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Wednesday, May 5th, 2021

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Embraer and Breeze Airways sign Pool Program Agreement

Brazil’s Embraer has announced that it has signed a long-term Pool Program Agreement with the U.S. carrier Breeze Airways (Breeze) to support a wide range of repairable components for the airline’s E190s and E195s fleet. Full repair coverage for components and parts are included in the agreement, plus access to a substantial stock of components at Embraer’s distribution center, which will Breeze from the onset.

The program will provide the most efficient and reliable solutions to Breeze’s E-Jets fleet. The airline will benefit from the availability of spare parts, enjoy significant savings on repair and service costs. The Pool Program currently supports more than 50 airlines worldwide. Embraer’s Flight Hour Pool Program is designed to allow airlines to minimize their upfront investment on high-value repairable inventories and resources while taking advantage of Embraer’s technical expertise and vast component repair service provider network.

Founded by aviation entrepreneur David Neeleman, Breeze is a new low-cost airline due to launch this year. The carrier intends to offer point-to-point flights from smaller, secondary airports, enabling travelers to get to their destination in half the time for roughly half the cost.


Spirit Airlines closes 1.00% Convertible Senior Notes due 2026

Spirit Airlines has entered into a series of liability management transactions given the favorable market dynamics.

The company received US$371.3 million from an issuance of 10,594,073 shares of its common stock to holders of its 4.75% Convertible Senior Notes due 2025 (the 2025 Convertible Notes).  Spirit used US$368.7 million of the net proceeds from the common stock offering to redeem US$340.0 million aggregate principal amount of its US$850.0 million 8.00% Senior Secured Notes due 2025, plus a premium of US$27.2 million and US$1.5 million in related accrued interest. As a result, US$510.0 million in 8.00% Senior Secured Notes remain outstanding.

In addition, the company issued US$500.0 million aggregate principal amount of 1.00% Convertible Senior notes due 2026 with a conversion price of US$49.07 per share. The US$500.0 million aggregate principal amount includes US$60.0 million of an over-allotment that the company granted to, and exercised by, the underwriters of the 2026 Convertible Notes. Net proceeds from this transaction were used to retire US$146.8 million aggregate principal amount of the 2025 Convertible Notes, plus a premium of US$290.7 million and accrued interest of US$3.2 million. As a result, US$28.2 million aggregate principal amount of the 2025 Convertible Notes remain outstanding. 

Additionally, the company plans to use approximately US$45.0 million of the remaining net proceeds to repay outstanding indebtedness under its Senior Secured Revolving Credit Facility due March 2024.


Air Cargo demand reaches all-time-high in March

The International Air Transport Association (IATA) released March 2021 data for global air cargo markets showing that air cargo demand continued to outperform pre-COVID levels (March 2019) with demand up 4.4%. March demand reached the highest level recorded since the series began in 1990. Month-on-month demand also increased albeit at a slower pace than the previous month with volumes up 0.4% in March over February 2021 levels.

Global demand, measured in cargo ton-kilometers (CTKs), was up 4.4% compared to March 2019 and 0.4% compared to February 2021. This was a slower rate of growth than the previous month, which saw demand increase 9.2% compared to February 2019. A weaker performance by Asia-Pacific and African carriers compared to February contributed to softer growth in March.

Global capacity, measured in available cargo ton-kilometers (ACTKs), continued to recover in March, up 5.6% compared to the previous month. Despite this, capacity remans 11.7% below pre-COVID-19 levels (March 2019) due to the ongoing grounding of passenger aircraft. Airlines continue to use dedicated freighters to plug the lack of available belly-capacity. International capacity from dedicated freighters rose 20.6% in March 2021 compared to the same month in 2019 and belly-cargo capacity dropped by 38.4%.

Asia-Pacific airlines saw demand for international air cargo drop 0.3% in March 2021 compared to the same month in 2019.

North American carriers posted a 14.5% increase in international demand in March compared to March 2019.

European carriers posted a 0.7% increase in demand in March compared to the same month in 2019.

Middle Eastern carriers posted a 9.2% rise in international cargo volumes in March 2021 versus March 2019.

Latin American carriers reported a decline of 23.6% in international cargo volumes in March compared to the 2019 period; this was the worst performance of all regions.

African airlines’ cargo demand in March increased 24.6% compared to the same month in 2019, the strongest of all regions.


SIA Engineering Group's full year revenue down 55%

SIA Engineering Group reported revenue of SG$443.0 million for the financial year ended March 31, 2021 which was SG$551.1 million (-55.4%) lower than in the previous financial year as low flight activities and widespread grounding of aircraft resulted in a sharp and severe reduction in business volume.

Group expenditure was also lower year-on-year, falling from SG$926.4 million to SG$468.0 million (-49.5%), due to grants from government support schemes and cost-saving measures. Staff costs and subcontract costs fell due to actions taken to match manpower requirements to lower business volume. Government wage support resulted in a further reduction in manpower costs. Non-manpower related costs fell due to tight control over expenses and deferment of non-critical expenses. As such reduction in expenditure could not keep pace with the sharp decline in revenue, the Group’s operating performance deteriorated from a profit of SG$67.7 million in the previous financial year to a loss of SG$25.0 million in the financial year ended 31 March 2021.

The adverse impact of COVID-19 on the aerospace industry also resulted in provisions being made for impairment of asset values during the financial year, the most significant being a SG$35.0 million impairment provision made on Base Maintenance unit’s assets and an SG$11.4 million impairment provision on the investment in an engine program. The Group recorded a net loss of SG$11.2 million for the financial year ended March 31, 2021, compared to a profit of SG$193.8 million in the previous year. The decline of the Group’s financial performance was substantially cushioned by grants from government support schemes, most significantly, the Jobs Support Scheme (JSS). Without this support, the Group would have recorded a loss of SG$192.4 million.


STS Aviation Services and Aircraft Engine Lease Finance execute long-term maintenance agreement

STS Aviation Services (STS) has signed a long-term base maintenance agreement with Aircraft Engine Lease Finance (AELF).

“We are extremely delighted that AELF has awarded STS a long-term base maintenance contract to support its Airbus A330 aircraft, which will be operated by Maleth Aero,” stated Ian Bartholomew, Vice President of Commercial for STS Aviation Services. “As a result of this contract, we are already preparing to accept the first maintenance visit at our state of the art, wide-body aircraft maintenance facility located in Birmingham, United Kingdom, and we look forward to supporting AELF and Maleth with further projects in the future”

This agreement will give AELF and Maleth the ability to access high-quality, flexible MRO services for its growing fleet of A330 aircraft both now and in the years to come.

F/LIST GERMANY receives EASA Part-145 approval for Erfurt site

F/LIST GERMANY’s upholstery facility in Erfurt has recently been granted EASA PART-145 approval from the European Aviation Safety Agency (EASA) to act as a repair station. This positions F/LIST GERMANY's newest branch as a qualified maintenance service for upholstery work on business aircraft.

The aftermarket division of business aviation picked up significantly in the crisis year 2020. The associated increase in the number of refurbishment requests has made the aftermarket division one of the fastest growing, and increasingly important strategic business areas of the international F/LIST Group. F/LIST GERMANY only took over ACC COLUMBIA's Erfurt upholstery facility in February this year. The acquisition of the upholstery business has expanded F/LIST's capacities and successfully expands its service network in the EMEA region on a long-term basis. The EASA Part-145 approval means that the integration phase of the new location under the management of F/LIST GERMANY GMBH is now complete and Erfurt is fully operational. Customers are therefore able to benefit from the high-quality support services offered in the VIP cabin interior refurbishment sector.

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Tamar Jorssen
Vice President Sales & Business Development
Email: tamar.jorssen@avitrader.com
Phone: +1 (788) 213 8543