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Tuesday, April 14th, 2020

easyJet delays delivery of 24 aircraft – founder Stelios Haji-Ioannou still unhappy

easyJet has delayed the delivery of 24 Airbus jets as it looks to stave off pressure from its major shareholder and former founder, Stelios Haji-Ioannou.

Haji-Ioannou is pushing hard for the cancelation of the order for the 24 jets and is looking to have two directors of Europe’s second-largest low-cost carrier, chief financial officer, Andrew Findlay, and non-executive director Andreas Bierwirth, removed from the positions if this does not happen. He has called for a shareholder meeting on May 7, which easyJet has confirmed will take place, having also confirmed that the carrier will defer the delivery of ten planes this year, 12 next year, and two in 2022.

Additionally, easyJet is in a position to defer payment on five additional jets and also delay or cancel leases on a further 24 operating leases which are up for renewal within the next 16 months. Haji-Ioannou is keen to see easyJet reduce its financial commitments, especially in light of the current COVID-19 crisis and the grounding of the carrier’s entire fleet, despite having already received £600 million (US$750 million) in government aid.

In response to easyJet agreeing a delay on plane deliveries, Haji-Ioannou said: “A deferral is the same as kicking the can down the road. In addition, they are not telling the investors how many Airbus aircraft will easyJet go ahead and pay Airbus for and how much per aircraft during the next six months using U.K. taxpayers’ money.” He said he would write to regulators at the Financial Conduct Authority to try to force easyJet to disclose the details of what it had agreed with Airbus.


US Department of Transportation ruling could be detrimental to airline industry

Recent instruction by the Department of Transportation will put airlines into further financial difficulty than they already are, says GlobalData, a leading data and analytics company.

Rheanna Norris, Associate Analyst at GlobalData, comments: “Airlines rely upon cancellation and change fees as a reliable stream of revenue. The coping mechanism for many US-based airlines has been seen in the form of drastic capacity cuts and furloughing many members of staff. Having the opportunity to not lose revenue by offering travel at a later date is providing a lifeline to airlines.”

By offering mandatory refunds on cancelled flights, this accelerates airlines’ cash burn, eating into their cash reserves and leaving less financial stability for when travel restrictions are lifted. This will be especially challenging for smaller airlines, who are less equipped for an external impact of this scale.

Norris concludes: “Airlines need to be cautious around their brand image and make the refund process as easy for the customer as possible. Negative media attention around this issue will tarnish an airlines’ reputation and could discourage an uncertain post-COVID-19 traveler from booking with the company in question in the future”.


TUI receives bridging loan of €1.8 billion

KfW and TUI AG have signed the state aid bridging loan for €1.8 billion. The loan had been committed by the German Federal Government on March 27, as part of the COVID-19 state support program. TUI's current Revolving Credit Facility “RCF” banking consortium supports the KfW loan and the addition of the €1.8 billion into TUI's existing RCF credit line.

Following the international travel restrictions, TUI decided to apply for the KfW loan in order to cushion the unprecedented effects of the pandemic until normal business operations can be resumed. TUI like others had to temporarily suspend its tour operator, flight, hotel and cruise programs.


Triumph furloughs 2,300 employees across U.S. and Europe

Given that Boeing has extended closure of its Washington state factories indefinitely, and closed its Charleston, South Carolina plant until further notice, Triumph announced furloughs for approximately 2,300 employees across Triumph plants in the U.S. and Europe for two to four weeks to reduce capacity associated with Boeing Commercial Aircraft programs. These plants will remain operational and continue to support other customer demands. Triumph will provide one week of company pay and will cover the employee share of medical premiums during the furlough period.

In addition to the previously announced 500-person reduction in force as part of its austerity measures, Triumph will eliminate approximately 200 full-time positions due to decreased demand. Triumph will pay severance to impacted employees consistent with existing policies. These reductions are expected to be completed by May 1, 2020.

To reduce working capital requirements, the Company will also adjust its supply chain demand consistent with updated OEM production and aftermarket forecasts.

Triumph's prior restructuring and austerity actions, and those listed above, preserve Triumph's liquidity while customer plants are closed, allowing Triumph to continue to support its customers' forecasted rates of production. Further workforce adjustments may be required based on site closures or changes in demand for Triumph's products and services. As previously reported, Triumph has adequate liquidity to support its operational requirements.

Although the situation remains fluid, all but two of Triumph's factories are operational. The Company's two facilities in Mexico (Zacatecas and Mexicali), which employ approximately 1,900 individuals, are complying with a government mandate for 30-day closure of non-essential operations effective March 31, 2020. Triumph will adjust its plans as government decisions and Company policies evolve.

SRT_05 (2020-03-11)

Air Canada re-configures passenger cabins on three aircraft to transport more vital supplies and necessary cargo

Air Canada is re-configuring the cabins of three of its Boeing 777-300ER aircraft to give them additional cargo capacity. The first aircraft conversion is complete and is now in service, with the second and third aircraft to be completed shortly.

The three Boeing 777-300ER aircraft are being converted by Avianor, an aircraft maintenance and cabin integration specialist, at its Montreal-Mirabel facility. Avianor developed a specific engineering solution to remove 422 passenger seats and designate cargo loading zones for light weight boxes containing medical equipment and restrained with cargo nets. This modification has been developed, produced and implemented within six days. All operations have been certified and approved by Transport Canada.

Through its cargo division, Air Canada has been using mainline aircraft that would otherwise be parked to operate cargo-only flights. The aircraft on these flights carry no passengers but move in their baggage holds time-sensitive shipments, including urgent medical supplies, and goods to support the global economy.


Commercial drone market to hit 2.44 million units by 2023, says Frost & Sullivan

Frost & Sullivan’s recent analysis, Global Commercial UAS Market Outlook, 2020, finds that the industry is transitioning from a nascent to a growth stage. With the surge in demand for commercial drones by the professional segment, unit shipment is estimated to rise at a compound annual growth rate (CAGR) of 4.5%, reaching 2.91 million units by 2023 from 2.44 million units in 2019. By 2023, North America will remain the largest market for commercial UAS with a total of 32.3% unit demand, followed by APAC and Europe at 29.1% and 23.3%, respectively.

“Unit growth is driven by increasing regulatory support for commercial drone use in the APAC region, especially India,” said Michael Blades, Aerospace, Defense, and Security Vice President at Frost & Sullivan. “There is also a significant increase in demand for professional segment drones to conduct crop spraying in China and other countries in APAC. Drone services companies tend to focus on specific verticals because a ‘one-size-fits-all’ business model does not work. Further, as companies gain experience through operations, those that can best innovate to meet specific end-user needs will prosper.”

Advanced technologies such as artificial intelligence (AI) for both autonomous flight and data processing, as well as platforms that have unique capabilities such as long endurance flights and conducting indoor/confined spaces inspections, are key trends inflating market growth.


Skyworld Aviation arranges sale of two Avro RJ100s to Executive Jet Support

Skyworld Aviation has arranged the sale of two Avro RJ100’s to spares and components specialist Executive Jet Support in the U.K. The two RJs were part of a ten aircraft fleet previously operated by Braathens Regional.

Executive Jet Support is a leader in providing commercial aircraft, engines and airframe components on sale, exchange or loan basis across all major commercial and executive aircraft manufacturers. SE-DSX (serial number 3255) and SE-DSY (serial number E3263) were ferried to Southend Airport last month, and the remainder of the Avro fleet are located at Norwich Airport in the U.K.

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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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