News
China Aircraft Leasing and Longjiang Airlines disagree
June 30th 2017
Last week, citing official correspondence from China Aircraft Leasing Group (CALC), Orient Aviation reported that CALC had served two termination notices to Longjiang Airlines (LJ Air) on June 16 after the airline allegedly had failed to fulfil certain terms and conditions of contracts that were signed last year. Read More »
LJ Air has now clarified that of its two A321ceo, only one is on lease from CALC and that it owns the second aircraft.
LJ confirmed to Orient Aviation that there was a “controversy with CALC” because of an unspecified “deposit issue” and that it is considering legal action against CALC for misrepresentation.
The start-up carrier said its sole route, a daily Harbin-Hefei-Zhuhai service, has been exclusively operated by its owned A321 since the inaugural flight on February 10. The second A321, parked at its Harbin base is the disputed aircraft contracted from CALC. LJ said that from February 10 to June 18 it has carried 59,572 passengers with an average load factor of 80%. Both A321s were previously in service with Niki, the Austrian subsidiary of airberlin.
Responding to Orient Aviation, CALC (“the Group”) explained LJ had signed two sale and lease back deals with the company, but only one aircraft was delivered following issues with the first lease, and this was why CALC had delivered two termination notices to LJ.
CALC said: “The Group has always respected and honoured the spirit of the contract and fulfilled its obligations. After seeking comprehensive legal advice, we believed it was in the best interest of the Group that it should issue a termination notice in respect of the Longjiang Aircraft Lease Agreement due to the non-fulfilment of material terms and conditions by Longjiang Airlines.”
It added: “The Group has a strong marketing team with the capacity to re-lease the aircraft. In addition, the Group took appropriate risk control measures before the delivery of the aircraft, which included a long-standing requirement that start-up airlines must provide a significant amount of deposit. In the Longjiang case, we received a sizable security deposit to minimize any risk. As such, the termination will not have any material impact on the Group’s existing business or financial position.”
