Indonesia’s Lion Air restructures some lease deals – report

Lion Air Group is understood to have reached agreement with a number of its lessors to restructure their lease agreements after months of negotiations, although most are still under discussion. Currently, 112 of the 156 aircraft Lion Air (JT, Jakarta Soekarno-Hatta) currently operates are leased, from 35 lessors, the ch-aviation fleets advanced module shows, while subsidiaries Batik Air, Malaysia’s Malindo Air, Thai Lion Air, and Wings Air (Indonesia) lease aircraft from some of these plus an additional 15 lessors, making a total list of 50 lessors the group has had to negotiate with. As previously reported, lessor Goshawk and eight of its affiliates sued the group in a London court in July alleging unpaid leasing bills for seven Boeing aircraft. However, one of the lessors has now told FlightGlobal: “We have reached agreement and money started flowing again in December and we are expecting money […] for January.” Given the talks’ secretive nature, it is not clear how many other lessors have reached a deal with the group. But four of them said that although their own negotiations with the group were still ongoing they had heard that other lessors had done so. Lion Air Group first appealed to lessors to engage in discussions in April 2020, according to the report, emailing them to explain that plummeting capacity and currency fluctuations meant that deferrals on its lease agreements would be required. Later, it allegedly asked them to sign power-by-the-hour agreements, a suggestion it then scrapped, instead proposing a haircut via partial repayment in instalments over an 18-month period. Another suggestion it has reportedly proposed has been to pay the lessors using proceeds from its long-delayed Initial Public Offering (IPO), a move it first mooted in 2004. If an IPO does not happen by 2027, it allegedly said, it would amortise the debts and repay them over the remaining lease period. One lessor said that given the grim situation Indonesia’s aviation industry currently faces, it may be better to agree with Lion Air Group sooner rather than later. Lion Air was not immediately available for comment.