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Tuesday, June 2nd, 2020

Embraer looks towards India and China as potential business partners after Boeing debacle

Brazilian planemaker Embraer has confirmed that it would consider a new partnership with China, India, Russia and possibly other countries in relation to its commercial jet division as part of a revised restructuring plan after Boeing abruptly backed out of a deal.

Embraer Chief Executive Francisco Gomes Neto has said that the company is looking at a new five-year plan that would involve engineering and production. However, he was keen to stress that there have been no firm negotiations either with Russia’s Irkut, India, or China’s state-owned COMAC now that Boeing is no longer in the picture, despite the fact the company had just posted a first-quarter loss of US$292 million as a combined result of the Boeing fiasco and COVID-19 pandemic.

Embraer also confirmed it was seeking new liquidity. Reuters news agency has reported that Brazilian development bank BNDES is helping coordinate a US$600 million loan for the planemaker, which burned through US$677 million in cash in the quarter. Embraer is declining to comment on the arbitration process that is in place against Boeing over the cancellation of their deal. It had placed staff on paid leave in January in order to finalize the Boeing deal, the cost of which has made a major contribution to its 23% drop in revenue. Embraer has said that it expects to recover tax costs from Boeing that are related to the deal that negatively affected Embraer’s quarterly results.

BA reconfigures Boeing 777 interiors to increase cargo capacity

British Airways has removed the seats and stripped the interiors of two of its grounded Boeing 777-200 fleet so the aircraft can operate as freighters and carry even more crucial cargo around the world.

The first voyage of one of these aircraft in its new configuration will be to Beijing where it will collect PPE for the NHS. The aircraft will also be used to carry other essential goods like food and medicine to the U.K. where required, alongside regular commercial shipments.

With demand for passenger travel still very low, working with IAG Cargo, British Airways is trying to use its grounded aircraft in creative ways to support in the global fight against Covid-19.

In March, the airline began operating cargo-only services with no passengers, carrying cargo solely in the hold. In April, British Airways started carrying cargo on its seats, while these recent changes – removing all passenger seats and stripping the interiors – will mean these aircraft now have space for an extra 100 m³ of cargo on each flight.


ACC Aviation partners with air ambulance systems specialist AeroMedical

ACC Aviation Group has announced a commercial agreement with U.S.-based air ambulance systems specialist, AeroMedical.

Founded in 1979, AeroMedical pioneered the production of specialist emergency medical services (EMS) equipment for rotary and fixed-wing aircraft and the organization has continued to lead the field in designing, certifying and manufacturing custom-built air ambulance systems.

The partnership will see ACC act as AeroMedical’s commercial representative, utilizing its worldwide presence and established airline and industry relationships to capitalize on new market opportunities.

ACC’s President – Americas, Jamie Harris, comments: “With the on-going situation surrounding the COVID-19 outbreak, we have seen an increase in demand for air ambulance capabilities, with a number of operators transitioning aircraft to support critical medevac and patient transportation
efforts during the pandemic.

Delta Cargo opens Cargo Control Center in Atlanta

Delta Cargo has officially opened its Cargo Control Center (CCC), which will support daily cargo operations across the globe. The new Atlanta facility provides comprehensive coverage of all aspects of cargo transportation and management, with the ability to track air shipments, trucks, mail, and freight — domestically and internationally.

The CCC will be staffed by a cross divisional cargo team from capacity management, warehouse management, trucking, rebooking, unit load devices management, service recovery and call center operations. The team will have the ability to view the individual elements of the shipment lifecycle and will be able to identify issues before they take place, as well as provide proactive communication and support in the situation of a delayed or cancelled flight. The CCC will initially be
open during business hours Monday to Friday, but will be a 24/7 operation by the end of the year.


Bombardier concludes sale of CRJ Series regional jet program to Mitsubishi Heavy Industries

Bombardier has closed the previously announced sale of the CRJ Series aircraft program to Mitsubishi Heavy Industries, for a cash consideration of approximately US$550 million, subject to post-closing adjustments and the assumption of liabilities by MHI related to credit and residual value guarantees and lease subsidies amounting to approximately US$200 million. Under the agreement, the Corporation’s net beneficial interest in the Regional Aircraft Securitization Program (RASPRO), which is valued at approximately US$170 million, has been transferred to MHI.

Through this sale, MHI acquires the maintenance, support, refurbishment, marketing, and sales activities for the CRJ Series aircraft, including the related services and support network located in Montréal, Québec, and Toronto, Ontario, and its service centers located in Bridgeport, West Virginia, and Tucson, Arizona, as well as the type certificates.

Bombardier will continue to supply components and spare parts and will assemble the remaining 15 CRJ aircraft in the backlog as of March 31, 2020 on behalf of MHI until the complete delivery of the current backlog, expected in the second half of 2020.

Bombardier retains certain liabilities representing a portion of the credit and residual value guarantees totaling US$288 million as of March 31, 2020. This amount is largely fixed and not subject to future changes in aircraft value and is mainly payable by Bombardier over the next four years.

Embraer posts first-quarter 2020 net loss of US$292.0 million

Embraer delivered five commercial jets and nine executive jets (five light / four large) in the first quarter of 2020, and the Company’s firm order backlog at the end of the quarter was US$ 15.9 billion.

EBIT and EBITDA as reported were US$-46.9 million and US$9.3 million, respectively, yielding EBIT margin of -7.4% and EBITDA margin of 1.5%. This compares to EBIT of US$-15.2 million (-1.8% EBIT margin) and EBITDA of US$30.9 million (3.8% EBITDA margin) in the first quarter of 2019.

The first-quarter results include special items due to the impacts of COVID-19: 1) US$22.2 million in negative fair value changes on the Company’s stake in Republic Airways Holdings, and 2) US$33.4 million in bad debt provisions on accounts receivables, as the Company adopted a more conservative approach in the context of the COVID-19 pandemic.

Adjusted EBIT and EBITDA were US$8.7 million and US$64.9 million, respectively, yielding adjusted EBIT margin of 1.4% and adjusted EBITDA margin of 10.2%;

Net loss attributable to Embraer shareholders and Loss per ADS were US$-292.0 million and US$-1.59, respectively. Adjusted net loss (excluding special items and deferred income tax and social contribution) for the first- quarter was US$-104.0 million, with Adjusted loss per ADS of US$-0.57. The adjusted net loss in the first-quarter of 2019 was US$-61.8 million, for an adjusted loss per ADS of US$-0.34 in the quarter.

Embraer reported Free cash flow of US$-676.5 million, in line with free cash flow of US$-665.3 million reported in the first quarter of 2019, which is historically negative due to seasonal working capital consumption.


BARIG: corona-crisis calls for shared sense of responsibility

Once, as recently proclaimed, a first removal of travel restrictions by the German government takes effect on June 15, Germany will also resume air traffic to and from the EU states and other countries. Similar to many other areas of public life, however, this will inevitably involve adjustments due to the corona-crisis. Procedures and routines, both on the ground and in the air, will be adapted. Coordinated measures by the industry have been implemented and remain under constant improvement to ensure a reliable framework for safe travel.

This matter was one of the key issues addressed by the Board of Airline Representatives in Germany (BARIG), the joint representation of interests of more than 100 German, European and global airlines, at their latest Full Board, which was held virtually for the first time a few days ago. The industry's sense of responsibility and commitment to implement appropriate concepts of measures in times of corona is given. In line with health and hygiene considerations, it is clear that safe travel by air is indeed possible if all parties involved, including passengers, act with care and responsibility.

BARIG Secretary General Michael Hoppe explains: "The corona-crisis has led to many changes in our daily life. This is what we all experience when shopping, visiting cultural institutions or using public transportation, for example. The same holds true for flying: All those involved - airlines, airport operators, but also the passengers themselves - must follow ground rules. With a shared sense of responsibility, flying will improve our mobility and reinstate an essential component to the quality of both our private and professional lives."

The basic prerequisites for safe flying in terms of health have been established - through corresponding guidelines for airlines and airport operators, as well as through demonstrably clean cabin air, intensified cleaning routines, adapted procedures for boarding and disembarking, adequate traffic routing at airports and other measures.

BARIG now also appeals to the passengers to act responsibly towards themselves, their fellow passengers, and everyone else concerned. This includes for instance:

the proper and consistent use of mouth-nose-covers at airports and in the air, complying with the distance rules, as well as following changed procedures and routines with the necessary discipline, for example when boarding and disembarking, waiting in the gate, or while on board the aircraft.

"We know that the changes may require readjustments for passengers. However, they need to be aware: Given the current healthcare situation, the necessary degree of responsibility towards oneself and society has also increased. Traveling by air is no exception to that," says Michael Hoppe.


‘Seat 9’ concept marks British School of Aviation reopening 

In support of the U.K. aviation industry and its importance to the economy, the British School of Aviation is reopening its training facility at London Luton Airport on Monday July 6, with a unique concept that highlights the need for skilled engineers, as aircraft return to service.

Entitled ‘Seat 9’, BSA will implement a low-density class configuration of just nine students, as opposed to previous intakes of 16, in order to ensure social distancing can be managed safely and practically. Additional health protection measures including daily student temperature checks, ‘smart’ pathways, hand sanitizing stations and use of face coverings will also be introduced.

Announcing the ‘Seat 9’ concept, Matt Harvey, BSA’s Chief Executive Officer commented: “As the aviation industry enters the recovery phase from the Covid-19 pandemic, the need for qualified professionals to ensure the safety of aircraft fleets returning to the skies has never been greater in the history of commercial flight.

“By taking the necessary steps to protect the health of students and staff, BSA can continue to deliver its world-class training. Our ‘Seat 9’ concept is designed to send a clear message to our airline and MRO colleagues that BSA is ready to support them with innovative and cost-efficient outsourced solutions to the training and certification requirement of frontline personnel."

"Over the coming months, we will also be introducing a range of distance learning B1/B2 modules, as well as an engineering maintenance apprenticeship program, which forms part of our strategy to deliver a wider range of career opportunities in aviation.”

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Tamar Jorssen
Vice President Sales & Business Development
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