Air Malta’s first Airbus A319 put available for lease

Air Malta’s Airbus A319 9H-AEG, the first aircraft to form part of the 2004 fleet renewal, has been placed in the international aircraft leasing and sales media since last November for dry (without crew) or wet (with crew) lease with immediate availability. 

The plane, which has 141 seats, is advertised as having logged 24,600 flying hours and 11,800 flight cycles (flights) in its eight years of service, meaning an average daily use of about 8.5 hours. This could mean 12 hours a day in summer and six hours during the winter schedule. Air Malta leases the plane from US leasing giant ILFC, a subsidiary of well-known AIG (American International Group), as part of a deal made in 2002.

However, contrary to the high-density layout A320 that went to Chile again this winter for a two-month period, this aircraft seems to remain parked in Malta or just kept active with low use (actually, Air Malta could surely operate its winter schedule workload with just six planes). In the winters of 2005 and 2007, 9H-AEG was leased out to now defunct Canadian charter/leisure airline Skyservice, for incoming flights to ski resorts in the Rocky Mountains and flights between Canada and Cuba.

Emerging markets – a chance for young second-hand jets

One opportunity for leasing could certainly be Russia, since the Russian government has passed an order that basically means the end of the line for a number of Soviet jet models, particularly the Tupolev 134. The larger Tu-154s, even of the M-version from the last Soviet decade and early 1990s, are also on their way out. UT Air, one of the big domestic carriers, will be in need of fleet modernisation very soon. Capacity-wise, the A319 is positioned right in between the two Soviet thunderbirds.

Thanks to its long range (Air Malta’s A319s: 4,800kms), the A319 has proved to be popular in the Commonwealth of Independent States (CIS), where airlines appreciate such a range (4,800km is like Moscow-Irkutsk) and since it loses quite a bit of value in its early years making it a relatively affordable high-tech second-hand plane to buy.

As an example, S7 Airlines (formerly Siberia Airlines, formerly Aeroflot Novosibirsk), a member of OneWorld Alliance, have been taking up a number of A319s of roughly the same age as Air Malta’s from Northwest Airlines surplus via a set-up vehicle registered in the Bermudas (for tax reasons). For A320 and B737-800 aircraft they are getting brand-new ones. State-owned Rossiya, which took over Pulkovo of St Petersburg, also took up a number of ex-Northwest jets, but additionally sourced some A319s from other sources too (such as Frontier).

Aeroflot, today a very high standard airline, relies on only new-from-factory aircraft. Other carriers can certainly be considered, but if what is being considered is not the complete disposal of a lease but a temporary one, it is also necessary to check the solvency of the carrier one is considering leasing to.

Troubled German low-cost/leisure airline Air Berlin has also been able to offload some A319s – for example, two jets built in 2008 have gone to Air Namibia on long-term lease. While this may not have been the first choice, given their route profiles, they have replaced Boeing 737s from the deep 1980s that are reaching the end of an economic life. Other Air Berlin A319s have been leased to Bosnia, or are currently parked, with the prospect of moving to the PRC.

With its excellent performance also at hot and/or high elevation airports, the A319 could also be interesting for operations in the Andes or Africa, where the rising cost of fuel, and higher operational flexibility (instrumentation, payload/range), makes younger aircraft more attractive despite higher capital costs.

The similarly sized Boeing 737-700s seem to be remaining with Air Berlin – also as the result of cost-saving measures – with just three planes going to Yakutia Airlines (Yakutia is a Russian province in north-east Siberia, and Yakutsk, its capital, is 4,800km east of Moscow), however after their lease to Air Berlin had expired anyway. The B737-700, especially with winglets, is regarded as offering lower trip costs and longer range than the A319, even operating flights of over 5,000km with Copa, a highly profitable Latin American carrier operating a mix of Embraer 190s and Boeing 737-700/800s.

The number of stored or available for lease B737-700s is much lower than that of the directly competing A319s.

While placing the A319 on a lease contract is more challenging than a high-density seating layout A320, it is better than having the airplane just parked and paying the leasing bill to America, and for the A319s (quite contrary to the financially more attractive A320s) one might maybe not be taking a residual value/buy/resale deal option at the end of the lease so one also has not that much a plus on ‘saving it’.

One will not fetch the same leasing revenue as with an equally old A320 or Boeing 737. But the remarketing is not as difficult as that of the Avro RJ70/85s. If one cannot place the plane, then surely one can deploy it on some Malta routes during summer, though flying and flying profitably are two different points. Generally speaking, Air Malta should already – over the last five or six years – have been more (pro-) active in the fields of route development and strategy.

As already said Air Malta’s core operations are within a 700-2,300km range frame, with Moscow at 3,000kms the longest sector, and no special performance airports except for the odd Isle of Man charter which surely is not the point. The A319s have the potential for longer range routes to Arabia or Africa (even places like Brazzaville or Entebbe can theoretically be reached), but at present one cannot risk such things, and the Gulf market is a no-chance one today given competition. While certainly traditional markets remain top, one should at least keep one’s eyes open also on emerging markets. One has already been successful with an A320 placed to a low-cost airline in Mexico.

source: http://www.independent.com.mt/news.asp?newsitemid=138597