KUALA LUMPUR (Nov 21): SKS Airways Sdn Bhd, Malaysia's newest airline launched in January last year, said initial payments — including the upfront security deposit — to secure the 10 Embraer E-195-E2 aircraft it is leasing from US-based aircraft lessor Azzora Aviation Holdings have been fully paid.

The airline was responding to recent news reports that SKS Airways was seeking funding from various parties to pay for commitments of the Embraer jets, the deliveries of which will begin by the second quarter of 2024, instead of January, as initially scheduled.

News of SKS Airways seeking investors prompted much speculation, as it came on the heels of an unsuccessful attempt by cash-strapped low-cost carrier MYAirline Sdn Bhd to secure new investors to sustain its operations. MYAirline, which has been suspended since Oct 12, said on Oct 31 that it had received over 15 proposals from potential investors, two of which were in advanced stages of negotiations. However, nothing has been firmed up yet.

"Payments to secure the 10 aircraft had been fully paid to our lessor Azzora. The subsequent payments are due when the aircraft are delivered," SKS Airways told The Edge in a statement issued late Tuesday evening.

"We have diligently managed our financial obligations, ensuring that all payments are made on time and in accordance with our commitments. We do not have any overdue payables, and we have taken great care to ensure that all our employees are fully paid and well taken care of without any exceptions," it said.

SKS Airways reiterated that it is on the lookout for strategic investors for Phase 2 of its growth plan with an additional 20 aircraft on top of the current 10 it has committed to.

"These additional aircraft will play a crucial role in our continued growth when the government’s Subang Airport Regeneration Plan [SARP] is completed. It is important to note that as we move forward, we are seeking investors with strategic contributions to help the company grow further. We believe that partnering with investors who share our vision and can provide strategic contributions will be instrumental in our long-term success," it said.

SKS Airways has, in recent months, approached a handful of parties — including Malaysia Aviation Group Bhd, the parent company of Malaysia Airlines Bhd — to become an investor, The Edge Weekly reported on Monday, citing sources familiar with the matter. The talks include a possible stake sale in the young scheduled commercial airline.

"Our new business model focuses on offering a unique and differentiated travel experience for all travellers. At the core of this business model is the city airport concept, supported by the right-size fleet of aircraft, the E195-E2s, to correspond with the city airport requirements," said SKS Airways.

"We wish to emphasise that SKS Airways’ new business model does not aim to compete with any other carriers. Instead, we seek to complement the existing offerings in the market by providing an alternative option for discerning travellers, particularly business and corporate travellers, who are time-sensitive and prioritise comfort and convenience," it added.

On its current fleet of two 19-seater DHC-6-300 Twin Otter turboprops, SKS Airways said the aircraft are specifically for flights to Tioman and Redang islands.

"We operated these flights last year during the monsoon seasons and experienced a low take-up rate. This year, as climate change has caused unpredictable weather conditions, we have decided to cancel all flights during the monsoon season for safety and commercial reasons," said SKS Airways.

"Moreover, most of the resorts on these islands are closed during this period. A recent news article [not The Edge] suggesting that the flight cancellation was due to funding issues are categorically false and reek of mischiefs.

"We wish to reassure all our stakeholders that SKS Airways is on track and remains committed to realising its next phase of growth. As a responsible corporate citizen, we emphasise on continuous and timely engagement with our stakeholders and therefore, we welcome our stakeholders to reach out to us for official and latest information and updates pertaining to SKS Airways," it added.

SKS Airways also announced that its chief executive officer Dzuleira Abu Bakar has resigned from her position on Nov 10. Dzuleira previously took over the helm from acting CEO and executive director Datuk Rohman Ahmad on Sept 15.

With Dzuleira's departure, Rohman has reassumed the role of acting CEO and executive director, said SKS Airways.

SKS Airways said airport operator Malaysia Airport Holdings Bhd (MAHB) has, in October this year, expressed its support to ensure a smooth and successful commencement of the airline’s jet operations at Sultan Abdul Aziz Shah Airport (Subang Airport) in Subang, Selangor next year.

"MAHB acknowledged that the timeline submitted by SKS Airways aligns with the overall completion of the renovation project of Subang Airport next year. This support from MAHB is a significant milestone for SKS Airways as it validates our vision and strategic plans for Subang Airport.

"With MAHB's backing, we are confident in our ability to establish a strong presence at Subang Airport, contributing to its transformation into a thriving aviation hub and Malaysia's premier city airport," it said.

The Malaysian government has decided to allow narrowbody jets up to the size of a Boeing 737 or Airbus A320 to operate again at Subang Airport, after it was discontinued in 2002. The move aligns with MAHB’s SARP to transform the airport into a premium city airport and regional aviation hub.

Earlier on Tuesday, Yang di-Pertuan Agong Al-Sultan Abdullah Ri'ayatuddin Al-Mustafa Billah Shah officiated SKS Airways’ newly renovated hangar at Subang Airport.

The new facility, measuring close to 46,000 sq ft, will provide ample storage space for aircraft spare parts, tools and equipment as well as office space. It "underscores SKS Airways’ readiness for its next phase of growth", it said.

"In late September this year, we were informed by our lessor that delivery of the E195-E2s will be delayed due to supply chain constraints at the aircraft manufacturer’s side. This is a global phenomenon that affects everybody. Nevertheless, the nature of delay is not significant and will not impact SKS Airways’ overall business plan.

"We are now in discussion with our lessor to finetune the revised aircraft delivery schedule and we are targeting the first delivery to be in 2Q 2024. The revised aircraft delivery schedule also takes into account the readiness of Subang Airport," said SKS Airways.

"SKS Airways is committed to ensure a smooth entry into service for our aircraft, and as such, we will continue to invest in our preparedness efforts. These investments are aligned with the revised timeline of the aircraft delivery and is being undertaken in close coordination with our lessor, Azorra, as well as the original equipment manufacturers involved, such as Embraer, Pratt & Whitney and Viasat."

SKS Airways also said the Malaysian Aviation Commission (Mavcom) and the Civil Aviation Authority of Malaysia (CAAM) have been "kept informed continuously" of its latest updates.

"We have an understanding that they will be notified of our aircraft delivery schedule at least three months prior to the delivery.

"All in all, SKS Airways remains focused on fulfilling the government’s aim of establishing Subang Airport as Malaysia’s premium city airport and aviation hub. SKS Airways is leading the way working in collaboration with Malaysia Airports Holdings Bhd to realise its groundbreaking concept in the post-Covid-19 environment.

"We are strategically growing our workforce in alignment with the timeline of the deliveries. We are proud to have a team that is aligned with our mission and shares our vision for SKS Airways," it said. The airline currently employs more than 190 people.

In May, the airline signed a 12-year operating lease agreement with Azorra for the 10 E195-E2 jets. Based on the list price of an E195-E2, the 10 jets are worth more than US$840 million (RM3.94 billion). It also signed a deal with Brazilian aircraft manufacturer Embraer Commercial Aviation for the repair and maintenance of the aircraft.

Companies Commission of Malaysia (SSM) data shows that Johor-based SKS Southern Sdn Bhd has 40% equity interest in SKS Airways, while SKS Group founder and chairman Alan Sim See Kiong and SKS Airways director Datuk Majid Manjit Abdullah, who is on the boards of Ekovest Bhd and PLS Plantations Bhd, each have a 30% stake. Majid Manjit is also chairman of Tree Movement (M) Sdn Bhd — a manufacturer of electric vehicles — whose shareholders include the Pahang royal family.

SSM data also revealed that SKS Southern, a property development and construction company, is wholly-owned by Sim’s daughter Cindi Sim, who is the group managing director of SKS Group.