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Wednesday, June 10th, 2020

France unveils full extent of €15 billion aerospace rescue package

The French government has announced that a total rescue package of €15 billion is in place to protect the country’s aerospace industry. €7.0 billion of this has already been earmarked to support Air France during a time when demand for air travel has fallen by up to 95%, along with an acceleration of orders for Airbus tankers and other military equipment. In total, over 100,000 jobs are at stake as a result of the effects of the COVID-19 pandemic.

Part of the rescue package will include a €500 million investment fund, with a target of raising one billion, to help develop medium-size suppliers, while an additional €300 million has been earmarked for the modernization of sub-contractor plants “We must save our aerospace industry,” Finance Minister Bruno Le Maire said as he presented the aid plan. France is also keen to see France-based Airbus retain its position as the world’s largest planemaker rather than cede its position to its long-term rival Boeing or China’s up and coming COMAC.

€1.5 billion is also being made available for a three-year research and development program into environmentally friendly aviation technology, with €300 million being available almost immediately. On behalf of multiple Airbus suppliers, the French government is also talking to banks in an effort to work out how they can manage surplus parts that have been accrued since Airbus slowed down production on its commercial jets. The French government has also agreed a one-year moratorium on the repayment of the principal of aircraft loans backed by export credit agencies from March 2020 with Italy, Britain, and Germany - worth €1.5 billion. (€1.00 = US$ 1.13 at time of publication.)


Lufthansa Group airlines expand flight schedules this summer in Canada and around the world

The Lufthansa Group of airlines will be significantly expanding its services in Canada and abroad over the next few months. This applies to both short and long-haul flights. The airline is expanding its flight schedules to offer its customers as many destination choices as possible.

In Canada, Lufthansa began offering three weekly, non-stop flights from Toronto to Frankfurt and back the week of June 1. On June 22, three weekly flights between Munich and Montreal will resume. On July 2, the airline will begin operating three weekly flights to and from Vancouver via its hub in Frankfurt. Edelweiss – a leisure-focused air carrier and SWISS subsidiary – is planning to resume service to and from both Calgary and Vancouver to Zurich in early July.

In September, 90% of all originally planned short and medium-haul destinations and 70% of long-haul destinations will be serviced once again. Customers planning their autumn and winter holidays now have access to a comprehensive global network of connections via all hubs of the Group.

Lufthansa will be flying more than 100 times a week to destinations in North America via its hubs in Frankfurt and Munich in autumn. Around 90 flights a week are planned to Asia, over 20 to the Middle East and over 25 to Africa. In Africa, for example, there will again be flights to Windhoek and Nairobi, in the Middle East to Beirut and Riyadh, in North America to Houston, Boston and Vancouver, in Asia to Hong Kong and Singapore.

On short- and medium-haul routes, Lufthansa will offer a total of 1,800 weekly connections from September onwards. There will be 102 destinations from Frankfurt and 88 from Munich, including Malaga, Alicante, Valencia, Naples, Rhodes, Palermo, Faro, Madeira, Olbia, Dubrovnik, Reykjavik and many other summer destinations from Frankfurt.

Air Lease Corporation signs lease agreement for one Airbus A320-200 aircraft with HiSky Moldova

Air Lease Corporation (ALC) has placed one used Airbus A320-200 aircraft on long-term lease with HiSky Moldova, scheduled to deliver this July. This will be the first aircraft in the fleet of the Moldovan start-up airline.

“ALC is pleased to announce this lease placement of our A320-200 with HiSky Moldova. We have worked closely with the HiSky Moldova executive team at previous airlines for many years and are honored to participate in the launch of the airline by providing them with their first aircraft,” said David Beker, Vice President and Head of Aircraft Sales and Trading at Air Lease Corporation.


IATA expects global air transport industry losses to top US$84 billion in 2020

The International Air Transport Association (IATA) has released its financial outlook for the global air transport industry showing that airlines are expected to lose US$84.3 billion in 2020 for a net profit margin of -20.1%. Revenues will fall 50% to US$419 billion from US$838 billion in 2019. In 2021, losses are expected to be cut to US$15.8 billion as revenues rise to US$598 billion.

“Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add US$230 million to industry losses. In total that’s a loss of US$84.3 billion. It means that—based on an estimate of 2.2 billion passengers this year—airlines will lose US$37.54 per passenger. That’s why government financial relief was and remains crucial as airlines burn through cash,” said Alexandre de Juniac, IATA’s Director General and CEO.

“Provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind us. A key to the recovery is universal implementation of the re-start measures agreed through the International Civil Aviation Organization (ICAO) to keep passengers and crew safe. And, with the help of effective contact tracing, these measures should give governments the confidence to open borders without quarantine measures. That’s an important part of the economic recovery because about 10% of the world’s GDP is from tourism and much of that depends on air travel. Getting people safely flying again will be a powerful economic boost,” said de Juniac.

2020 Main Forecast Drivers:

Passenger demand evaporated as international borders closed and countries locked down to prevent the spread of the virus. This is the biggest driver of industry losses. At the low point in
April, global air travel was roughly 95% below 2019 levels. There are indications that traffic is slowly improving. Nonetheless, traffic levels (in Revenue Passenger Kilometer) for 2020 are expected to fall by 54.7% compared to 2019. Passenger numbers will roughly halve to 2.25
billion, approximately equal to 2006 levels. Capacity, however, cannot be adjusted quickly enough with a 40.4% decline expected for the year.

Passenger revenues are expected to fall to US$241 billion (down from US$612 billion in 2019). This is greater than the fall in demand, reflecting an expected 18% fall in passenger yields as airlines try to encourage people to fly again through price stimulation. Load factors are expected to average 62.7% for 2020, some 20 percentage points below the record high of 82.5% achieved in 2019.

Costs are not falling as fast as demand. Total expenses of US$517 billion are 34.9% below 2019 levels but revenues will see a 50% drop. Non-fuel unit costs will rise sharply by 14.1%, as fixed costs are spread over fewer passengers. Lower utilization of aircraft and seats as a result of restrictions will also add to rising costs.

Fuel prices offer some relief. In 2019 jet fuel averaged US$77/barrel whereas the forecast average for 2020 is US$36.8. Fuel is expected to account for 15% of overall costs (compared to 23.7% in 2019).

Cargo is the one bright spot. Compared to 2019, overall freight tons carried are expected to drop by 10.3 million tons to 51 million tons. However, a severe shortage in cargo capacity due to the unavailability of belly cargo on (grounded) passenger aircraft is expected to push rates up by some 30% for the year. Cargo revenues will reach a near-record US$110.8 billion in 2020 (up from US$102.4 billion in 2019). As a portion of industry revenues, cargo will contribute approximately 26%--up from 12% in 2019.


FAA approves Shadin fuel flow meter on Robinson R66 turbine helicopters

Robinson Helicopter Company is now offering Shadin Avionics’ fuel flow meter on new R66s equipped with Garmin GTN 6xx or 750 GPS navigators.

The fuel flow meter provides real-time fuel flow data to the GTN which in turn displays the fuel consumption rate along with fuel range rings on a moving map. Fuel used, fuel remaining, fuel to destination, and other real-time information is also available on accessory pages. 

The installation adds approximately 2 lbs to the aircraft’s empty weight.

Trenchard Aviation Group appoints new COO

Trenchard Aviation Group has appointed Gary Smith as its new Chief Operating Officer.

With over 25 years senior management experience in Airline Engineering and MRO, Smith will be responsible for all operations across manufacturing, parts and repairs, and on-wing services.  Gary has extensive knowledge of Trenchard Aviation customers’ requirements, having been Head of Engineering and postholder at easyJet, and having lead MRO facilities at Rolls-Royce and Triumph Air Repair for over 10 years.

Prior to joining Trenchard Aviation, Smith had a 30 year career in aviation, and most recently was Director of Operations Transformation at easyJet, responsible for formation and delivery of the airline's operations strategy, and for delivering its very successful 'Operational Resilience' program, focused on reducing disruption and improving operational performance.


Element invests in aerospace capabilities in Montreal

Element Materials Technology (Element) has invested in aerospace testing capabilities at its Montreal, Quebec laboratory.

Formerly known as Exova Pointe-Claire, the laboratory was traditionally used for transportation and industrials testing with a focus on rolling stock. Element recognized that the laboratory’s proximity to other key players in the Quebec aerospace industry and converted operations in Q1 to provide customers with easier and more efficient access to Element’s highly renowned testing expertise.

One of the key benefits to potential customers in the sector is the option to place orders in Canadian Dollars, while retaining Element’s full suite of testing provisions across all of its North American locations.

Element Montreal’s expertise includes materials characterization, such as tensile and compression, impact, hardness, as well as metallography (microstructure, grain size, and microscopy); atmospheric corrosion testing (salt spray); failure analysis; and weld evaluation.

Rick Sluiters, EVP of Aerospace at Element, said: “Given the strength of the aerospace sector in Canada, and the number of primes located in the Quebec region, we recognized the advantage of utilizing our Montreal laboratory for this industry”.

“Not only does it allow for more efficient access, it also opens the full scope of North American capabilities to Canadian business. For example, customers can access Element’s Cincinnati centre of excellence for fatigue testing, while placing the order within Canada and in that currency.”

Element Materials Technology is a leading testing, inspection and certification supplier across both the commercial and military aerospace sectors. With 29 Nadcap-accredited laboratories - 13 of which are in North America - and more than 3,000 technicians, engineers and scientists dedicated to the sector, its customer approvals, technical expertise, and geographical footprint are unrivalled in the industry.


AAR manages logistics of MRO services for BASF Deoxo™ ozone and VOC converters in compliance with new ACMMs

BASF has appointed AAR as a preferred distributor of Maintenance Repair and Overhaul (MRO) services for Deoxo™ aircraft cabin ozone/volatile organic compounds (VOC) converters in compliance with the new abbreviated component maintenance manuals (ACMMs) released earlier this month.

As announced earlier this month, BASF has updated its ACMMs for the Deoxo™ portfolio for the
Airbus A320, and A330/A340. The updated ACMMs redefine the test procedures and service methods for maintaining the converters to ensure continued industry-leading performance. Proper testing includes functional checks of both ozone conversion efficiency and change in air pressure through the converter. These functional checks are currently included in BASF’s MRO services, which have been managed by AAR since April 2019.

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Tamar Jorssen
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