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Monday, August 24th, 2020

Road ahead cleared for Bain Capital recapitalization of Virgin Australia

Singapore’s Broad Peak and Hong Kong’s Tor Investment Management, who between them hold approximately AU$300 of Virgin Australia’s AU$2 billion of unsecured bonds, have withdrawn plans for recapitalization of the struggling airline, leaving Bain Capital with an unobstructed path for its own recapitalization plans.

The withdrawal comes after a court ruling last week which would make it impossible to complete the necessary due diligence and also a predominantly unconditional DACA proposal that would challenge that of Bain Capital at the September 4 creditors’ meeting, according to the two bondholders.

Currently, Virgin Australia is in voluntary administration, the Australian ‘equivalent’ to U.S. Chapter 11 bankruptcy protection deployed to enable company restructuring. Deloitte, the bankruptcy administrator, will be issuing a creditor’s report on August 25 which will outline what return they might expect to receive if the Bain capital recapitalization is successful.

“After the release of the administrator’s report, we reserve our rights to take whatever action is necessary to protect our interests as creditors,” the bondholders’ spokesman said. According to Reuters news agency, the bondholders have said their DOCA would allow for the conversion of noteholders’ and certain other unsecured creditors’ debts into equity worth around 69 cents on the dollar, with an option for creditors to sell their shares for cash. (US$1.00 = AU$1.40 at time of publication.)

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EU Commission gives green light for Brussels Airlines stabilization package

On July 24, Brussels Airlines had reached an agreement with the Belgian Federal Government and Lufthansa to secure the future of Belgium’s home carrier and herewith the long-term development of the airline through a stabilization package. On August 17, the package was approved by the German Economic Stabilization Fund (WSF) and on August 21 the EU Commission has also given its approval.

The stabilization package of €460 million - €290 million from the Belgian Federal government and €170 million from Lufthansa - covers in part the losses incurred by Brussels Airlines due to the crisis and secures at the same time tens of thousands of direct and indirect jobs that are linked to the activities of Brussels Airlines. Thanks to the package, the airline can finance its turnaround plan and herewith create a long-term and structurally profitable future.

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Leonardo strengthens helicopter support services in South Africa

Leonardo is strengthening the level of support and maintenance services offered to its customer base in South Africa with a new service center following the recent acquisition of Precision Aviation Services (Pty). The service center is located at Wonderboom Airport – Pretoria and comprizes 2275 m² of floor space, 450 m² of workshop and store, and an equivalent amount of office space.

The site had been operating as an Authorized Service Centre for Leonardo’s helicopters in the country over the last 25 years and is the first Leonardo Excellent Service Centre in the continent.

The facility includes maintenance hangars, bonded warehouse, workshops and other services and provides maintenance, product support, engineering services while reinforcing spares availability for a range of models also including the AW119 single engine, AW109 light twin series, AW Family including the AW139, AW169 and AW189, with the possibility to extend these capabilities to future products.

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CEO of Qantas International to leave the Group

The Qantas Group has announced a reduction to its Group Management Committee as it continues to respond to the expanding COVID-19 crisis.

CEO of Qantas International, Tino La Spina, will leave the Group in light of what is likely to be the extended grounding of this part of the airline.

Responsibilities currently held by La Spina will transfer to CEO of Qantas Domestic, Andrew David. David’s role will change as a result, adding functional responsibility for Qantas International in addition to his existing responsibility for Qantas Domestic and Qantas Freight, reporting to Group CEO Alan Joyce.

John Gissing (Group Executive of Associated Airlines and Services) will continue to have responsibility for regional carrier, QantasLink. The changes will take effect from September 1, 2020.

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Nordic Aviation Capital posts full-year results

Regional aircraft lessor Nordic Aviation Capital (NAC), has posted its financial results for the 12-month period ending June 30, 2020. 2019/2020 was an extremely challenging year for the business and while NAC posted its strongest ever first-half financial performance, it was followed by its most challenging last quarter to date on the back of the COVID-19 pandemic.

NAC reported that the business performance result was close to double the result for the same period in 2018/19. The company priced a U.S. private placement of US$859 million in February 202. NAC recorded a 22% increase in placements and extensions compared to last year including the execution of 65 lease extensions with existing customers. The company increased lease revenue by 2% to US$760 million and reported EBITDA of US$686 million. NAC generated cash flow from operations of US$377 million over the year and recorded US$490 million in unrestricted cash, total assets of US$8.1 billion and total debt of US$5.7 billion.

Due to the significant impact of COVID-19 on the business, material impairments of goodwill and other intangible assets led to a loss of US$639 million for the year. At the financial year-end, many of NAC’s customers had entered into short-term rental deferral agreements and/or were in arrears on their payment obligations. As a result, trade receivables and expected credit losses thereon have increased. Despite this, the cash collection rate on revenue during the financial year was 77%.

The comany's owned and managed fleet comprized of 490 aircraft with commitments for another 71 aircraft taking the fleet to 561 aircraft.

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Airbus delivers first advanced law enforcement H125 helicopter to U.S. Customs and Border Protection

Airbus Helicopters (AHI) has delivered the first of 16 new H125 helicopters uniquely configured for U.S. Customs and Border Protection (CBP) Air and Marine Operations (AMO). AMO collaborated with AHI as part of a long-term fleet upgrade initiative.

The first helicopter for the new configuration was tested and delivered from Airbus Helicopters' facility in Grand Prairie, Texas. The remaining aircraft are being built in Columbus, Miss, where a workforce made up of 40% U.S. veterans also produces the UH-72A Lakota for the U.S. Army and has delivered more than 450 single-engine H125 aircraft for the North American market.

Following a rigorous analysis of its mission needs and next generation aerospace technology, AMO developed a set of requirements for the new helicopters, which Airbus put in place through nearly 30 Supplemental Type Certificates (STCs). The series of STCs are tied together through a primary all-encompassing STC that ensures all of the systems interact properly with one another and with the basic aircraft.

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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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