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Wednesday, July 15th, 2020

Delta posts US$5.7 billion quarterly loss as it cuts projected flight increases by 50%

As the COVID-19 pandemic shows no sign of receding and numbers of reported cases increasing in over 35 U.S. states, the uncertain demand for future air travel has seen Delta Air Lines (Delta) halve its anticipated 1,000 flight increase for the month of August to just 500 flights.

Having posted a net quarterly loss of US$5.8 billion, it’s worst result since 2008, and currently operating at a cash burn rate of approximately US$27 million on a daily basis, the U.S. carrier, which is the world’s second-largest carrier by number of scheduled passengers carried, revenue passenger-kilometers flown and fleet size, had 19 months of liquidity and US$15.7 billion at the end of the second quarter. Normal daily cash burn for the carrier stood at approximately US$100 million.

“Demand has stalled as the virus has grown, particularly down here in the South, across the Sun Belt, coupled with the quarantine measures that are going in place in many of the Northern states,” CEO Ed Bastian told CNBC’s ‘Squawk Box.’ “Those two factors are causing consumers to pause.” On the subject of corporate travel, which Delta heavily relies on, Bastien doesn’t anticipate that: “we’ll ever get back entirely to where we were in 2019 on the volume of business traffic.,” adding: “I do think there’s a lot of inefficiency, which we can all appreciate in business travel,” he said. “The international trips that we’ve all been on where we’ve flown over to Europe for a two-hour meeting and flown back that does nothing but beat you up, and you’d certainly be much easily better accommodated over a video call.”

Delta’s revenue in the quarter ended in June fell 88% from a year earlier to US$1.47 billion, marginally above analysts’ estimates. While the US$25 billion of federal coronavirus aid prohibits Delta from laying off any employees before October, already 17,000 employees have signed up for voluntary redundancy as the carrier looks for ways to reduce its payroll. The carrier has also been badly hit with both Aeromexico and LATAM, airlines in which Delta has substantial stakes of US$770 million and US$1.1 billion respectively, recently filing for bankruptcy protection.


Helvetic Airways upgrades Embraer E2 order

Helvetic Airways has signed a commitment with Embraer to convert four of their remaining firm orders to the larger E195-E2 aircraft. The original order, for 12 E190-E2s with purchase rights for a further 12, and conversion rights to E195-E2, was announced in September 2018. Embraer has so far delivered five E190-E2s to Helvetic Airways, and all deliveries of the remaining seven aircraft, including the four E195-E2s, will be completed before the end of 2021, with the majority in the first half of 2021.

The remaining firm order for the seven aircraft to be delivered has a value of US$480 million, based on current list prices. With all the purchase rights being exercised, the deal has a list price of US$1.25 billion.

Nordic Aviation Capital delivers one ATR 72-600 to Windrose Aviation Company

Nordic Aviation Capital (NAC) has confirmed the delivery of one ATR 72-600 aircraft, MSN 1262, to Windrose Aviation Company on lease.

Founded in 2003, Windrose Aviation has received an operator's certificate in 2007 and began operating charter flights under the brand name "WINDROSE Airlines".

Today Windrose is one of the leading companies of tourist air traffic in Ukraine with a market share of 21%, according to the State Aviation Service of Ukraine. In 2019, Windrose transported 1.4 million passengers, making 28 flights a day on average.


AAR continues successful partnership with Unison Industries

AAR, one of the leading providers of aviation services to commercial and government operators worldwide, and Unison Industries jointly announced the expansion and extension of the longstanding partnership as the exclusive worldwide aftermarket distributor for Unison Industries´ aviation, aerospace, military, civil and land vehicles products. The agreement adds new material content to include new product introduction spanning multiple aircraft platforms.

As exclusive distributor, AAR will be responsible for developing customized sales strategies and marketing campaigns, executing growth plans, forecasting, warehousing and performing aftermarket product distribution services of Unison Original Equipment Manufacturer (OEM) replacement parts.

In addition, AAR will provide 24/7 Aircraft-On-Ground (AOG) call center support to deliver rapid-response services to customers using Unison products in the aviation aftermarket. Components covered by the program include turbine ignition systems, engine-dedicated alternators, sensors, switches, wiring harnesses, bellows and metal tubing/ducting consumed by commercial and military aircraft operators, maintenance repair and overhaul facilities and other industry customers, worldwide. The agreement also includes repair services management backed by AAR's supply chain and customer support network.


Virgin Atlantic reaches major milestone towards securing its future

Virgin Atlantic has taken a big step forward in securing its future, by launching a court backed process as part of a solvent recapitalization of the airline and holiday business, with a restructuring plan that once approved and implemented, will keep Virgin Atlantic flying.

The restructuring plan is based on a five year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.

The recapitalization will deliver a refinancing package worth £1.2 billion over the next 18 months in addition to the self-help measures already taken, including cost savings of £280 million per year and £880 million rephasing and financing of aircraft deliveries over the next five years.

Shareholders are providing £600 million in support over the life of the plan including a £200 million investment from Virgin Group, and the deferral of £400 million of shareholder deferrals and waivers.

Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170 million of secured financing

Creditors will support the airline with over £450 million of deferrals

The airline continues to have the support of credit card acquirers (Merchant Service Providers) Lloyd’s Cardnet and First Data.

To secure approval from all relevant creditors before implementation, the restructuring plan will go through a court-sanctioned process under Part 26A of the Companies Act 2006 (the restructuring plan). With support already secured from the majority of stakeholders, it’s expected that the restructuring plan and recapitalisation will come into effect late summer 2020.


GA Telesis MRO Services Group signs E-Jet support and services agreement with Liebherr-Aerospace

GA Telesis' MRO Services Group has entered into an agreement with Liebherr-Aerospace for material support and maintenance services for the E-Jet Family of aircraft.

Under this agreement, the company receives technical support and original OEM materials to repair and overhaul landing gears for operators in the Americas. Landing gear repairs and overhauls for this aircraft type will be carried out in the MRO Services Miami facility located across from Miami International Airport. MRO Services Group has an experienced team of technicians that have previously worked on the E-Jet Family landing gears.

GA Telesis' MRO Services Group began landing gear overhauls in 2019 and has entered into several contracts to perform overhaul and repairs. “This agreement is another step in the evolution of GA Telesis’s strategic alignment with OEMs to provide superb quality at a sensible cost to our customers,” said Pastor Lopez, President MRO Services. “It is now more important than ever to continue to support the aviation industry with diversified products and services that meet their new cost reality," added Lopez.

Robert Knox promoted to Chief Accounting Officer for AvAir

After nearly four years as AvAir’s Senior Vice President of Finance, Robert Knox has been promoted to Chief Accounting Officer.

During his time as SVP of Finance, Knox increased access to capital, financed a management buyout and significant inventory purchases, established a European subsidiary, upgraded the 410K plan and developed an exceptional finance organization. As CAO, Knox will continue to position AvAir as a top aviation parts supplier globally.


PASSUR and Aireon sign agreement to power aviation data analytics, collaboration, and digital decision support solutions globally

PASSUR® Aerospace, an industry leader in predictive analytics and collaboration, and Aireon, leader in global space-based automatic dependent surveillance-broadcast (ADS-B), have announced an agreement that will integrate Aireon’s global, gate-to-gate ADS-B dataset, into PASSUR’s AR\VA platform. This integration will be the first to feature Aireon’s air traffic service (ATS) surveillance-quality data feed including high-fidelity, low latency airport surface surveillance and global International Civil Aviation Organization (ICAO)- compliant flight tracking on PASSUR’s AR\VA platform.

The partnership will also power PASSUR’s predictive arrival times (ETA) and constraint forecasting services, delivering advanced disruption management, as well as PASSUR’s unique collaborative airfield management solutions, to any airline, airport, or business aviation service provider globally.

PASSUR AR\VA -- a single platform, cloud based solution, available across multiple devices -- delivers greater efficiency in airline and airport operations management, resource utilization and improved throughput through industry-leading flight trajectory forecasting technology; advanced predictability in airline demand and air traffic/airport capacity; collaborative airfield traffic workflow; and operational disruption alerting and resolution. 

The global availability of PASSUR’s advanced predictive analytics empowers the global aviation industry to accelerate automation and optimization -- critical for reducing the US$24 billion in costs caused by disruption and uncertainty. At a major US airline, the financial impact of reducing scheduled block time by just one minute is approximately US$100 million. 


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Tamar Jorssen
Vice President Sales & Business Development
Email: tamar.jorssen@avitrader.com
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