Air Kiribati (IK, Tarawa) is set to head to court with US aircraft supplier, CAAMS, over a 2012 DHC-6-300 trade deal that has now gone sour. Under the terms of the original agreement, Air Kiribati was to have paid cash in addition to trading in its sole CN-212, cn 356, to CAAMS in return for two Twin Otters.

While one of the aircraft, cn 647, was delivered in 2012, CAAMS has retained the other claiming Air Kiribati has yet to deliver the CN-212 in an airworthy state. During a US Federal Aviation Administration (FAA) pre-delivery inspection, the CN-212 was found to have extensive corrosion around its horizontal stabiliser area requiring significant repair before it could be legally flown to the United States. The CN-212, which was part of the trade-in agreement for cn 647, could therefore not be ferried to the US its until manufacturer, EADS-CASA, had seen to the problem.

"So Air Kiribati signed an amendment to the contract to repair or pay for the costs to fix the CASA and they never did. So we are in the process we have another Twin Otter that we were getting ready to deliver to Air Kiribati but we haven't delivered it yet because they haven't delivered the CASA to us yet," CAAMS managing director Everette Mash told Radio New Zealand.

As CAAMS has also filed a formal complaint with the FAA and the US Department of Transportation against Air Kiribati, so the FAA has now blacklisted the airline for failure to maintain the CASA aircraft and for operating non-airworthy aircraft for public transportation.

While the Americans, in their suit filed for Fraud & Misrepresentation against Air Kiribati, and the Kiribati government, are demanding delivery of the CASA turboprop first, the Kiribatians say in theirs that the outstanding aircraft must be delivered as it has paid over USD4 million.

"What I have gathered so far is that the company have their own reason for holding back the aircraft. From our side we thought that everything has been cleared so there shouldn't be any problems. And that is being addressed by our legal people in the US," Air Kiribati's Chief Executive, Tarataake Teannaki said.

Currently, Air Kiribati offers scheduled services throughout the Phoenix, Line and Gilbert island groups using its existing Twin Otter as well as a Chinese-made Harbin Y12.