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Monday, March 1st, 2021

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Norwegian cancels major aircraft order and books US$1.5 billion charge

Having secured bankruptcy protection in both Norway and Ireland in 2020, low-cost carrier Norwegian Air (Norwegian) has taken a NEK12.8 billion (US$1.5 billion) charge and cancelled its current order of 88 narrow-body Airbus jets. Last year Norwegian cancelled its remaining orders for 97 aircraft with Boeing, while also seeking compensation from the planemaker for the grounding of 737 MAX jets and technical problems relating to the 787 Dreamliner.

The intention is for Norwegian to extricate itself from its current restructuring process with appreciable less debt and many fewer aircraft to avoid bankruptcy. From an original fleet of 140 aircraft the carrier is looking to negotiate terms with lessors to allow it to reduce its fleet size to 53; currently it is operating just ten aircraft, but hopes to increase that number as demand for air travel returns.

“We are doing everything we can to emerge as a more financially secure and competitive airline with an improved customer offering,” Chief Executive Jacob Schram said on Friday. “As soon as Europe begins to reopen, we will be ready to welcome more customers on board.”

Norwegian is running the risk of running out of cash by the end of March if it is unable to successfully restructure its debt and liabilities, while the termination of both the Boeing and Airbus purchase contracts necessitated a fourth-quarter 2020 charge of NEK4.8 billion. According to Reuters news agency, Norwegian’s total liabilities had fallen to 56.2 billion crowns by the end of December from NEK66.8 billion on Sept. 30, while its interest-bearing debt dropped NEK8.3 billion to NEK40.2 billion.  It hopes to cut its debt to about NEK20 billion crowns and raise NEK4 billion to NEK5 billion from new shares and hybrid capital. Norway has already agreed to contribute NEK1.5 billion crowns. (US$1.00 = NEK 8.67 at time of publication.)

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Austrian Airlines sells three Boeing 767s to U.S. company MonoCoque Diversified Interests (MDI)

Austrian Airlines has found a buyer for the three long-haul aircraft that were up for sale. The Boeing 767-300ER aircraft will go to U.S. company MonoCoque Diversified Interests (MDI). The purchase agreement has already been signed. The parties have agreed not to disclose the purchase price. The first aircraft, registered OE-LAT, will leave Vienna at the beginning of March for Pinal Airpark, Arizona. The aircraft is currently undergoing all the necessary preparations for the handover. The next transfer flight is scheduled for May with the Boeing 767 registered OE-LAX.

At an average age of 28.5 years, the three B767s sold are among the oldest aircraft in the Austrian Airlines fleet. The remaining three B767s are between 20 and 22 years old. After the handover is completed, Austrian Airlines will still have nine long-haul jets at its disposal, which will connect Austria with destinations around the globe - from the U.S.A. to the Far East. In detail, these are six Boeing 777s with over 300 seats and three Boeing 767s with over 200 seats.

Until the beginning of 2022, 28 aircraft will leave the fleet of Austria's home carrier: in addition to the aforementioned three Boeing 767-300ERs, 18 Dash turboprops and seven Airbus A319 jets will be handed over. Ten turboprops have already left Vienna, with the remaining eight to follow soon. This means that the fleet will consist of around 60 aircraft by the beginning of 2022. As mainly smaller aircraft will be retired, this corresponds to a capacity reduction of around 20%.

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JetBlue takes delivery of first Airbus A321neo aircraft featuring reimagined Mint

JetBlue has formally taken delivery of its first Airbus A321neo aircraft configured with the airline’s reimagined premium Mint® experience and an all-new onboard layout, featuring comfort and connectivity perks that set the airline apart from other U.S. carriers. The aircraft arrived at JetBlue's home at New York's John F. Kennedy International Airport (JFK) on February 26, from the Airbus production facility in Hamburg, Germany.

JetBlue’s A321neo with Mint features 16 Mint suites – including two Mint Studios™ – and 144 core seats. It will first operate on select flights between New York-JFK and Los Angeles International Airport (LAX) this summer. This latest delivery brings JetBlue’s total fleet count to 270 aircraft and is the airline’s 16th A321neo and the first of this aircraft type to feature Mint.

CAS purchases new Hydraulics Universal test stand

Certified Aviation Services (CAS) has purchased a new Series 920 Universal Independent Dual System Hydraulic test stand. The Series 920 stand is manufactured by A&P Hydraulics based in Landrum, South Carolina.

The Series 920 stand features 80gpm, 5,000psi independent dual systems which will be utilized to test hydraulic components such as thrust reverser actuators, servos, braking manifolds, linear actuators, power transfer units, primary control actuators, etc. The test stand also has a hydraulic pump and motor test system for testing engine driven pumps, AC motor pumps and hydraulic motor generators.

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Honeywell expands popular ultraviolet treatment product line

Expanding on its popular UV Treatment System for airliners, Honeywell has debuted a new, smaller version of the product that includes a UV wand and portable backpack. Designed to help reduce pathogens found on high-touch surfaces in a quick and low-cost manner, this new device can be easily used in a multitude of transportation options, from buses and trains to cars and small aircraft.

The Honeywell UV Treatment Wand includes a handheld wand approximately 12 inches long to dispense UVC light. The entire system weighs roughly 15 pounds and can be used in any size space where a person will fit, including vehicles, buildings and other shared spaces. The backpack portion of the device, which also rolls like a small piece of luggage, contains a battery that lasts for one hour of steady usage. It takes about 2.5 hours to recharge the battery when fully drained. The new portable option contains a single UVC lamp, and it can be operated for as little as 10 cents per use.

The wand can be used at varying speeds and distances from a target surface. At its ideal dosage and speed, the wand can be used to cover approximately one square meter in 17 seconds, or about 3.5 meters per minute. The device could treat high-touch surfaces in a midsize business jet cabin, cockpit and lavatory in less than 15 minutes.

Unlike chemical cleaning solutions, UV light does not leave chemical residues on surfaces or require storage and frequent replenishment of chemicals. When properly applied, UVC lights have been found capable of delivering doses that clinical studies show reduce or inactivate various viruses and bacteria, including SARS-CoV (including SARS-CoV-2 which causes COVID-19) and MERS-CoV. Results vary based on UV dosage and application, and no testing has been done specifically on protection against the COVID-19 disease.

BOC Aviation signs purchase-and-leaseback agreements with IndiGo for eight A320neo aircraft

BOC Aviation Limited (BOC) has signed purchase-and-leaseback agreements with InterGlobe Aviation (IndiGo) for eight new Airbus A320neo aircraft, powered by CFM Leap engines. The aircraft are scheduled to be delivered in the second half of 2021.

Mr. Riyaz Peermohamed, Chief Aircraft Acquisition & Financing Officer, IndiGo, said: “We are pleased to further strengthen our existing relationship with BOC Aviation. The addition of these eight A320neo aircraft demonstrates our confidence in the future growth of the aviation market in India.”

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IBA sees sustained growth in freighter aircraft demand but suppressed values

Demand for freighter aircraft continues to grow strongly as a result of Covid-19, but values and lease rates remain suppressed by an oversupply of feedstock aircraft, according to leading aviation industry consultant IBA.

Since May 2020, almost 200 narrowbody and widebody aircraft have joined the worldwide freighter fleet, data from IBA’s Insight.iQ platform indicated during an IBA webinar yesterday on the freighter market.

The active fleet of narrowbody freighters has grown by 61 to 625 aircraft with newly converted Boeing 737-800s accounting for around half that growth. The Boeing 757-200 remains the pre-eminent freighter aircraft with a fleet of 298 aircraft (converted and factory delivered), followed by the Boeing 737-400 with 148.

The active mid-size widebody freighter fleet has grown more steeply in the same period by 80 to 624 aircraft. The Boeing 767-300ER is the dominant aircraft in this segment, both accounting for more than half the growth as many ex-passenger aircraft and converted, and in total fleet size which now stands at 315 aircraft when one adds converted and factory delivered aircraft. The A330 freighter fleet is also growing strongly but from a much lower base, with 6 aircraft converted during this period, but with an additional pool of aircraft taking its fleet size to 74.

The large widebody freighter fleet has grown by 55 to 601 aircraft since May 2020. The re-entry into service from storage of 29 Boeing 747-400s and 7 MD-11Fs accounted for around half the growth, with the remainder made up of factory deliveries of 22 Boeing 777Fs and 3 747-8Fs.

Since the start of the Covid-19 pandemic, freighter aircraft usage has grown strongly, driven by the fall in belly hold capacity as passenger aircraft were grounded. The number of freighter aircraft flights, which was averaging around 100,000 per month before the pandemic, has grown, peaking at over 145,000 in December 2020 as the holiday period drove supply chain demand. Conversely, passenger aircraft utilisation fell from over 2.9 million flights in January 2020 fell to 556,000 in April 2020, and since then has only partially recovered to around 1.5 million flights in January 2021.

Data from IBA’s Insight.iQ platform also demonstrates the dominance of certain aircraft types in the passenger to freighter conversion market.

The Boeing 737 Classic family have now been surpassed by the Boeing 737-800 in terms of conversion rates, of which 27 were converted in 2020, and around 40 are set to be converted over the next 12 months. In the large narrowbody segment, the Boeing 757-200’s dominance of recent years continues with 10 aircraft converted in 2020 and a further 20 set to be converted in the next 12 months. However, conversions of the A321-200 are now gathering pace with three in 2020 and a further 6 in the next 12 months.

In the mid-size widebody segment, the Boeing 767-300ER continues to dominate with 26 aircraft set to be converted in the next 12 months, with its nearest competitor the Airbus A330-300 accounting for just seven but with further aircraft likely to be committed for conversion.

Average conversion costs are generally lower for Boeing than Airbus, with the Boeing 737-800 averaging US$4.16 million and the Boeing 757-200 at US$5.2 million, compared to US$6.14 million for the A321-200. The average conversion cost for the Boeing 767-300ER is US$14.7 million compared to US$18.4 million for the A330-300. Part of the reason for this cost difference is the relative sizes of each aircraft, with the Boeing 737 being a smaller aircraft than the Airbus A321, and the Boeing 767 being smaller than the A330.

IBA has also considered the economics of Boeing 777 freighter conversions, especially the younger, larger Boeing 777-300ER model. While conversion costs are not yet widely available, it estimates the conversion cost of a 2005 built Boeing 777-300ER to be around US$32.5 million. When also taking into account acquiring a feedstock aircraft and other associated costs, IBA estimates the total outlay for an aircraft of this age to be around US$54.5 million.

The value of a 2002 build Boeing 737-800 converted freighter has dropped from US$20.9 million in mid 2020 to US$18.28 million in early 2021 with younger aircraft seeing a greater drop. Lease rates for an aircraft of the same age have dropped from US$220,000 per month to US$192,000 per month over the same period.

The value of a 2000 build Airbus A321-200 converted freighter has dropped from US$28.3 million in mid 2020 to US$23.3 million in early 2021. Lease rates for an aircraft of the same age have dropped slightly from US$264,000 per month to US$240,000 per month over the same period.

The values of Airbus A330-300 converted freighters have seen falls of varying ranges with older aircraft built in 1995 dropping by around 12%, whereas a 2010 built aircraft fell in value by around 25% from US$47 million in mid 2020 to US$35.48 million in early 2021. The fall in lease rates has also increased with younger aircraft, ranging from around 8% for a 1995 built aircraft to around 11% for a 2010 model.
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