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Tuesday, March 30th, 2021

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Southwest Airlines adds 100 firm orders for Boeing 737 MAX 7 aircraft

Southwest Airlines has completed its previously disclosed discussions with Boeing regarding the restructuring of its delivery schedule for MAX aircraft. The company has completed the multi-year evaluation of the successor aircraft to its Boeing 737-700 model, with the selection of the Boeing 737 MAX 7 aircraft. Southwest Airlines and Boeing reached an agreement on 100 firm orders for MAX 7 aircraft, with the first 30 scheduled to be delivered in 2022. This agreement underscores Southwest's commitment to continued modernization of its fleet with more fuel-efficient and climate-friendly aircraft. It also positions Southwest to capitalize on growth opportunities, when they arise.

As part of the agreement, the company also converted 70 MAX 8 firm orders to MAX 7 firm orders and added 155 MAX options for MAX 7 or MAX 8 aircraft for years 2022 through 2029. These order book additions and revisions result in a new total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8) and 270 MAX options for MAX 7 or MAX 8 aircraft for years 2021 through 2031. The company's previous order book consisted of 249 MAX firm orders (30 MAX 7 and 219 MAX 8) and 115 MAX options for MAX 7 or MAX 8 aircraft for years 2021 through 2026. The company continues to expect delivery of 28 MAX 8 aircraft in total this year (19 from Boeing and nine from third-party lessors), as well as 17 737-700 retirements, ending 2021 with 69 MAX 8 aircraft and 729 total aircraft.

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Joramco signs new maintenance agreement with flydubai

Joramco, the Amman-based MRO and the engineering arm of Dubai Aerospace Enterprise (DAE), has entered into a new maintenance agreement with Dubai-based airline, flydubai. This marks a continuation of the long-term partnership between the two companies. The new agreement includes all due C-checks on the carrier’s Next-Generation Boeing 737-800 aircraft. Checks began March 1, 2021 and are set to continue through December 2021.

flydubai has created a network of more than 70 destinations served by a fleet of 51 aircraft. Since commencing operations in June 2009, flydubai has been committed to removing barriers to travel, creating free flows of trade and tourism and enhancing connectivity between different cultures across its ever-expanding network.

Jeff Wilkinson, Joramco‘s Chief Executive Officer commented, “Our long-standing partnership with flydubai, which began in 2013, is a testament to the quality of service that we provide and our ability to meet flydubai’s expectations. We are proud that flydubai continues to entrust Joramco by providing first-class maintenance services to their growing fleet.”

Japan Coast Guard adds two H225s to growing fleet

Japan Coast Guard (JCG) will expand its fleet with two new H225 helicopters, taking its total Super Puma fleet up to 17, comprising two AS332s and 15 H225s. The largest Super Puma operator in Japan received its tenth H225 in February this year. The new helicopters will join its growing fleet to support territorial coastal activities, security enforcement, as well as disaster relief missions in the country.

“From the first Super Puma delivery nearly 30 years ago to the latest H225 orders, we greatly appreciate Japan Coast Guard’s continued trust in our products and services,” said Guillaume Leprince, Managing Director of Airbus Helicopters in Japan. “This repeat H225 order reinforces the aircraft’s position as a reference in SAR operations and security enforcement. We are proud of how the deployment of the agency’s fleet has ensured mission success throughout the years. Airbus will continue to ensure the fleet’s high availability, in support of the agency’s safe operations.”

JCG’s H225 fleet is covered by Airbus’ highly adaptive HCare Smart full-by-the-hour material support. This customized fleet availability program allows the national coast guard agency to focus on its flight operations whilst Airbus manages its assets.

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Vallair appoints Armando Filho as Director of Material Management

Vallair, the multi-faceted aviation business dedicated to the support of aircraft operators and lessors, has strengthened its MRO team with the appointment of Armando Filho as Director of Material Management. Filho will be responsible for Vallair’s component support division complementing the activities of the teardown team ensuring that customers extract maximum value from their assets.

Vallair offers an integrated supply chain in conjunction with a component repair shop allowing it to oversee the return to full service of all components requiring repairs or overhauls, and ensuring customers have timely access to parts, worldwide.

Vallair has recently augmented its MRO capability by signing an LoI with the Centre-Val de Loire and the Châteauroux Airport Establishment. The LoI will see Vallair awarded a ten-year lease for a state-of-the-art full-service aircraft maintenance, repair, overhaul and cargo conversion hangar adjacent to its existing aerostructures repair and logistics facility in Châteauroux, France. Vallair’s technical support teams oversee the return to service of all components requiring repair or overhaul, whilst minimising costs and streamlining the return to service of critical parts. The Company’s capability further extends to accommodating concurrent aircraft and engine teardowns.

Carlyle Aviation to acquire Fly Leasing

Fly Leasing (FLY) a global leader in aircraft leasing, has entered into a definitive agreement to be acquired by an affiliate of Carlyle Aviation Partners (Carlyle Aviation), the commercial aviation investment and servicing arm within The Carlyle Group’s US$56 billion Global Credit platform.  Under the terms of the Merger Agreement, FLY shareholders will receive US$17.05 per share in cash, representing a total equity valuation of approximately US$520 million. The total enterprise value of the transaction is approximately US$2.36 billion. FLY’s portfolio of 84 aircraft and seven engines is on lease to 37 airlines in 22 countries.

“This transaction represents strong value for FLY shareholders at a time when airlines are facing an extremely difficult environment and smaller aircraft lessors are disadvantaged in the debt markets,” said Colm Barrington, CEO of FLY. “After a thorough review and evaluation of its options, FLY’s Board of Directors enthusiastically recommends this transaction to its shareholders.”

The per share cash consideration represents a premium of approximately 29% to FLY’s closing price on March 26, 2021 and a 43% premium to the volume-weighted average share price during the last 30 trading days.

The Board of Directors of FLY has approved the Merger Agreement, acting upon the recommendation of a special committee appointed by the Board of Directors and consisting solely of independent and disinterested directors, and has recommended that FLY shareholders vote in favor of the transaction.

The transaction is expected to close in the third quarter of 2021 and is subject to customary closing conditions, including applicable regulatory clearance and the approval of FLY’s shareholders. Given the pending transaction, FLY will not host a first quarter earnings call.

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Aviation Concepts Technical Services achieves first FAA audit renewal

Aviation Concepts Technical Services, Inc. (ACTSI), a Subic Bay Philippines-based Maintenance, Repair and Overhaul (MRO) and parking facility, has conducted, completed, and passed its first FAR 145 Repair Station audit for renewal conducted by the Federal Aviation Administration (FAA) on February 18, 2021.     

ACTSI continues to focus on the needs of the customers in the region.  Along with the recent renewal of the FAA 145, ACTSI has also received approval from the FAA for increased capabilities for the Gulfstream G280 up to 16A/16C inspection levels.  

ACTSI currently holds FAA 145, Cayman AMO, Cayman CAMO, Bermuda AMO approvals for the Gulfstream G280, GIV-X (G350/G450), GV, GV-SP(G550), and G650/G650ER. Additionally, ACTSI has added more battery models to its existing battery shop accessory rating capabilities to meet the rising demand of our customers.  

ACTSI, a new facility for aviation maintenance, repair, and overhaul (MRO) services recently opened at the Subic Bay International Airport (SFS/RPLB), transforming the former U.S. Navy base into a 24/7 hub for business aviation in the Asia Pacific.  Strategically-located within an 18,000 meter² hangar, ACTSI is to become a premier parking and MRO service provider for business jets within the region which can easily match OEM and client standards.

AeroCentury files petition for chapter 11 reorganization

AeroCentury and certain of its subsidiaries commenced a voluntary case under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware.

The company has determined that the Chapter 11 process is the most effective next step to resolve the company’s outstanding indebtedness and to progress toward the company’s goal of continuing in the regional aircraft business in order to preserve enterprise value for the company’s stakeholders. AeroCentury will continue to operate its business as “debtor-in-possession” under the jurisdiction of the bankruptcy court and in accordance with the applicable provisions of the bankruptcy code and the orders of the bankruptcy court. The company’s management of its portfolio assets and operations with respect to its aircraft and communications and interaction with lessees will remain unchanged, and the company intends to pay vendors and suppliers under customary terms for goods and services received on or after the filing date and pay its employees in the usual manner.

To ensure its ability to continue operating in the ordinary course of business, the company has filed with the bankruptcy court motions seeking a variety of “first day” relief, including authority to continue utilizing and maintaining its existing cash management system and authority to pay its employees in the ordinary course of business. Business operations across the AeroCentury platform are continuing without interruption.

The company has proposed in one of its chapter 11 motions an auction sale for its assets in order to fund repayment of its indebtedness to its sole secured lender, Drake Asset Management Jersey Limited (Drake). The company has entered into a stalking horse agreement with Drake to acquire the aircraft collateral securing the Drake indebtedness, subject to higher and better bids. In the event Drake is the successful bidder, the closing of the purchase will resolve all of the company’s outstanding indebtedness to Drake.

As of the filing date, the company believes it has sufficient cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the company may seek access to additional capital as the reorganization progresses.
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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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Tamar