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Friday, January 8th, 2021

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Lufthansa raised €500 million in aircraft financing in second half of 2020

Since July 2020, Deutsche Lufthansa AG has raised a total of around €500 million by using aircrafts as security in eight financing transactions. This enabled the Group to secure additional funds on top of the €1.6 billion raised via a convertible bond and a corporate bond.

The five Airbus A350s and three aircraft from the A320 family were used as securities for various financing instruments. Funds were raised through sale and lease back financing, secured loans and secured promissory notes.

Banks, private equity funds and corporate investors, particularly from Europe and Asia, participated in the financing. Lufthansa was also able to agree upon attractive terms compared with the most recently issued bonds.

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Historic partnership struck between Etihad Aviation Training and Israir Airlines

Subsequent to the signing of the Abraham Accords peace agreement, Israer Airlines has signed an agreement with Etihad Aviation Training (EAT), part of which includes a ‘dry lease’ enabling the Israeli carrier to train its pilots on EAT’s Airbus A320 full-flight simulator in Abu Dhabi using its own instructors.

EAT offers a wide range of training products and services, including airline training, type rating, cabin crew safety training, instructor training and cadet programs, and aircraft maintenance training, making it one of the largest training facilities in the Middle East.

“Continuing our commitment to providing highly skilled pilots by offering state-of-the-art training facilities, EAT is looking forward to working with Israir Airlines and is anticipating further collaboration with the airline to cement this landmark agreement,” said Captain La Cava Managing Director Etihad Aviation Training.

IAG Chairman Antonio Vázquez retires

International Consolidated Airlines Group (IAG) has released that Antonio Vázquez has retired as a director of the company and chairman of the Board. As previously announced, Javier Ferran has succeeded Antonio as chairman.

Javier Ferran, IAG chairman, said: “Antonio was instrumental in the creation and development of IAG and has led the Board with integrity and rigour since the Group’s formation in January 2011. He has made a huge contribution to IAG and, previously, in his role as president of Iberia. On behalf of the Board, I’d like to thank Antonio for his commitment and support and wish him well in the future.”

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IATA: passenger demand recovery comes to a halt in November

The International Air Transport Association (IATA) announced that the recovery in passenger demand which had been slowing since the Northern hemisphere’s summer travel season, came to a halt in November 2020.

Total demand (measured in revenue passenger kilometers or RPKs) was down 70.3% compared to November 2019, virtually unchanged from the 70.6% year-to-year decline recorded in October. November capacity was 58.6% below previous year levels and load factor fell 23.0 percentage points to 58.0%, which was a record low for the month.

International passenger demand in November was 88.3% below November 2019, slightly worse than the 87.6% year-to-year decline recorded in October. Capacity fell 77.4% below previous year levels, and load factor dropped 38.7 percentage points to 41.5%. Europe was the main driver of the weakness as new lockdowns weighed on travel demand.

Recovery in domestic demand, which had been the relative bright spot, also stalled, with November domestic traffic down 41.0% compared to the prior year (it stood at 41.1% below the previous year’s level in October). Capacity was 27.1% down on 2019 levels and the load factor dropped 15.7 percentage points to 66.6%.

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Boeing to pay US$2.5 billion settlement over 737 MAX criminal probe

Boeing has entered into an agreement with the U.S. Department of Justice (DOJ), which resolves the Department’s investigation into the company relating to the evaluation of the Boeing 737 MAX airplane by the Federal Aviation Administration (FAA). As part of Boeing’s resolution with DOJ, the Department has agreed to defer prosecution of the company, provided that Boeing abides by the obligations set forth in a three-year deferred prosecution agreement, after which time the charge will be dismissed.

Under the agreement, Boeing will pay a penalty of US$243.6 million and provide US$500 million in additional compensation to the families of those lost in the Lion Air and Ethiopian Airlines accidents. The agreement also includes a commitment to provide US$1.77 billion to Boeing’s airline customers as part of the company’s ongoing efforts to compensate those customers for financial losses resulting from the grounding of the 737 MAX.

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Ryanair cuts full year (to March 21) traffic forecast

Ryanair has briefed the markets that it now expects the newly announced Covid lockdowns in Ireland, the U.K., and a small number of other EU countries this week, will materially reduce its flight schedules and traffic forecast through January, February and March.

Ryanair now expects its January traffic to fall to under 1.25 million passengers, and that new COVID restrictions could also reduce February and March traffic to as little as 500,000 passengers each month. In response, Ryanair will significantly cut its flight schedules from January 21, which will result in few, if any, flights being operated to/from Ireland or the U.K. from the end of January until such time as these travel restrictions are removed.

These new cutbacks will reduce full year (FY March ’21) traffic forecast from currently “below 35 million” to between 26 million to 30 million passengers. Ryanair does not expect these flight cuts and further traffic reductions will materially affect its net loss for the year to March 31, 2021 since many of these flights would have been loss making.

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