CityJet seals new $210m jet options to expand
Published 17/12/2015 | 02:30
CityJet has placed an option to take delivery of six more Sukhoi Superjet aircraft with a $210m (€192m) list price as the Dublin-based carrier advances talks with two European airlines to operate regional services for them.
CityJet founder and executive chairman Pat Byrne told the Irish Independent that the airline is also likely to execute an existing 10-order option for the Russian-built Superjet. In October, CityJet announced that it had placed a firm order for 15 of the aircraft, and the 10 options, at a list price of just over $1bn (€914m).
The airline is acquiring the jets on foot of an agreement with aircraft financing firm Falko, which buys the jets and then leases them to CityJet. The jets are being used to replace CityJet's current fuel-hungry Avro fleet.
Mr Byrne said CityJet will probably decide whether or not to exercise all its options by the third quarter of next year.
He also revealed that the airline is eyeing more services from Dublin and Cork, possibly to Italy and Scandinavia.
The scale of the planned fleet renewal and expansion at CityJet comes after it delivered a strong performance in 2015. It has endured years of losses under the ownership of Air France-KLM.
CityJet, controlled by Germany's Intro Aviation since last year, has also recently won a contract from SAS to operate a regional service on behalf of the Scandinavian airline.
As part of the agreement, CityJet acquired 100pc ownership of SAS subsidiary Blue1.
The Irish airline also placed an order for up to 14 Bombardier aircraft that will be used to operate the service for SAS. Under the so-called wet lease arrangement, CityJet supplies the jets and crews, and also paints the aircraft in SAS livery.
"We're shaping up well for 2016," said Mr Byrne. "Winning the SAS contract, ordering the Superjets and Bombardiers means we're now in implementation mode. We're absorbing Blue1 and it forms the base of our Scandinavian operation." The operation for SAS will have bases in Stockholm and Helsinki. A third might be added.
"We're burning cash doing that. We're carrying Blue1 through the winter because they're not doing any flying because everyone's being retrained. That will cost us about €5m, but it has to be done. And the SAS contract has massive expansion capability. We're starting with eight aircraft, but that contract could grow into a really substantial earner for us."
He said that CityJet's strategy is to be eventually generating between 60pc and 70pc of its revenue from contract services. CityJet still has five aircraft on contract with Air France until the end of 2017, and Mr Byrne said that he would like to see that contract continue.
He said that having ordered the Superjet, CityJet has received enquiries from mainline carriers interested in inking wet lease arrangements with the airline to operate regional services. "We're tracking two airlines. I'd expect to have some kind of traction on one of those during the first half of 2016."