to seek funding for the lease of 10 Embraer E195-E2 aircraft signed with aircraft lessor Azzora Aviation Holdings.
It is learnt that SKS Airways had approached two giant airlines in Dubai and Jeddah a few weeks ago to become an investor by purchasing a stake in the cash-crunch carrier.
The airline is also believed to have asked Malaysia Aviation Group (MAG) for funds, although MAG and the two Middle Eastern based airlines are not keen to invest.
"The fact that they have gone to these airlines is telling by itself. If they were to be compared with MYAirline Sdn Bhd, MYAirline was in a much better financial position but somewhere along the way they burned a lot of money.
"But SKS Airways hasn't even started (operating the regional jets) or even received the airplanes yet," an aviation insider told Business Times.
To make matters worse, it is understood that newly minted chief executive officer Dzuleira Abu Bakar tendered her resignation last week.
Business Times has contacted SKS Airways and Embraer for comments. As at press time, no comments were received.
A source said the current issue facing SKS Airways is the monthly payment for the pre-delivery commitments for the 10 E195-E2 aircraft, which is the most expensive type compared to Embraer's other E-jets family model such as the E190, E175 and E170.
The source added that part of an aircraft leasing process involves signing the lease agreement and paying a certain amount of security deposit to a lessor.
"The payment needs to be done monthly. In the case of SKS Airways, the RM3.9 billion is the value of the aircraft, not the amount of the lease.
"Let's say the lease altogether (including maintenance and other expenses for an aircraft) is about US$350,000 to US$400,000 per aircraft. For 10 aircraft, the airline would have to fork out between US$3.5 million to US$4 million per month," the source said.
The challenge for SKS Airways and other airlines in Malaysia is that the income received is in ringgit while most of the operational expenses, including jet fuel, maintenance and lease, are in US dollar.
The Malaysian currency has been hammered by the dollar over the last few months. Yesterday the ringgit stood at RM4.67 against the dollar.
The aviation insider said although its plan to start a premium regional jet service out of Sultan Abdul Aziz Shah (SAAS) airport is ambitious, SKS Airways might not take into account the currency mismatch between the ringgit and greenback.
"The announcement of SKS Airways' regional jet plan ties in very nicely with the Subang Airport Regeneration Plan (SARP) announcement. Narrowbody airplanes will also be allowed to fly out of Subang Airport again but who came up with this idea?" the source asked.
On Aug 7, Business Times reported that the ground-breaking of the SARP project was expected to be in 2025 where the terminal would be expanded to cater to five million passengers per year by 2027 and eight million by 2031.
Currently, Subang Airport is handling 1.5 million passengers every year.
Transport Minister Anthony Loke had repeatedly said the SARP would not cannibalise Kuala Lumpur International Airport by taking away passenger traffic from the latter.
Loke declined to comment on SKS Airways when asked yesterday during a press conference at the launch of MAG's first Boeing B737 MAX 8 aircraft.