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Wednesday, May 27th, 2020

Fiji Airways looks to defer aircraft payments and reduce staffing levels by over 50%

Fiji Airways has announced that it will permanently cut its current staff levels by 51% while also negotiating with lenders and aircraft lessors to defer payments and, additionally, arrange further debt financing as the South Pacific carrier struggles with the fallout from the COVID-19 pandemic.

The staff cuts equate to 758 employees, of which 78 are expatriate pilots and eight are expatriate executives. “The sad reality of prolonged flight suspensions means that we simply do not have work for a large segment of our workforce now, and for the foreseeable future,” Fiji Airways Chief Executive Andre Viljoen said in a statement. In addition, as of June 1, all remaining staff will have their salaries permanently cut by 20%, while reductions in flight numbers will remain in place until August. These moves are all seen as critical to the survival of the airline which is the lifeblood of the Fijian tourist industry.

“Many large and respected airlines around the world are collapsing as a consequence of this unprecedented crisis,” Viljoen added. “However, we will do everything within our power to ensure that Fiji Airways does not suffer the same fate.” Fiji has also made it clear that it would like to be included in negotiations currently being held between Australia and New Zealand over a proposed “travel bubble” that would permit trips between these countries without the need for quarantine periods. According to Worldometers, there have been only 18 cases of the coronavirus reported on Fiji, with no deaths recorded.


IATA: heavy new debt levels will weigh down airlines' recovery

The International Air Transport Association (IATA) has released an analysis showing that the airline industry’s global debt could rise to US$550 billion by year-end. That’s a US$120 billion increase over debt levels at the start of 2020. US$67 billion of the new debt is composed of government loans (US$50 billion), deferred taxes (US$5 billion), and loan guarantees (US$12 billion). US$52 billion is from commercial sources including commercial loans (US$23 billion), capital market debt (US$18 billion), debt from new operating leases (US$5 billion), and accessing existing credit facilities (US$6 billion).

Financial aid is a lifeline to get through the worst of the crisis without folding operations. But during the re-start period later this year, the industry’s debt load will be near US$550 billion—a massive 28% increase. Government aid is helping to keep the industry afloat. The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” said Alexandre de Juniac, IATA’s Director General and CEO.

In total governments have committed to US$123 billion in financial aid to airlines. Of this, US$67 billion will need to be repaid. The balance largely consists of wage subsidies (US$34.8 billion), equity financing (US$11.5 billion), and tax relief/subsidies (US$9.7 billion). This is vital for airlines which will burn through an estimated US$60 billion of cash in the second quarter of 2020 alone.

Over half the relief provided by governments creates new liabilities. Less than 10% will add to airline equity. It changes the financial picture of the industry completely. Paying off the debt owed governments and private lenders will mean that the crisis will last a lot longer than the time it takes for passenger demand to recover,” said de Juniac.

The kind of aid provided will influence the speed and strength of the recovery. IATA urged governments still contemplating financial relief to focus on measures that help airlines raise equity financing. “Many airlines are still in desperate need of a financial lifeline. For those governments that have not yet acted, the message is that helping airlines raise equity levels with a focus on grants and subsidies will place them in a stronger position for the recovery,” said de Juniac.

A tough future is ahead of us. Containing COVID-19 and surviving the financial shock is just the first hurdle. Post-pandemic control measures will make operations more costly. Fixed costs will have to be spread over fewer travelers. And investments will be needed to meet our environmental targets. On top of all that, airlines will need to repay massively increased debts arising from the financial relief. After surviving the crisis, recovering to financial health will be the next challenge for many airlines,” said de Juniac.


Finnair signs ten-year Global Maintenance Agreement with ATR

ATR and one of its long-standing customers, the Finnish airline Finnair, have signed a ten-year Global Maintenance Agreement (GMA). Through this package, Finnair and Nordic Regional Airlines (NoRRA) – who operates Finnair’s regional ATR traffic – will benefit from a customised support from ATR, which will help the airline better anticipate maintenance costs while enhancing the dispatch reliability of its fleet of 12 ATR 72-500.

This pay-by-the-hour contract covers the repair, overhaul and pooling services of Line Replaceable Units, along with its door-to-door delivery and an on-site leased stock of spare parts. Finnair will also benefit from blades maintenance and availability, and maintenance recommendations based on ATR’s expertise to enhance aircraft reliability.  

Airbus A400M achieves Automatic Low Level Flight certification

The Airbus A400M new generation airlifter has achieved a new decisive milestone after the certification of its Automatic Low Level Flight capability, offering a unique capability in its class for a military transport aircraft.

The certification campaign, performed in April above the Pyrenees and central France, involved operations down to 500ft, including transitions from low level flight to other operations like aerial

This first certification phase concerns operations with Visual Meteorological Conditions, meaning with crew visibility. There will be a second phase including Instrumental Meteorological Conditions, without visibility, to be certified in the second quarter of 2021.


S7 Technics extends scope of EASA Part-21 J certificate

S7 Technics’ DOA (Design Organisation Approval) has received an extension of Part-21J certificate scope to perform design works on water and waste systems (ATA 38), which gives an opportunity to design modifications and repairs for all components of these systems: pipelines, water systems of galleys and toilets, water tanks, waste tanks and other.

The certificate extension required the necessity to pass an EASA audit, which included the staff competence checking, as well as the checking of the ability to perform this type of works. Due to the opportunity to design modification and repairs under its own design approval, S7 Technics reduces the time for repair of damaged components.

S7 Technics’ DOA can develop modifications and repairs for all types of transport category aircraft certified by EASA.


Congo Airways converts Embraer E175 order to E190-E2 Jets

Congo Airways have converted the firm order made in December 2019 for two E175 aircraft, with purchase rights for two more, into a firm order for two E190-E2 jets, with purchase rights for a further two.

The new deal has a total value of US$256 million at current list prices with all purchase rights exercised, and will be included in Embraer’s second quarter backlog.

The aircraft will be configured in a dual class layout seating 96 passengers in total, with 12 staggered business class seats. Deliveries are expected to begin in the second quarter of 2022. This is the second E2 order received from an African customer. There are currently 189 Embraer aircraft operating in Africa with 54 airlines in 27 countries.


DC Aviation Group receives contract to overhaul Challenger 605 including 48-month check

DC Aviation Group have been awarded a contract for the comprehensive overhaul of a Challenger 605 including a 48-month check, a cabin refurbishment as well as a Proline 21 Advanced Upgrade. The work will be carried out at DC Aviation’s Stuttgart Maintenance Centre.

The Proline 21 Advanced Upgrade includes the installation of Automatic Dependent Surveillance-Broadcast (ADS-B) equipment. This surveillance technology is already mandatory in the U.S.A. and the UAE since January 1, 2020 and will be mandatory in Europe from June 7, 2020. With this system, the aircraft can be tracked as it determines its position via satellite navigation and periodically broadcasts it. The upgrade also includes the implementation of the TOSE (Take-Off Safety Enhancement) system.

Furthermore, a software upgrade of the 3rd VHF transceiver will be carried out to meet the Eurocontrol Link 2000+ mandate.


AerCap reschedules aircraft deliveries

AerCap has rescheduled the delivery of 37 aircraft that were previously expected to be delivered in 2021 and 2022. These aircraft are now expected to be delivered in 2023 and later years.

Working in concert with the aircraft manufacturers and its airline customers, AerCap has rescheduled the delivery of over 100 aircraft that were originally planned to be delivered in 2020, 2021 and 2022.

The rescheduling of these deliveries has reduced the company's cash capital expenditures in 2020 and 2021 by a total of approximately US$4.7 billion. AerCap currently expects to have cash capital expenditures of approximately US$1.1 billion for the remainder of 2020 and approximately US$2.5 billion for 2021. The company expects that cash capital expenditures during these years to decrease further as it continues discussions with aircraft manufacturers and customers.

All of the aircraft delivering in 2020 and 2021 have already been placed on long-term leases.

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