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Thursday, July 8th, 2021

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Lufthansa Group secures further liquidity on capital market

Deutsche Lufthansa AG has again successfully issued a bond with a total volume of €1 billion. The bond with a denomination of €100,000 was placed in two tranches with a term of three and eight years respectively and a volume of €500 million each: the tranche with a term until 2024 bears interest at 2.0% per year, the tranche maturing in 2029 3.5%.

With the placement of the last corporate bond in February 2021, the Group already secured the refinancing of all financial liabilities due in 2021 and repaid the KfW loan of €1 billion ahead of schedule. The long-term funds now raised will be used to further strengthen the Lufthansa Group’s liquidity.

As of March 31, the Group had cash and cash equivalents of €10.6 billion (including uncalled funds from the stabilization packages in Germany, Switzerland, Austria, and Belgium). At that time, Lufthansa had used around €2.5 billion of the €9 billion government stabilization packages.

In addition to today’s bond issue, the Lufthansa Group is continuing to prepare for a capital increase. The net proceeds would contribute to the repayment of stabilization measures of the German Economic Stabilization Fund (ESF) and to the restoration of a sustainable and efficient long-term capital structure. The Executive and Supervisory Boards have not yet taken a decision on the size and timing of a possible capital increase. In addition, approval by the ESF for this must be obtained.

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IATA – May Air cargo up 9.4% compared to May 2019

The International Air Transport Association (IATA) has released global air cargo market data for May 2021 which reveals the continued trend for growth. Figures provided by the Association are compared to May 2019 as May 2020 figures were impacted by the effects of the COVID-19 pandemic. Global demand, measured in cargo ton-kilometers (CTKs), was up 9.4% compared to May 2019 with seasonally adjusted demand rising 0.4% month-on-month. Air cargo outperformed global goods trade for the fifth consecutive month. North American carriers contributed 4.6 percentage points to the 9.4% growth rate in May, with airlines in all other regions except Latin America also supported the growth. Capacity remains constrained at 9.7% below pre-COVID-19 levels (May 2019) due to the ongoing grounding of passenger aircraft, though seasonally adjusted capacity rose 0.8% month-on-month in May, the fourth consecutive month of improvement indicating that the capacity crunch is slowly unwinding. Underlying economic conditions and favourable supply chain dynamics remain supportive for air cargo with Global trade rising 0.5% in April.

The cost-competitiveness of air cargo relative to that of container shipping has improved compared to pre-pandemic levels when the average price of air cargo was 12-times more expensive than sea shipping. In May 2021 it was six-times more expensive. “Propelled by strong economic growth in trade and manufacturing, demand for air cargo is 9.4% above pre-crisis levels. As economies unlock, we can expect a shift in consumption from goods to services. This could slow growth for cargo in general, but improved competitiveness compared to sea shipping should continue to make air cargo a bright spot for airlines while passenger demand struggles with continued border closures and travel restrictions,” said Willie Walsh, IATA’s Director General.

Regional performances for May are as follows: Asia-Pacific airlines saw demand for international air cargo increase 5.3% in May 2021 compared to the same month in 2019. North American carriers posted a 25.5% increase in international demand in May 2021 compared to May 2019. European carriers posted an 5.7% increase in demand in May 2021 compared to the same month in 2019. Middle Eastern carriers posted a 14.1% rise in international cargo volumes in May 2021 versus May 2019. Latin American carriers reported a decline of 14% in international cargo volumes in May compared to the 2019 period. African airlines’ cargo demand in May increased 24.5% compared to the same month in 2019.

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AerCap leased, purchased, and sold 78 aircraft in second quarter of 2021

AerCap Holdings (AerCap) has announced its major business transactions during the second quarter 2021:

AerCap signed lease agreements for 51 aircraft, including 13 wide-body aircraft and 38 narrow-body aircraft. The company purchased 15 aircraft, including ten Airbus A320neo-family aircraft, four Boeing 737 MAX aircraft and one Embraer E2 aircraft.

AerCap executed sale transactions for 12 aircraft, including one Airbus A330, five Boeing 737NGs, three Boeing 757s and three Boeing 767-300ERs from AerCap’s owned portfolio.

Hamburg makes aviation fit for hydrogen

The aerospace industry in Hamburg is preparing for flying with hydrogen. Therefore, the starting signal has now sounded for the set-up of a new development platform. Over the next two years and with funds provided by the city of Hamburg, Lufthansa Technik together with the German Aerospace Center (DLR), the Center for Applied Aeronautical Research (ZAL) and Hamburg Airport will design and test extensive maintenance and ground processes in handling hydrogen technology. For this purpose, an aircraft of the Airbus A320 family will be converted into a stationary laboratory at Lufthansa Technik's base in Hamburg.

Liquid hydrogen (LH2) is increasingly being more concretely envisaged in the development departments of large aircraft manufacturers as a sustainably producible fuel for future generations of commercial aircraft. In order to investigate the effects of the use of LH2 on maintenance and ground processes at an early stage, Lufthansa Technik, DLR, ZAL and Hamburg Airport are now pooling their extensive practical and scientific expertise. The aim is to jointly develop a pioneering demonstrator, and to operate it from 2022.

As the world's third largest aviation location, the Free and Hanseatic City of Hamburg is funding the research project with the largest single item in its special program to mitigate the economic impact of the coronavirus pandemic on the aviation industry.

In the first phase of the project, by the end of 2021 the partners aim to identify the most urgent fields of development for closer scientific examination and, on this basis, to elaborate the concept for subsequent practical testing. The practical implementation of the concept will start at the beginning of 2022 and will involve the modification of a decommissioned Airbus A320 aircraft. It will be equipped with an LH2 infrastructure to be used as a fully functional field laboratory at Lufthansa Technik's base in Hamburg. In parallel, a virtual environment is being created at DLR that will be used to achieve digital and highly accurate mapping of the defined development fields. The new development platform is to provide inspiration for the design process of the next generation of aircraft by means of parameterized and highly accurate virtual models.

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GA Telesis signs repair management agreement with Air Astana

GA Telesis, LLC (GAT) has announced the signing of a repair management agreement with Air Astana, the flag carrier of Kazakhstan. The agreement covers repair services for spare parts, components, and tooling in support of the Air Astana fleet, which encompasses Boeing 767, Airbus A320/A321, and Embraer E-190 aircraft types.

The agreement is a supplemental support contract driven by the Flight Solutions Group’s Eurasia office, headed by Mehmet Gökhan Doğan, Sr. Vice President. Doğan mentione: “I am very happy to further develop our existing agreements signed with Air Astana. They remain one of our key strategic partners in Eurasia with whom we have an existing Airbus A320/A321neo flight-hour agreement. This new repair management agreement will be supported by our MRO Services Group and allows us to improve on the customer’s efficiency while lowering costs on a larger scale for enhanced operational excellence.”

Blueberry Aviation expands team with appointment of Toshiyuki Takada

Blueberry Aviation, the specialist aircraft trading and management company, has further expanded its team with the appointment of Toshiyuki Takada as Senior Consultant Japan, based in Tokyo.

Toshiyuki has over 30 years’ experience in commercial aircraft finance, leasing, and trading. He worked for NatWest for eight years and spent the following 25 years working for Sumitomo Corporation, FPG and Sumitomo Mitsui Finance and Leasing Co. (SMFL) in commercial aviation finance, where he sourced and sold various aircraft transactions and structured tax lease, and ECAs financing for airlines and lessors.

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MTU Maintenance Hannover delivers facility's 9,000th engine to Saudi Aramco

MTU Maintenance, a global market leader in customized solutions for aero engines, has delivered the facility’s 9,000th engine, a CFM56-7B from the Saudi Aramco fleet.

Saudi Aramco is the largest listed, state-owned petroleum and natural gas company based in Saudi Arabia. The company has been sending CFM56 engines to MTU Maintenance since 2004 and relies on MTU for excellent technical support and cost-efficient maintenance solutions for the specific requirements generated because of the harsh environment in which they fly. MTU Maintenance also supported Saudi Aramco’s CF34-8E engines before they were phased-out and has been taking care of their LM2500 industrial gas turbines since 2009.

DAE Capital signs agreements to sell nine narrow- and wide-body aircraft

Dubai Aerospace Enterprise's leasing division DAE Capital has signed agreements to sell nine narrow- and wide-body aircraft with a total market value of approximately US$500 million. The aircraft sales are all expected to close in 2021.

Firoz Tarapore, Chief Executive Officer of DAE commented “The post-pandemic market for trading aircraft assets is robust. These transactions demonstrate DAE’s ability to originate and trade aircraft assets with a lease attached from high quality airline credits.”
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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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Tamar