Tuesday, June 11th, 2019

United Technologies and Raytheon to combine to create defense and aerospace giant

United Technologies Corp and Raytheon Co will merge to create a new company in what is seen as the largest-ever merger in the aerospace sector. Subject to regulatory approval, the deal should go through by the end of the first half of 2020 and will create a company worth an estimated US$121 billion. It is understood that the merged companies will be renamed Raytheon Technologies Corporation

The merger
will create a conglomerate which will span commercial aviation and defense
procurement and as United Technologies predominantly provides commercial plane
makers with electronics, communications and other equipment and Raytheon
primarily supplies the U.S Government with military aircraft and missile
equipment, there is little overlap between the two companies, a point that will
be emphasised to antitrust regulators.

combining resources, the overall anticipated cost synergies should exceed US$1
billion by the end of the fourth year. According to Reuters, no shareholder of
either company will receive a premium, with United Technologies shareholders
holding a 57% stake and Raytheon shareholders holding 43%. United Technologies
and Raytheon currently have a market capitalization of $114 billion and $52
billion, respectively.

spent US$23 billion in its acquisition of Rockwell Collins last year, United
Technologies has confirmed it now intends to focus on the aerospace sector and
is on course to separate its Carrier air conditioning and Otis lift businesses.
The newly created company is expected to return between US$18 billion and US$20
billion of capital to shareholders in the first three years after the deal’s
completion, while it is believed that the new company will also assume approximately
US$26 billion in net debt.


Avianca Argentina follows in its Brazilian counterpart’s footsteps and suspends all operations

Only two
weeks after another Avianca carrier was forced to suspend operations, Avianca
Argentina has obtained governmental approval for a 90-day suspension of all activities
while it looks to restructure its business and network model. "With the
current aircraft and the competition that exists, it is not viable to continue
with the operations," the CEO of the company, Carlos Colunga, told
Argentinian news agency Telam. Avianca Argentina operated two ATR 72-600
aircraft on its two domestic routes, Buenos Aires-Mar Del Plata and Buenos
Aires-Santa Fe. The 90-day suspension has an option for a further 90-day
extension and as it is state approved, this should protect Avianca Argentina
from sanctions linked to flight suspensions.

The parent
company of Avianca Argentina and Avianca Brazil is the Synergy Group, headed by
entrepreneur Germán Efromovich. Synergy Group acquired the formerly named Avian
Lineas Aereas in 2016 and had intended to operate narrow-body jets on
international routes, but this never came to fruition. As part of a regional
expansion plan, in 2016 Synergy announced 12 firm orders and 6 options for the
ATR 72-600, of which two to date have been delivered. The six options were
canceled in mid-2018.

Efromovich and Synergy’s woes were compounded last month with Efromovich being ousted as chairman of another Synergy carrier, Columbia’s flag-carrying airline, Avianca. Despite being the majority shareholder, Efromovich was replaced by Roberto Kriete, head of Texas-based minority shareholder Kingsland Holding Ltd.


Héroux-Devtek acquires Québec-based Alta Précision

Landing gear manufacturer, Héroux-Devtek, has concluded the acquisition of all the outstanding shares of Montreal-based Alta Precision Inc., a manufacturer of high-precision landing gear components. The transaction, which is subject to final purchase price adjustments, is valued at CA$23 million and was funded through the Corporation's credit facilities.

Héroux-Devtek, with its head office in Longueuil, Québec, has 1,960
employees around the world, of which approximately 800 are located in Québec
following the acquisition of Alta Precision Inc. Since its inception in 1942,
Héroux-Devtek has grown from a small repair and overhaul facility to a
world-class supplier of landing gear and actuation systems, delivering on major
platforms such as the Boeing 777 and 777X. This acquisition, along with those
of CESA, Beaver and Tekalia announced over the last year, strengthen its
leadership position around the world.

Warrick Hood joins C&L Aviation Group

Warrick Hood has joined C&L Aviation Group as Senior VP responsible for the company’s growing ATR program. Hood will oversee ATR parts distribution, aircraft support, consignments, and other programs for regional aircraft operators around the world.

Hood brings with him extensive knowledge of aviation
purchasing, logistics, business development, inventory management, and
accounting procedures from his 13 years of international aviation experience.
He has developed strong relationships with European and African regional
airlines, specializing in ATR, ERJ, Beechcraft, and Cessna aircraft, and has
utilized those relationships to support customers creating solutions for their
regional aircraft. Previous to his employment with C&L, Hood was
Managing Director for ACIA Aero Parts Company.


Locatory.com launches aircraft engine stands leasing for MROs and airlines

Locatory.com, an aviation IT company primarily acting as an aircraft parts locator, is continuously looking for opportunities in rapidly growing aviation market and always suggest new solutions for its clients. The company is spreading its services portfolio not just with IT solutions but also with actual physical additions that would improve the work for MROs and airlines. Now, Locatory.com introduces their new service – aircraft engine stands leasing.

The company starts its service by providing two options – stands for CFM56A/B and CFM56-7 engines. Locatory.com will offer a high-quality equipment lease for a preferred period so that the clients all around the world could productively carry out maintenance operations. The engine stands will be checked and certified according to the highest standards and quality requirements. In addition, the company will offer worldwide shipping services for all leasing orders.

Norwegian reports May load factor of 86%

A total of 3,362,413 passengers chose to fly with Norwegian in May; 59,047 less than the same month previous year. The total traffic increased by 4%, while the capacity growth was 4% compared to May 2018. The load factor was 86.1% down 0.4 points.


Vanguard raises ‘concerns’ with Boeing leaders over 737

Boeing’s largest shareholder, the Vanguard
Group Inc which currently holds a 7.1% stake in the U.S. plane maker, has made
public its concerns over Boeing management’s handling of the grounding of the
737 MAX and that its fund managers have become “very concerned” regarding
oversight failures in light of the two recent fatal 737 MAX crashes.

According to the Financial Times, the British newspaper has had sight of a letter written by Vanguard’s head of portfolio company engagement, analysis and voting, W. Robert Main III, in which he stated that Vanguard had “engaged with Boeing leadership and directors to convey our concerns.” Main also wrote that: “In our role as shareholders, we expect companies to effectively oversee the materials risk of their business, adding: ”In Boeing’s case, our expectation is that Boeing Leadership, including its Board of Directors, closely monitoring and maintaining the safety of its aircraft.”

Since the two crashes, several advisory
groups have been pressing for a management shake-up at Boeing, including the
removal of CEO Dennis Muilenburg as Board Chairman. One of the most critical
people has been Ralph Nader whose grandniece was killed in the Ethiopian
Airlines crash in March and who has personally written Vanguard’s CEO Mortimer
Buckley urging him to push for an investigation into “management misdeeds” and
to “make sure Boeing management takes its responsibility seriously. While
Vanguard have kept details of the correspondence confidential, Mr. Main
confirmed that Vanguard frequently investigates incidents that “put the health
and safety of consumers at risk, or threaten to disrupt confidence in
an industry.”

Boeing has stated that it has finished the anti-stall
software ‘fix’ to ensure the plane is safe to fly, but the jet’s return to
service will likely be delayed for quite some time while Boeing answers several
questions from the U.S. Federal Aviation Administration.


Hawaiian Airlines reports May traffic statistics

Hawaiian Airline has posted its system-wide traffic statistics for the month ended May 31, 2019.  
Hawaiian welcomed more than one million guests in May. Total traffic increased 5.8% on an increase of 4.1% in capacity compared to May 2018. Load factor increased 1.4 points year-over-year to 87.3%.

Avtrade secures 16 new component contracts in 2018

Independent aviation services provider, Avtrade, has secured 16 new component contracts in the last year. Airlines across 4 continents have taken advantage of their contract support which covers the whole spectrum of extensive service portfolio, including Boeing and Airbus Repair Management, PBH, Leasing and MRO.

Avtrade are not only preferred partners of new customers, but trusted allies of existing ones, with 25+ contracts renewed or extended by long-standing customers over the same term. In addition, the company has announced that 14 new contracts with maintenance partners have also been agreed, resulting in significant cost and efficiency savings to Avtrade and their customers.

These contracts consolidate their reputation for offering fast, flexible support, combined with access to capital and the world’s largest available component inventory. Their flexible and bespoke approach provides options such as price per transaction, fixed price, and flight hourly or monthly rates. They offer a choice of total budgetary control or pay-as-yougo, giving customers complete control with zero operational risk. The company has tripled the aircraft under contract in the last 5 years.


FedEx to not renew FedEx Express U.S. domestic contract with Amazon.com

FedEx has made the strategic decision to not renew the FedEx Express U.S. domestic contract with Amazon.com, as it will focus on serving the broader e-commerce market. This decision does not impact any existing contracts between Amazon.com and other FedEx business units or relating to international services. Amazon.com is not FedEx’s largest customer. The percentage of total FedEx revenue attributable to Amazon.com represented less than 1.3% of total FedEx revenue for the 12-month period ended December 31, 2018.

FedEx stated that there is significant demand and opportunity for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026. FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space.

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Managing Technical Aspects of a Leased Asset & Maintenance Reserves Seminar Training Seminar
June 11 - 12, 2019 – Novotel Barcelona City Hotel, Barcelona, Spain

Paris Air Show 2019
June 17 - 23, 2019 – Le Bourget, Paris, France

Advanced Engineering 2019
October 30 - 31, 2019 – NEC, Birmingham, UK