The leasing company Aircraft Engine Lease Finance (AELF) is suing Suriname Airways over failure to pay a US$4.1 million settlement following an Airbus A340 lease breach. Both parties agreed that payments would begin in December 2020, and so far, the South American carrier has failed to meet its obligations.
The issue
Between 2015 and 2019, AELF leased Surinam Airways an Airbus A340-300, according to data provided by ch-aviation. This aircraft, registration N365JS, is currently stored at Ciudad Real Central, Spain. It will be scrapped in the near future, after more than 20 years of active service.
When Surinam Airways returned the aircraft to AELF, it breached the return conditions set upon the lease agreement, AELF said in a statement sent to Simple Flying.
Following this breach of the agreement, both parties entered a settlement agreement in June 2020. Surinam Airways agreed to pay US$4,125,000 to AELF in exchange for the lessor to release its claim for the leasing breach.
Additionally, both parties agreed that payments would begin in December 2020 as a way to ease Surinam Airways’ financial burden due to the impact of the COVID-19 pandemic worldwide.
Nonetheless, Surinam Airways has failed to make payments when due, reported AELF. As a response, the lessor has instituted proceedings against the carrier in Suriname and the Commercial Court in London, UK.
Surinam Airways, a Sovereign state?
In the meantime, Surinam Airways “has raised a very technical argument that the airline was not served correctly under the English State Immunity Act, because the airline is, according to the airline, a Sovereign state,” said AELF.
The lessor’s legal representative in the UK has stated that this argument is wholly without merit. In the past, Surinam Airways’ chief legal officer noted that the carrier is an entity separated from the State.
Nonetheless, even if Surinam Airways were a state, “it would not have immunity in relation to commercial activities.” When both parties entered the aircraft lease agreement, they added an express waiver of sovereign immunity.
According to the leasing company, Surinam Airways is playing for time. To face these delay tactics, AELF has instituted proceedings against the carrier in Suriname. The lessor is looking to freeze Surinam Airways’ assets; moreover, it expects the English court will back up AELF’s judgment.
Surinam Airways issues
Suriname’s flag carrier has had financial troubles for quite some time now. In 2021, the airline’s debt was over US$102 million. Moreover, other leasing companies repossessed the airline’s fleet in 2020, which is always a sign of trouble (as we could see, for example, with the Mexican carrier Interjet).
According to the Surinamese newspaper Star Nieuws, the airline was looking to obtain US$2 million monthly support from the government. This amount would help the airline cover its operational expenses while Surinam Airways adapted its commercial activities. As reported by ch-aviation, the Surinamese government vowed to restructure the flag carrier under State ownership rather than through privatization.
Currently, Surinam Airways has 113 scheduled flights, offering over 22,000 seats, according to data provided by Cirium.
Do you think Surinam Airways will find a way to reorganize its debt? Let us know in the comments below.
