Jetlink might ground fleet for four months as Juba settles forex crunch

It will take about four months before Jetlink Express, the budget airline which grounded its fleet on Thursday returns to business. And that will only be realised if the firm resolves the financial crisis which left it unable to pay operation costs.

On Thursday, Jetlink Express announced suspension of operations for all scheduled flights as it was unable to access over $2 million (Sh171 million) held in South Sudan due to foreign currency crunch that has hit Juba.

“From briefing we had yesterday (Thursday), we understand the North has more or less agreed to facilitate oil into South Sudan. We may resume in four months or so, when currency inefficiency will be a matter of the past,” Jetlink commercial manager Ephraim Kamonjo told Nation at the firm’s head office in Nairobi. The Juba route has been the carrier’s biggest revenue stream accounting for over 60 per cent of its earnings.

South Sudan is grappling with a severe foreign exchange shortage at the moment after it stopped exporting oil — its largest forex earner — during a spat with Khartoum over oil-transit fees. The World Bank had projected that Juba’s dollar reserve would run out by August.

However, South Sudan is hoping that a recent deal with the north would allow oil to start flowing soon again, ending the dollar crunch.

Meanwhile, the carrier’s 350 employees will remain on leave as the company seeks a solution to the crisis.

Away from office

“It is a situation we never expected to find ourselves in. Should we not manage to get the funds in foreign currency, it means our staff will be away from the office a little bit longer than we would have wished for,” Mr Kamonjo noted.

The airline, the first Kenyan company to begin flights in South Sudan, is hoping for a speedy repatriation of its Sh170 million tied up in Africa’s newest state’s currency.

“Juba did not usually have the foreign currency problem because they used to trade oil with dollars. Lack of oil as a main trading portfolio has locked out these currencies,” noted Mr Kamonjo.

Economic opportunities in South Sudan have led other airliners to consider the Juba route, a move that is expected to be reconsidered after Jetlink’s fate.

FastJet had announced it will introduce flights in the region this month, while Kenya Airways’ JamboJet was expected to follow suit.

The model adopted by JetLink is the reason behind the domino effect whereby a crisis in one route affects all other operations.

The company covered the Kisumu, Mombasa, Eldoret, Juba and Mwanza in Tanzania routes using only four aircrafts, hence the use of rotational method of operations.

An aircraft would leave Kisumu to Nairobi, then be serviced and head to Mombasa. From Mombasa it would take passengers to Eldoret before heading to Juba.

Failure of one route would be enough to affect the other operations. “Currently the aircrafts will be grounded because we are not able to efficiently run them,”says Mr Kamonjo.