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Tuesday, September 22nd, 2020

Lufthansa to make even greater cuts to fleet and staffing levels

The resurgence of the coronavirus across parts of Europe has further hit airlines as long-haul routes and business travel remain stagnant. Germany’s Lufthansa has been particularly hard hit through its particular reliance on demand for Asian flights and now anticipates operating at between 20% and 30% capacity for the fourth quarter of the year.

As a consequence, the flag-carrying airline intends to further reduce its fleet of aircraft by 150 instead of 100 aircraft. In addition, job cuts are likely to well exceed the 22,000 full-time posts that have been earmarked as surplus to requirements. Lufthansa has also struggled to deal with the new travel bans and quarantines that have been sporadically issued by individual European states and, like easyJet, has been critical of the lack of a pan-European strategy on travel. The replacement of quarantines with pre-flight virus tests is “an essential prerequisite” to a recovery, Lufthansa said.

Lufthansa will see eight Airbus A380s and ten A340 aircraft put in long-term storage. IBA, the aircraft valuation specialist, has let it be known it anticipates that over 1,000 aircraft are likely to be returned to lessors in 2021.

With regard to redundancies, Lufthansa had hoped that by reducing pay and hours, together with a limited number of compulsory redundancies would help to stem the rate of cash burn, but has now been forced to approach the Verdi union to discuss further job cuts in an attempt to further reduce that cash burn from €500 million (US$590 million) a month to €400 million (US$470 million) a month. “It’s clear to everyone that Lufthansa can’t go on without cuts,” said Mira Neumaier, a Verdi spokesperson, adding that “job cuts alone will not save the company”.


Airbus reveals three concepts for world’s first zero-emission commercial aircraft

Airbus has revealed three concepts for the world’s first zero-emission commercial aircraft which could enter service by 2035. These concepts each represent a different approach to achieving zero-emission flight, exploring various technology pathways and aerodynamic configurations in order to support the Company’s ambition of leading the way in the decarbonisation of the entire aviation industry.

All of these concepts rely on hydrogen as a primary power source - an option which Airbus believes holds exceptional promise as a clean aviation fuel and is likely to be a solution for aerospace and many other industries to meet their climate-neutral targets.
The three concepts - all codenamed “ZEROe” - for a first climate neutral zero-emission commercial aircraft include:

A turbofan design (120-200 passengers) with a range of 2,000+ nautical miles, capable of operating transcontinentally and powered by a modified gas-turbine engine running on hydrogen, rather than jet fuel, through combustion. The liquid hydrogen will be stored and distributed via tanks located behind the rear pressure bulkhead.

A turboprop design (up to 100 passengers) using a turboprop engine instead of a turbofan and also powered by hydrogen combustion in modified gas-turbine engines, which would be capable of traveling more than 1,000 nautical miles, making it a perfect option for short-haul trips.

A “blended-wing body” design (up to 200 passengers) concept in which the wings merge with the main body of the aircraft with a range similar to that of the turbofan concept. The exceptionally wide fuselage opens up multiple options for hydrogen storage and distribution, and for cabin layout.

In order to tackle these challenges, airports will require significant hydrogen transport and refueling infrastructure to meet the needs of day-to-day operations. Support from governments will be key to meet these ambitious objectives with increased funding for research & technology, digitalisation, and mechanisms that encourage the use of sustainable fuels and the renewal of aircraft fleets to allow airlines to retire older, less environmentally friendly aircraft earlier.

“This is a historic moment for the commercial aviation sector as a whole and we intend to play a leading role in the most important transition this industry has ever seen. The concepts we unveil today offer the world a glimpse of our ambition to drive a bold vision for the future of zero-emission flight,” said Guillaume Faury, Airbus CEO. “I strongly believe that the use of hydrogen - both in synthetic fuels and as a primary power source for commercial aircraft - has the potential to significantly reduce aviation's climate impact.”


Embraer achieves 250th business jet delivery milestone in Latin America

Embraer announced the delivery of a Phenom 100EV and a Phenom 300E to two separate Brazilian customers, marking the company’s 250th business jet delivery in Latin America.

The Phenom 100EV was delivered to an undisclosed industrial company, which selected the aircraft to maintain crucial business operations during the COVID-19 pandemic. The Phenom 300E was delivered to AGROJEM, an agribusiness company.

“Due to our continuous expansion of operations, we made the decision to transition from a turboprop to the new Phenom 300E. With our previous aircraft, we flew 200 hours per year. Now, with the Phenom 300E, we expect to cover the same distance in just 120 hours per year, saving valuable time and resources,” said José Eduardo Motta, CEO of AGROJEM. “The Phenom 300E is truly a time-saving machine. Beyond reducing our travel time, the aircraft also creates the opportunity for continuous connectivity and the seamless ability to work in transit.”

Over 1,000 aircraft set to return to lessors in 2021 without new homes says IBA

The commercial aircraft leasing market is set for considerable turmoil in 2021 with over 1,000 aircraft set to be returned to lessors without clear options for onward placement.

In a webinar IBA outlined how around 1,300 aircraft, including 200 widebodies, had been scheduled (prior to the COVID-19 pandemic) to be returned to its lessors in 2021. IBA believes that, whilst the majority of those leases would have been extended, that option is now extremely unlikely.

IBA forecasts that, due to the drop in demand caused by the COVID-19 pandemic, the vast majority of these aircraft will now not have follow on leases secured at the point of return. With increasing numbers of airlines looking to terminate longer leases earlier due to restructuring, and also because of airline failures, the number of aircraft returning to lessors without onward placement is only likely to increase.

This uncertainty is set to break the model established in recent years of seamless redeliveries between lessees, and IBA expects a higher level of disputes between airlines and lessors around lease returns and redeliveries.

IBA also forecasts that this drop in aircraft leasing activity will drive a corresponding fall in engine shop visits. Prior to COVID-19, these were expected to rise from 3,200 in 2019 to 4,500 by 2023, according to data from IBA.iQ - a leading platform for aviation intelligence. It now forecasts that there will be only 1,000 shop visits this year, and it will take until 2026 to reach the originally forecast 2019 levels, with MROs expected to introduce more flexibility into its shop visit programmes.

These factors are set to drive resourcing pressures, with the risk of significant redundancy programs, at lessors and MROs, including the early retirement of many experienced staff.

Phil Seymour, President of IBA, says: “The buoyancy in the commercial aircraft leasing market of the last few years is being brought to an abrupt end by Covid, and we foresee a significant impact not only on lessors but across the supply eco-system – particularly in the MRO sector.”

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REX in exclusive funding negotiations for domestic major city operations

Regional Express Holdings (Rex) has signed a long-form term sheet and is in advanced exclusive negotiations with PAG Asia Capital (PAG), a leading Asia-Pacific focused investment firm, regarding an investment by PAG of
up to AU$150 million to be used exclusively to support the launch of Rex’s domestic major city jet operations scheduled to commence on March 1, 2021 (Funding).

The Funding is proposed to comprise first ranking senior secured convertible notes (Notes). It is proposed that an initial Funding tranche of AU$50 million will be drawn on completion of the Transaction, targeted for the end of December 2020 (Completion), with the balance of the Funding drawn over the following three years.

The Funding is subject to completion of due diligence by PAG; to agreement and execution of long-form documentation; to customary conditions including Rex shareholder approval for the purposes of section 611 (Item 7) of the Corporations Act 2001 (Cth) (Corporations Act) and the ASX Listing Rules, which is intended to be sought at Rex’s Annual General Meeting (AGM) that is tentatively scheduled for early December 2020; as well as to the Foreign Investment Review Board (FIRB) and any other required regulatory approvals. The terms of the Funding will also be reviewed by an independent expert.

SR Technics sells design engineering solutions to groWING.aero

Effective October 1, 2020, SR Technics' design engineering solutions department will be transferred to groWING.aero, as part of a sale that ensures the continuity of these services. This is due to the industry-wide COVID-19 crisis and the changing market environment where SR Technics has decided to focus on engine services and line maintenance in Switzerland. SR Technics will remain involved until the end of this year to support a smooth transition to the new owner.

All SR Technics staff dedicated to design engineering solutions at the Belgrade, Dublin and Zurich locations will continue to be employed at groWING engineering partners GmbH under the umbrella of the Swiss company groWING (holding) AG, based in Hünenberg, canton of Zug.

The new groWING.aero design organization will continue to provide services under approval reference EASA.21J.770, and customers will continue to receive support from the former SR Technics team led by Randolph Odi as the previous and new operational lead, and in sales and customer support by Oladimeji Olukolu, also part of the current SR Technics team. Together with Patrik Kobler and Manfred Brunner from groWING.aero, the four managing partners will support the integration of the organization into the groWING.aero network. Jointly they will support the existing clients and design solutions and ensure the continuity into the future, while developing new services and products for its valued customer base.


Chorus Aviation delivers third Airbus A220-300 aircraft to airBaltic

Chorus Aviation has delivered one new Airbus A220-300 aircraft to airBaltic of Latvia. The aircraft (MSN 55086) is the third of five units to be placed on long-term lease with the airline through a committed sale and leaseback transaction. The two remaining aircraft are expected to be delivered later this year. airBaltic has safely resumed and expanded its services following the pandemic crisis and is now connecting 35 European destinations to its Riga hub.

“The recent crisis enabled us to push forward our decision to introduce an Airbus A220-300 single type fleet. It allows us to minimize complexity and benefit from the additional efficiency provided by the aircraft. With a partner like Chorus Aviation, we will continue our growth and add additional jets in the future,” said Martin Gauss, President and Chief Executive Officer, airBaltic.

Boeing, Honeywell and Rolls-Royce Deutschland partner to service H-47 Chinook engines

Boeing, Honeywell Aerospace and Rolls-Royce Deutschland have reached an agreement to providein-service support of the T-55 engine should the government of Germany select the H-47 Chinook for its Schwerer Transporthubschrauber (STH) heavy-lift helicopter requirement.

Since the forming of the Chinook Germany Industry Team in 2018, originally comprised of nine German companies, Boeing continues to build a strong industry team to provide the Luftwaffe with local long-term services support, maintenance and training of the Chinook over the next several decades. In addition, Boeing’s industrial plan will foster German economic growth while creating highly skilled jobs in country.

Under the agreement, Honeywell will license Rolls-Royce Deutschland as its partner in Germany to perform depot-level maintenance of the Chinook T-55 engine operated by the Luftwaffe.


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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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