Fiji Airways is contractually obliged to take delivery of the five Boeing 737 MAX 8 aircraft it ordered and the penalty for breaking contracts is more severe than accepting the aircraft and utilising them to earn revenue.
This was the explanation offered by Fiji Airways CEO and managing director Andre Viljoen in a statement issued yesterday.
He said the deal for the five planes announced on November 23, 2016, by Fiji Airways, Boeing and GE Capital Aviation Services (the lessor) was a “groundbreaking” 12-year sale and leaseback agreement with GECAS, for aircraft to be specifically built for Fiji Airways.
Mr Viljopen said GECAS was effectively renting the aircraft to Fiji Airways.
“I have previously explained in statements and press conferences, with the last one on 22nd August 2020, that aircraft contractual obligations are absolute,” he said.
“Penalties for breaking these contracts are much more severe than accepting and utilising the aircraft to earn revenue.
“What Fiji Airways has been able to do, as also explained on 27th August 2020, is renegotiate and drive down monthly recurring fixed costs by approximately 50 per cent.”
Mr Viljoen said the first two jets arrived in December 2018 and January 2019 and the remaining three were due to be delivered by mid-2019.
However, Boeing 737 MAX aircraft were grounded globally in March 2019 following the tragic incidents in Indonesia and Ethiopia and the grounding was lifted late last year.
He said in early April this year, Fiji Airways staff, including engineers, pilots and other experts with Civil Aviation Authority of Fiji officials were in Seattle Washington, Boeing’s Aircraft Delivery Centre for the handover and acceptance process for the aircraft which arrived last week.
“In other words, they left well before this current outbreak and the process was already underway when the current unfortunate outbreak occurred.”
