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Friday, February 5th, 2021

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Russia’s TMH Group to buy Bergen Engines from Rolls-Royce

Russia’s TMH Group, a supplier of rolling stock, has agreed to buy Norway-based Bergen Engines from Rolls-Royce for a net price of €150 million (US$180 million). The deal is one of a number of sales involving its smaller businesses in an attempt to mitigate the financial hardship the conglomerate is suffering as a result of the COVID-hit aerospace industry.

Rolls-Royce relies heavily on revenue from airlines which is generated on a flying-hours basis and has already warned that it may well suffer from continued cash outflows though 2021 as air travel looks to remain constrained. The company hopes to raise approximately £2 billion (US$4.74 billion) and a major portion of that amount will come from the sale of Spain-based IAP Aero.

“The sale of Bergen Engines is a part of our ongoing portfolio evaluation to create a simpler, more focused group and contributes towards our target to generate at least £2 billion from disposals,” said Rolls-Royce’s CEO Warren East.

Bergen makes medium-speed gas and diesel engines for marine and power generation clients, employing approximately 950 people, and generated roughly £239 million (US$327.00) in 2019.

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Lufthansa issues bond of €1.6 billion, repays KfW loan

Deutsche Lufthansa AG has successfully issued a bond with a total volume of €1.6 billion. The bond with a denomination of €100,000 was placed in two tranches with a term of four- and seven-years respectively: The tranche with a term until February 11, 2025, has a volume of €750 million and bears interest of 2.875 percent per year. The tranche with a term until the February 11, 2028, has a volume of €850 million and bears interest of 3.75 percent per year.

Based on the long-term funds raised now and the borrowings of €2.1 billion in the second half of 2020, Lufthansa has secured the refinancing of all financial liabilities of around €2.6 billion due in 2021. As contractually agreed as part of the stabilization measures last June, the raising of additional funds will lead to the repayment of Lufthansa's KfW loan. Thus, the loan of €1 billion will be repaid to KfW ahead of schedule. After full repayment, Lufthansa will again have the aircraft pledged as collateral for the KfW loan at its disposal.

SIA Group posts S$142 million net loss in third-quarter

SIA Group revenue fell S$3,404 million (-76.1%) year-on-year to S$1,067 million during the third quarter, as all three passenger airlines within the Group (SIA, SilkAir, Scoot) recorded a sharp drop in passenger flown revenue due to low traffic. This was partially offset by improvements in cargo flown revenue, as the global airfreight capacity crunch continued to provide strong support for both load factors and yields.

Group expenditure was down S$2,624 million (-65.2%) from last year to S$1,398 million. Non-fuel expenditure fell significantly year-on-year, by S$1,540 million (-54.7%), on the back of cost-saving initiatives such as capacity cuts and staff-related measures, as well as government support schemes. Net fuel cost declined S$933 million (-77.3%) to S$274 million as capacity cuts and lower fuel prices reduced fuel cost before hedging.

A net gain of S$63 million was recorded for the quarter in relation to fuel hedging and fuel derivatives, comprising fuel hedging losses of S$88 million, a fuel hedging ineffectiveness loss of S$36 million (arising from a further downward revision to the recovery trajectory) and fair value gains of S$187 million on fuel derivatives that had earlier been deemed to be ineffective hedges.

As a result, the Group registered an operating loss of S$331 million for the quarter, a S$780 million reversal from an operating profit of S$449 million last year. For the quarter ended 31 December 2020, the Group reported a net loss of S$142 million, a deterioration of S$457 million against last year.

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Pegasus Airlines CEO Mehmet T. Nane elected Chair of IATA Audit Committee

Pegasus Airlines CEO, Mehmet T. Nane, has been elected as Chair of the Audit Committee of the International Air Transport Association (IATA) by the members of the IATA Board of Governors. Mehmet T. Nane will serve as the Chair of the Audit Committee for a three-year term, which began on anuary 19, 2021.

Commenting on the subject, Pegasus Airlines CEO, Mehmet T. Nane said, “The global aviation industry is experiencing its most challenging period, unprecedented in history. During such a period, I am proud to have been chosen for this important role and to carry this great responsibility. No matter how difficult the conditions are; as IATA, we will continue to work tirelessly with the aim of helping the airline industry operate safely, securely, efficiently, and economically under clearly defined rules. As the global aviation industry, we will continue to work with great effort, jointly with our valuable partners, to overcome these difficult days all together.”

Founded in 1945, IATA today represents 290 member airlines from 120 countries, or 82 percent of total air traffic. Pegasus Airlines CEO, Mehmet T. Nane, was elected as a member of the IATA Board of Governors in 2019.

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SITA launches 'Health Protect', a secure way for airlines to share health information

SITA announced the launch of 'Health Protect' – an industry solution, to help airlines, airports, governments, and passengers safely and securely share information on health tests or vaccinations needed during travel.

Successful trials have already been undertaken with travelers to the United Arab Emirates, and soon to start at Milan Malpensa Airport.

For many countries, economic recovery from the COVID-19 pandemic relies heavily on travel and tourism. As governments globally seek a way to resume safe and secure travel in the wake of COVID-19, the ability for passengers to share vital health information such as PCR test results or vaccination history with authorities is increasingly important. SITA’s Health Protect allows airlines and passengers to submit these required documents safely and securely in line with specific government requirements.

A key benefit is a unique ability to seamlessly integrate with multiple travel pass or ‘health passport’ schemes, bridging the gap between these schemes and aviation and border processes. Critically, by incorporating Advance Passenger Processing (APP), it enables authorities to make an informed decision whether a passenger can travel at the point of check-in, improving the safety of all passengers and avoiding costly return flights.

Passengers without the required documentation, or considered high risk, will be unable to check in for their flight, ensuring they do not travel to the airport. By facilitating the inclusion of health pass schemes into existing, proven, and trusted passenger processing systems, Health Protect minimizes the operational and technical impact on carriers and ports.

Combining the functionality of passenger locator forms, health attestations, and travel declarations, as well as Electronic Travel Authorization (ETA), Health Protect will deliver confidence for all stakeholders to travel again, safely and securely, supporting a seamless and contactless passenger journey. It will also provide passenger certainty that they have the right documents before departure, vitally at a time when borders regulations change regularly.

At the airport, Health Protect also integrates with the existing airport passenger processing systems to verify the health status of the passenger at each point in the process using SITA Flex touchless passenger flow monitoring technology.

This week for the first time, a small group of air travelers flying from Germany and Estonia to the United Arab Emirates has tested the health data platform and app SimplyGo in a live environment. As part of the trial project, SimplyGo partnered with SITA to make use of SITA Health Protect.

During the trial, travelers obtained a negative COVID-19 result via their SimplyGo app before traveling. The data was then securely stored on the SimplyGo platform to be accessed by airlines and border officials authorizing boarding of the plane and eventually arrival at the destination country, the United Arab Emirates. Integration with the UAE government systems was made possible through the Advance Passenger Processing platform delivered by SITA.

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Finnair traffic performance in January 2021

In January, Finnair carried 85,600 passengers, which was 92.4% less than in the corresponding period of 2020 and 7.5% less than in December 2020. The COVID-19 impact, including the exceptionally strict travel restrictions imposed by several countries, still affected all passenger traffic figures. It was visible especially in the North Atlantic figures (no scheduled passenger flights in January).

The overall capacity measured in Available Seat Kilometres (ASK) decreased in January by 89.8% year-on-year. Finnair operated 74 daily flights (cargo-only included) on average which was 20.8% compared to January 2020. The differences between capacity figures are explained by the shorter operated flights on average and by the smaller gauge of operated aircraft compared to January 2020. Finnair's traffic measured in Revenue Passenger Kilometres (RPKs) decreased by 96.7%. The Passenger Load Factor (PLF) decreased by 52.6% points to 25.4%.

The ASK decline in Asian traffic was 88.6%. The North Atlantic capacity decreased by 100.0%. In European traffic, the ASKs were down by 91.5%. The ASKs in domestic traffic decreased by 74.6%.

RPKs decreased in Asian traffic by 98.6%, in North Atlantic traffic by 100.0%, in European traffic by 94.9% and in domestic traffic by 79.1%.

The PLF was 10.1% in Asian traffic but it was supported by the strong cargo operations and a high cargo load factor. The PLF was 42.9% in European traffic and 52.3% in domestic traffic, whereas there was no PLF figure in North Atlantic traffic since there were no passenger flights in January.

Passenger numbers decreased in Asian traffic by 98.6%, in North Atlantic traffic by 100.0%, in European traffic by 93.4% and in domestic traffic by 82.2%.
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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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Tamar