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Tuesday, April 7th, 2020

COVID-19 sees end to Hexcel and Woodward merger

The planned US$6.4 billion all-stock merger between two major aerospace and defense suppliers, Hexcel Corp and Woodward Inc, has been abandoned by mutual consent in light of the ravages the effects of the COVID-19 pandemic are having on the aerospace industry.

With the companies’ two principal customers Boeing and Airbus cutting back on or halting production of certain aircraft models, the merger would have created the world’s largest aerospace and defense suppliers with the ability to generate free cash flow in the region of US$1 billion on an annual basis.

The deal was agreed back in January this year, against a continuing backdrop of Boeing struggling to get its grounded 737 MAX jet back in the air and its subsequent decision to halt production altogether. With potential for the merger to fail and the problem to be lain at the doorstep of the merger itself and not the COVID-19 outbreak, it made no sense for the two companies to continue going down the merger route and as the decision has been a mutual one, there will be no termination fee to pay by either party.

According to Reuters news agency, Airbus is considering a drastic cut in production numbers for the popular A320 owing to multiple requests from carriers to now delay deliveries, while the European planemaker has also advised suppliers to reduce expected parts’ demand by 50% for the larger A350 as it plans to reduce output from 9.5 to 5 aircraft per month.

The Hexcel and Woodward deal is the first in the aerospace industry to collapse as a result of the COVID-19 pandemic, while elsewhere it has been reported that Xerox Holdings Corp has turned its back on its hostile US$35 billion cash-and-stock bid for HP Inc.


Airbus is pausing production at A220/A320 manufacturing facility in Mobile, Alabam

Airbus is temporarily adapting commercial aircraft production and assembly activity at its German sites in Bremen and Stade and pausing production at its A220/A320 manufacturing facility in Mobile, Alabama in the United States. These actions are being taken in response to several factors related to the ongoing COVID-19 pandemic including high inventory levels in the sites and the various government recommendations and requirements which impact at different stages of the overall industrial production flow.

Commercial Aircraft production and assembly activities in Bremen will be paused from April 6, until April 27, inclusive, with key business support services continuing on the site. Airbus in Stade will pause production and assembly from April 5-11, inclusive, with some additional pause days in the weeks that follow in selected production departments. Key business support services will also remain active on the site.

In Mobile, the pause in production begins this week and is expected to last until April 29. Certain activities will continue on site, including building and installation maintenance, aircraft maintenance, some critical product safety and customer driven operations, receipt and control of materials and components, critical administrative support and preparation of activity restart.


Magnetic MRO offers temporary passenger aircraft cabin modifications

Magnetic MRO, a Total Technical Care and asset management organization, is reacting to the current situation in the aviation market and announced the company’s readiness to provide temporary cabin modifications.

Considering the COVID-19 crisis and reflecting to changing needs of airlines, the company’s DOA (EASA Part 21J) team is ready to provide its customers with cabin modifications for COVID-19 medical cargo transportation in primarily passenger cabin aircraft.

Magnetic MRO has the certification and experience in providing both types of modifications that are allowed by the European Union Aviation Safety Agency (EASA). One modification option can be done while leaving the seats and fixing cargo boxes on them with the special straps, meanwhile the second option allows the removal of seats, leaving 0 PAX LOPA with change to type of operations.

In addition, Magnetic MRO DOA holds STC and can also provide cabin modification for medical stretchers installation on various aircraft types, including A321 Family aircraft, B737-800, B747-400, B777-300 aircraft, ATR aircraft and others. Such modification can support airlines to utilize their passenger cabin fleet in relation to COVID-19 medical assistance requirements.


Aircraft Solutions USA’s plan to build aircraft recycling facility in North Carolina now underway

Aircraft Solutions USA, a leading provider of sustainable end-to-end aircraft recycling solutions, is moving forward with its plan to build an aircraft recycling facility at North Carolina’s Global TransPark in Kinston. The construction start has been delayed due to the COVID-19 pandemic, but the facility is still slated to be operational by the second quarter of 2021. It will consist of one of the world’s largest hangars which will include dismantling, MRO and painting operations. “We are making some critical hires, including our interim CEO and our Head of Innovations, and are looking to start construction this summer,” said Sven Daniel Koechler, PhD, General Manager of Aircraft Solutions USA.” The company will initially create 475 jobs and will invest nearly US$100 million in the new aircraft recycling center.

Once operational, Aircraft Solutions USA’s Kinston facility will recycle decommissioned commercial and military aircraft deploying a proprietary new recycling technology. This will enable the company to recycle many more aircraft each year than conventional methods enable. “With our proprietary recycling technology, we can recycle many more aircraft per year; for instance, up to 70 additional twin-engine narrow body airliners” said Koechler

Aircraft parts such as engines, landing gear, avionics, and in-flight entertainment systems can be refurbished and sold on the aircraft parts aftermarket. Aircraft Solutions USA’s ultimate-goal is to use every part of the airplane and up-cycle it to make a new product, for-example a new pair of sneakers made from aircraft seating material. The long-term objective is to expand the recycling operation by establishing various production facilities that will create new products for diverse industries from up-cycled materials.

HEICO Distribution is a world leader in technical sales and the distribution of aerospace components. These parts are stocked and distributed globally to support our customer requirements. www.heico.com

Aero Norway to invest US$1.5 million in state-of-the-art high-speed grinder

Aero Norway, the independent engine MRO provider and trusted partner for customers operating CFM56-3, CFM56-5B and 7B engines, has invested US$1.5 million in a new state-of-the-art high-speed grinder. The purchase of this specialist machine will ensure stable and efficient turn-around times are maintained and that the services Aero Norway’s customers are being offered remain at the forefront of engine MRO-technology capabilities.

The Danobat mBTG-800 High Speed Blade Tip Grinding Machine is manufactured for the precision grinding, deburring and measuring of the blade tips of finished assembled engine turbine and APU rotors. “The investment of US$1.5 million in this piece of equipment allows us to grind the rotor blade tips whilst they are being spun at high speed. This presents the blades to the grinding wheel as they would be if they were in operation,” says Glenford Marston, CEO of Aero Norway. “We pride ourselves on being at the forefront of engine MRO and the purchase of this machine ensures that we can offer the highest degree of accuracy possible with current technologies on blade tip grinding.”

Currently the machine is being used on every engine core performance work scope and is the only system approved by the OEM. The operation of the grinder is fully automatic and features all-digital technology to ensure the integrity of the system. 


Rolls-Royce withdraws previously announced financial guidance for 2020

Rolls-Royce exited 2019 in a robust liquidity and financial position as its transformation efforts gained momentum. In response to the change in outlook resulting from the global spread of COVID-19 and to ensure cash headroom in the event of a prolonged reduction in trading activity, the company took the precautionary decision in March to draw fully on our £2.5 billion revolving credit facility. Including this cash, which has been placed on short-term deposit, our current gross cash balance is £5.2 billion. We have also secured an additional £1.5 billion revolving credit facility commitment with a consortium of banks, which will increase overall liquidity to £6.7 billion.

Rolls-Royce will be executing a number of specific mitigations to reduce its cash expenditure which will have a cash flow benefit of at least £750 million in 2020 in addition to its ongoing transformation plans. These mitigations include minimizing discretionary costs such as non-critical capital expenditure projects, consulting, professional fees and sub-contractor costs, ceasing all non-essential travel, postponing external recruitment, and reducing salary costs across its global workforce by at least 10% in 2020, subject to local legal requirements. Salaries for the company's senior managers and Executive Team will be reduced by 20% for the rest of 2020, comprising a reduction of 10% and a deferral of 10%, with an additional bonus deferral for the CFO and CEO. There will also be a corresponding reduction in fees for Non-Executive Directors of the Board for the remainder of the year.

Notwithstanding the Group’s financial and liquidity position, the Board has decided that in light of the uncertain macro outlook they are no longer recommending a final shareholder payment of 7.1 pence per share in respect of 2019, equivalent to a further £137 million. Rolls-Royce is withdrawing its previously announced financial guidance for 2020.

Universal Avionics opens doors to aid workers for COVID-19 face mask and shield assembly

Universal Avionics is assisting the local Tucson community in protecting healthcare workers and first responders during the COVID-19 pandemic. The company is currently providing the non-profit group, Hope Worldwide (Tucson Chapter), with assembly line space at its Tucson Headquarters to manufacture medical face masks and shields.

“This plan was developed in coordination with the University of Arizona, City of Tucson, Pima County, and the Arizona Technology Council, and is a great example of our community coming together,” said Steve Pagnucco, Vice President of Operations at Universal Avionics. “Within one week of reaching out to our partners to see how we could help, we had an assembly line safely set up to produce much needed personal protective equipment,” he added. “On behalf of Universal Avionics, I would like to thank everyone involved for their incredible responsiveness, cooperation, and teamwork.”    


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Tamar Jorssen
Vice President Sales & Business Development
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