Key Points:

  • SKS Airways, a recent customer of Embraer's E2 jet family, is reportedly facing a significant financial crisis, leading to suspended operations.

  • The Malaysian airline's difficulties include halted flight services, a non-operational booking system, and unsuccessful attempts to secure investors from the Middle East.

  • SKS Airways' financial woes pose a challenge to Embraer's expansion plans in Southeast Asia, with the airline previously set to showcase the E195-E2 jet in the region.

SKS Airways' Financial Challenges and Operational Halt

SKS Airways, one of the newest customers for Embraer's E2 jet family, is reportedly grappling with a severe financial crisis. The Malaysia-based regional airline has suspended its flight operations, primarily conducted with DHC-6 Twin Otter turboprops. Additionally, its official website has ceased accepting flight reservations, signaling operational disruptions.

Unsuccessful Search for Financial Backing

Amid financial struggles, SKS Airways executives reportedly embarked on a quest for potential investors in the United Arab Emirates and Saudi Arabia. However, these efforts were unsuccessful in garnering the necessary financial support. The airline's objective was to secure funding for the leasing of 10 E195-E2 jets, arranged with the lessor Azorra in May. There were also discussions with Malaysia Aviation Group (MAG), the parent company of the nation's leading airline, to explore possible financial solutions.

Management and Operational Uncertainties

The airline's challenges were further compounded by the unexpected departure of CEO Dzuleira Abu Bakar soon after assuming the role. SKS Airways had plans to establish a hub at Subang Airport in Kuala Lumpur, leveraging the passenger capacity and range of the E195-E2. However, the depreciating local currency, the ringgit, against the dollar (the standard for lease payments), added to the financial strain.

Embraer's Southeast Asia Expansion at Risk

Embraer's strategy to establish its E2 jets in Southeast Asia faces a potential setback due to SKS Airways' financial troubles. The manufacturer had hoped that SKS Airways, along with Scoot (a subsidiary of Singapore Airlines), would showcase the new E2 jets in the region, attracting other potential buyers. While Scoot is expected to receive its first E190-E2, also leased from Azorra, in early 2024, SKS Airways' timeline for the same model remains uncertain amidst its ongoing financial difficulties.

SKS Refutes Financial Crisis Rumors, Confirms Commitment to Growth

has issued a forceful statement on November 22nd, countering recent media reports that suggested the airline is facing financial distress. The airline termed these reports as "categorically false" and emphasized its unwavering commitment to its growth trajectory.

Addressing the suspension of operations to Redang and Tioman, SKS attributed the cancellations to unpredictable weather during the monsoon season, contrasting with reports that linked them to financial issues. The airline also confirmed the departure of CEO Dzuleira Abu Bakar on November 10, appointing Rohman Ahmad as the interim CEO.

The airline's statement comes amidst turbulent times in the Malaysian aviation sector, following the sudden suspension of operations by low-cost carrier MYAirline due to financial challenges. SKS Airways, however, assures stakeholders of its commitment to its growth strategy and future operations.