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Tuesday, September 1st, 2020

Qantas confirms AU$500 million unsecured bond issue

The Qantas Group has confirmed a 10-year, AU$500 million unsecured bond issue as part of ongoing management of its debt maturity profile. Once settled, the proceeds will strengthen short term liquidity and then be used to pay AU$400 million in bonds due to expire in June 2021.

The coupon for the new bond, which was oversubscribed, is 5.25 per cent – significantly lower than the 7.5 per cent funding it replaces.

The Group continues to have no financial covenants on any of its debt.

Qantas is one of few airlines with continued access to long term, unsecured bond markets. Access to this and other funding sources in recent months – including secured debt and equity markets – during the COVID crisis reflects the national carrier’s strong overall position, the importance of aviation to its home market of Australia and its clear recovery plan.

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IATA releases data for global air freight markets in July, showing stable air cargo demand

The International Air Transport Association (IATA) has released data for global air freight markets in July showing air cargo demand is stable but at lower levels than 2019. While there is some month-to-month improvement, it is at a slower pace than some of the traditional leading indicators would suggest. This is due to the capacity constraint from the loss of available belly cargo space as passenger aircraft remain parked.  

Global demand, measured in cargo tonne-kilometers (CTKs), fell by 13.5% in July (-15.5% for international operations) compared to the previous year. That is a modest improvement from the 16.6% year-on-year drop recorded in June. Seasonally-adjusted demand grew by 2.6% month-on-month in July.

Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 31.2% in July (‑32.9% for international operations) compared to the previous year. This is a small improvement from the 33.4% year-on-year drop in June.

Belly capacity for international air cargo shrank by 70.5% in July compared to the previous year owing to the withdrawal of passenger services amid the COVID-19 pandemic. This was partially offset by a 28.8% increase in capacity through expanded use of freighter aircraft.

Asia-Pacific airlines saw demand for international air cargo fall by 15.3% in July 2020 compared to the same period a year earlier. After a robust initial recovery in May, month-on-month growth seasonally-adjusted demand has softened. International capacity decreased 32.0%

North American carriers reported a single digit fall in international cargo demand of 5.4% year-on-year in July. The stronger performance is due in part to strong demand on the transpacific, Asia-North America route, reflecting e-commerce demand for products manufactured in Asia. International capacity decreased 30.9%.

European carriers reported a 22.4% annual drop in international cargo volumes in July. This was a slight improvement from June’s performance of -27.6%. Demand on most key trade lanes to / from the region remained weak. The large Europe–Asia market was down 20% year-on-year in July. International capacity decreased 37.4%.

Middle Eastern carriers reported a decline of 14.9% in year-on-year international cargo volumes in July, an improvement from the 19% fall in June. Seasonally-adjusted demand grew 7.2% month-on-month in July–the strongest of all regions. This recovery was driven by the aggressive operational strategies of some of the region’s carriers. International capacity decreased 27.1%, the most resilient of all regions.

Latin American carriers posted a 32.1% drop in year-on-year international demand in July, down from a 28.6% decline in June. International capacity decreased 44.5%. The drop in both demand and capacity was the most severe of all regions. The COVID-19 crisis is particularly challenging at present for airlines based in Latin America owing to strict lock-down measures. In July the Latin American air cargo market was smaller than the African market for the first time since these statistics have been reported in 1990.

African airlines posted a contraction of 3.0% in July. This was down from a 3.8% increase in demand in June. The small Africa-Asia market continued to support the region’s performance. International capacity decreased 33.7%.


Dubai-based carriers Emirates and flydubai reactivate partnership

Emirates and flydubai customers can once again access a wider range of travel options around the world, connecting seamlessly and safely through Dubai.

Following the progressive resumption of passenger flights to global destinations, the two Dubai-based airlines have revived their successful and strategic partnership to offer customers increased connectivity, convenience and travel flexibility. Emirates customers can now travel on codeshare flights to over 30 destinations on flydubai, while flydubai customers have over 70 destinations they can travel to on Emirates. Some of the favorite flydubai destinations for Emirates passengers include: Belgrade, Bucharest, Kyiv, Sofia and Zanzibar.


CAE turns to online instructor-led courses covering maintenance training for jet platforms

CAE (formerly Canadian Aviation Electronics), which sells flight simulators and training devices to airlines, aircraft manufacturers and training centers, has announced it is expanding its online instructor-led maintenance training program for Bombardier, Dassault and Gulfstream aircraft types, together with certain helicopter programs. The courses provide real-time teaching with the opportunity for students to interact directly with the course instructor. Maintenance technicians are able to take part in any of the courses as long as they have access to the internet.

“We are thrilled to expand our virtual classrooms to support business jet operators at a time when it is needed most. Maintenance technicians are now able to take advantage of high-quality instructor-led training online, keeping them healthy and their operations flying safely,” said Nick Leontidis, CAE’s Group President, Civil Aviation Training Solutions. “Throughout the pandemic, we have strived to find new ways of delivering essential training, and this forward-thinking approach is a prime example of how we are supporting our customers during unprecedented times.”


Spirit Airlines announces proposed senior secured notes offering by newly formed brand and loyalty subsidiaries

Spirit Airlines has reported that Spirit IP Cayman and Spirit Loyalty Cayman (the Issuers), each a newly formed Cayman Islands exempted company incorporated with limited liability and an indirect wholly-owned subsidiary of Spirit, intend to commence a private offering to eligible purchasers of US$600 million in aggregate principal amount of senior secured notes due 2025 (the Notes), subject to market and other conditions. The Notes will be guaranteed by Spirit and certain subsidiaries of Spirit. The Notes will be secured by, among other things, a first priority lien on the core assets of Spirit’s loyalty programs (comprised of cash proceeds from its Free Spirit co-branded credit card programs, its US$9 Fare Club program membership fees, and intellectual property utilized in connection with the loyalty programs) as well as Spirit’s brand intellectual property.

The Issuers intend to lend the net proceeds from the offering of the Notes to Spirit, after depositing a portion of such proceeds in a reserve account. The final terms and amounts of the Notes are subject to market and other conditions and may be materially different than expectations.


Regional Express Group post full-year 2020 net loss of AU$19.4 million

The Regional Express (Rex) Group has released its preliminary final report announcing a statutory loss after tax of AU$$19.4 million, on a turnover of AU$$321.8M for the financial year 2020 (FY20).

Rex Executive Chairman Lim Kim Hai said, “The COVID-19 pandemic devastated almost every industry with aviation being hit the hardest. Even Rex, which had virtually no debt and strong cash flow in the past, was brought to its knees with passenger numbers plummeting
90% between March 15, 2020 and March 28, 2020. Passenger revenue declined by AU$65 million in the last quarter of FY20.”

“The Rex Group managed to post a small underlying profit before tax of AU$250,000 but ended with a significant statutory loss before tax of AU$27.4 million and loss after tax of AU$19.4 million. This is because the Group has decided to book in a substantial AU$62 million impairment in anticipation of difficult trading conditions in the next two years. The losses were reduced by grants provided by the Commonwealth to all regional carriers to assist with financial liquidity. Rex booked in AU$62.1 million of such government grants and subsidies in FY20 which included the "JobKeeper subsidy.”


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