23 November 2012

Kenya: Jetlink Sued for Sh420 Million Aircraft Lease

JETLINK Airlines go into further troubles yesterday after it was sued for grounding its fleet before paying an aircraft leasing company Sh420 million.

Jetlink, which suspended operations last week, is indebted to the Irish aircraft leasing company, Mexican CJR Ltd in excess sum of US$ 4,948,792.

Mexian CJR is the owner of four aircrafts known as Bombardier CRJ 200LR and aircraft engines known as general electric that were leased to Jetlink.

Yesterday, commercial Judge Alfred Mabeya compelled the director general of the Kenya Civil Aviation Authority or his officers to ground all the aircrafts, detain and preserve them pending hearing of the case.

This was after the company said it was apprehensive that the other of Jetlink's creditors may mistakenly attach its aircraft and engine on the mistaken belief that the same belongs to Jetlink

Accoridng to court documents, Jetlink has stopped carrying out its operations while it is in physical possession of the Mexican aircrafts 'and while it is still indebted to it.'

Under a certificate of urgency, CJR claims it leased all the four aircrafts to Jetlink under various leases dated 22 December 2008, 29 January 2009, 4 December 2009 and 9 April 2010 together with all aircraft engines.

The airline has now ceased carrying out its operations for lack of cash flow. The airline said last week it has been unable to convert its more than Sh170m worth of South Sudanese pounds into dollars.

It has also proceeded to ground all aircraft that it operates including the aircraft leased to it by Mexican CJR without having fulfilled the terms of the leases.

But the company, through lawyer John Tito, argued that the act of ceasing to carry out its operations and grounding the aircraft constitute a fundamental breach of the terms of the lease entered between the two.

"The company's contention is that it stands to lose the expected revenue from the period of the leases already spent in the event that court does not intervene," said the lawyer.

Justice Mabeya noted that Mexican CJR Ltd has expressed fear that the aircraft and engine being highly mobile assets can be spirited out of jurisdiction as well as maybe attached by other creditors for recovery of debt that may complicate its position.

"There is a prima facie evidence that CJR is a leaser of the subject four aircrafts. What should be done is to safeguard the aircraft and engine pending the hearing iter-parties," he said.

Jetlink was further restrained from operating or utilising all the aircrafts known as Bombaridier. The application shall be served for hearing inter-parties within the next 14 days.

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