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Thursday, August 6th, 2020

Embraer announces revenue from commercial aviation sector has dropped 82%

The world’s third-largest planemaker, Brazil’s Embraer, has announced that in the second quarter of 2020, revenue from its commercial aircraft sector has fallen 82% to US$109 million compared to last year. The company also reported a loss of US$315 million for the last quarter. The drop in revenue has been blamed on the worldwide fallout from the COVID-19 pandemic which is having a devastating effect on air travel and, bar cargo, the commercial aviation sector as a whole.

The announcement comes just three months after Boeing pulled the plug on it’s US$4.2 billion plan to acquire the commercial aviation arm of Embraer, the most profitable part of its business. Boeing cited the Brazilian company’s failure to meet certain unnamed conditions as the reason for terminating the deal with no advance notice, although the world was, by then, already gripped by the pandemic and global aviation had shrunk to over 90% of its usual capacity.

Embraer is encountering the same problems as both Boeing and Airbus with regard to demand and deliveries, confirming that 50% of its current aircraft orders have now been deferred to 2022. To mitigate the effects of the current drop in sales and deliveries, Embraer has launched a new sales campaign o try and boost aircraft deliveries in the shorter term.


Lufthansa Group reports net loss of €3.6 billion for first half of 2020

The collapse in demand for air travel due to the CORONA pandemic led to an 80% drop in revenue for the Lufthansa Group in the second quarter to €1.9 billion (previous year: €9.6 billion). Most of the revenue (€1.5 billion) was generated by Lufthansa Cargo and Lufthansa Technik.

The Lufthansa Group Adjusted EBIT in the quarter under review amounted to minus €1.7 billion (previous year: €754 million), despite extensive cost reductions. Operating expenses were reduced by 59%, primarily through the introduction of short-time working for large parts of the workforce and the cancellation of non-essential expenditures. The consolidated net income of Lufthansa Group for the months April to June amounted to minus €1.5 billion (previous year: €226 million).

The logistics division benefited from stable demand. The loss of cargo capacity in passenger aircraft led to a significant increase in yields. Lufthansa Cargo's Adjusted EBIT thus rose to €299 million (previous year: minus €9 million).

In the entire first half of 2020, Lufthansa Group revenue fell by 52% to €8.3 billion (previous year: €17.4 billion). Adjusted EBIT amounted to minus €2.9 billion (previous year: €418 million) and EBIT to minus €3.5 billion (previous year: €417 million). The difference between the two figures is mainly due to depreciation on aircraft and aircraft usage rights amounting to €300 million, goodwill impairments totaling €157 million and the impairment of joint venture holdings in the MRO segment totaling €62 million.

In addition, the negative market value development of fuel cost hedging contracts had a negative impact of €782 million on the financial result in the first six months of the year. Compared with the first quarter, this effect decreased by €205 million. The Lufthansa Group net result for the first half of the year thus amounted to minus €3.6 billion (previous year: minus €116 million).


Copenhagen Airports to cut 650 full-time positions

In order to secure its long-term competitive strength, Copenhagen Airports (CPH) will align its organisation to the lower level of activity which the aviation industry is currently experiencing as a result of the coronavirus crisis and which is expected to continue for some time. As a result, CPH is contemplating cutting 650 full-time positions from the company’s current approximate total of 2,600. Over the coming weeks, discussions will be held with CPH’s union representatives to determine the expected redundancies. Copenhagen Airport CEO Thomas Woldbye says this is the saddest decision he has had to make during his nine years with CPH, but that it is necessary in order to safeguard the airport’s future operations and financial position.

CPH has in recent months implemented a number of operational and investment cost cuts in order to align costs to the current level of activity. Cost cuts initiated for the current year amount to approximately DKK 950 million. To put this into perspective, CPH had revenue of DKK 4.3 billion in 2019.

Honeywell uses Blockchain to digitize aircraft records, parts pedigree data

Honeywell is fully integrating aircraft record generations into its digital blockchain ledger. This provides Honeywell’s customers with an easy way to search and retrieve scattered data through a simple user interface, creating a level of speed and efficiency.

Quick and easy access to this data is critical for airlines because most use dozens of repair facilities, and the paperwork from each is not integrated. Additionally, airlines and operators commonly deal with lost, printed paperwork associated with a part. This paperwork, or “trace documents,” are critical to maintaining the value of a part’s worth.

Honeywell's blockchain is a secure, decentralized database crowd-sourced by all its authorized users. Each user that Honeywell allows has a copy of the database and knows its contents in real time. Instead of storing only PDF documents or a reference to the digital aircraft record, Honeywell now stores the actual form data “on chain.” This data is used to re-construct aircraft records, including records that prove the U.S. Federal Aviation Administration has certified that aircraft parts are safe to fly. These records can be accessed by customers, and in the case where paperwork is missing, customers can simply input the part number and serial number and the user interface will retrieve the data from the blockchain and “rebuild” the missing document.


Willis Lease Finance reports second quarter pre-tax profit of US$9.7 million

Willis Lease Finance has reported second quarter total revenues of US$75.0 million and pre-tax profit of US$9.7 million. The company reported lower revenue in the second quarter of 2020 than the prior year period due primarily to the impact the COVID-19 pandemic has had on the aviation industry, generally, leading to reduced revenues in the core leasing business. Aggregate lease rent and maintenance reserve revenues were US$68.4 million for the second quarter of 2020.

“We are pleased to have maintained profitability in the second quarter, with US$9.7 million of reported pre-tax income, given the unprecedented impacts the COVID-19 pandemic has had on our industry,” said Charles F. Willis, Chairman and CEO. “As we have from the beginning of this event, we are working closely with our global customer base to provide tailored lease and service solutions while also maintaining a focus on the strength of our own balance sheet and liquidity."

SR Technics appoints Caroline Vandedrinck as Senior Vice President Sales

SR Technics has appointed Caroline Vandedrinck as Senior Vice President Sales with effect from September 1, 2020. She will report directly to Jean-Marc Lenz, Chief Executive Officer, and will be leading the new Sales organization. Michael Sattler, Chief Commercial Officer, will be leaving SR Technics at the end of August 2020.

Vandedrinck has more than 25 years of experience in aviation, during which she has held various senior commercial positions for international aviation companies. She joined SR Technics in 2016 as Vice President Americas and has played a key role in driving SR Technics’ sales organization forward.


Dubai Aerospace Enterprise posts financial results for first-half 2020

Dubai Aerospace Enterprise (DAE) has reported its financial results for the six months ended June 30, 2020.

DAE reported total revenue of US$672.6 million compared to US$735.2 million in the first-half of 2019 and net income of US$121.7 million compared to US$197.1 million in the previous year.

The reported net income in the first-half was lower attributable primarily to 23 fewer aircraft in the Owned Aircraft portfolio, fewer asset sales resulting in lower gains on sale of assets, reduced finance income, and higher provisions for trade receivables offset by lower interest expense.

As of July 31, 2020, DAE has granted rent deferral requests from 34 airlines totaling aggregate rent of approximately 16% of annual reported revenue. The company is currently evaluating rent deferral requests from an additional 24 airlines totaling aggregate rent of approximately 13% of annual reported revenue.

As of June 30, 2020, DAE had US$2.8 billion of cash and available liquidity. During the first half of the year, the company re-purchased US$187 million of its bonds and has US$229 million of remaining repurchase authorization.

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