Mexico’s Interjet Alters Growth Plan, To Shed some SSJ100s

 - September 17, 2018, 10:48 AM
Mexico's Interjet plans to return some problematic Sukhoi SSJ100s to the manufacturer following negotiations for improvements to future airplanes. (Photo: SCAC)

Interjet, Sukhoi Civil Aircraft (SCAC), and Superjet International (SJI) are re-negotiating delivery terms on eight Sukhoi Superjet 100s remaining on the Mexican airline’s orderbook. Talks held last week brought about a tentative agreement that the aircraft will come in an updated form, featuring a higher gross weight, winglets, and various improvements to onboard systems and the interior, according to officials at SCAC and its parent company, United Aircraft Corporation (UAC), who spoke with AIN on condition of anonymity. The sides also negotiated an “amicable deal” on the return of few older aircraft (delivered from 2013 onward), but the sides have yet to determine when and how many.

The talks occurred during a period of some tumult, thanks in part to controversial press reports and a sudden disruption in the Mexico-City-based airline’s new development plan dubbed Interjet 2021, Focus on the Future. The three-year plan comes after a so-called “new commercial strategy” enforced last year, which resulted in an aggressive increase in international traffic (39.5 percent in the first seven months of this year). It failed to ensure profitable growth, however, and in the second quarter the airline swung to operational losses of 395 million pesos ($21 million) from a profit during the same period a year earlier.

Under the Focus on the Future plan, Interjet targets further traffic growth, while aiming to return to profitability through restructuring of its fleet, which now consists of 85 aircraft—47 Airbus A320s, three Airbus A320neos, six Airbus A321s, seven A321neos, and 22 SSJ100s—averaging 6.6 years of age.

In letters and notifications sent to shareholders and partners last week, the airline expressed a desire to further expand its international services, which already has grown from 12 in 2015 to 20 in 2018, with “enough of the right type of aircraft.” While confirming an existing order for 35 A320neos, Interjet plans to add 20 more of the aircraft over the next five years. At the same time, the carrier wants to phase out some of its SSJ100 fleet while reserving the option to take next-generation Superjets “for use in markets where these aircraft make operational and economic sense.”

The new plans came as sour news for the SCAC team in Mexico, which had expected another sort of “amicable deal,” or one that would see sweetened terms on financing and technical support of already delivered aircraft and those on order. Taking back some SSJ100s would require serious negotiations with banks, insurance, and export-promotion agencies of the four countries involved in structuring a complex deal arranged in 2012.

Moscow earlier turned down proposals to arrange a credit line for the Mexican client on the grounds of its questionable economic strategy. Another warning came this past fall from the national secretariat for tourism (SECTUR), in which it urged the airline to reduce its fleet because of mounting financial pressure. Nevertheless, Interjet has persisted with the aggressive expansion. The airline moved its main base to Benito Juárez International Airport, which involved additional expense and technical support issues. Devaluation of the national currency and the rise of jet fuel prices have added to the airline’s problems.

Although local and Western media attributed Interjet’s current profitability issues to the Superjet’s deplorable performance, according to SCAC all the SSJ100s in Interjet’s inventory now operate, apart from one that suffered damage during taxiing. The type did suffer from technical problems from late 2016 to early 2017, when EASA issued emergency airworthiness directives after cracks developed in horizontal rear stabilizers. Interjet had to ground a quarter of its SSJ100 fleet for a week and another quarter for half a month while mechanics performed repairs. The manufacturer paid hefty compensation for the downtime, allowing the airline to emerge profitable in 2017. Separately, problems with PowerJet SaM.146 engines and certain Western components caused the temporary grounding of four aircraft from which mechanics scavenged parts to keep the remaining fleet flying. According to the Russian sources speaking with AIN, part of the blame belongs to the airline for not keeping any spare engines in its own stock until early 2017, when it placed orders for “a few.”  

In a September 12 statement, the airline called the Superjet “part of [its] success story,” and that it harbors no plans to completely shed the fleet. The carrier now plans to install an SSJ100 flight simulator at the Toluca Training Center and boost its spare parts inventory in Mexico City.