Friday, July 26th, 2019

U.K.’s Cobham acquired by U.S. private equity group Advent for US$5 billion

Having made a name for itself by pioneering air-to-air refueling technology and its technology also found on Airbus jets as well as F-35 fighters, British company Cobham is to be acquired by American private equity group Advent International for £4 billion (US$5 billion). The offer equates to 165 pence in cash for each share in the aerospace company, a 50.3% premium on its average share price over the last three months.

News of the deal saw shares jump early on to 165.95 pence. It was back in 2016 and 2017 that Cobham was rocked by a series of profit warnings which saw it forced to raise cash from its shareholders, after which company Chief Executive David Lockwood embarked on a turnaround strategy which focused on improving the company’s financial and operating performance.

“This offer reflects the potential for future growth and improving performance and is an endorsement of our turnaround strategy and our hard-working people,” Lockwood said, commenting on the deal. His plan was initially hampered by problems with Boeing’s troubled KC-46 aerial refueling program, but he remarked that the company’s free cash flow was better than expected after a £48.7 million settlement of the issue.

Cobham posted organic revenue growth of 11% to £1.03 billion and a 12% rise in underlying operating profit to £107.1 million in the half year to June 30. Cobham also said it had started a strategic review of its aviation services business in Australia. (£1.00 (100 pence) = US$1.25 at time of publication.)


Hawaiian charter group Wing Spirit to purchase 15 HondaJets

Hawaiian charter group Wing Spirit has purchased a total of 15 HondaJets to support inter-island transportation in the Hawaiian Islands. With the initial deliveries to Wing Spirit taking place earlier this month, the HondaJet Elite became the first light jet to enter service in Hawaii.

A newly-established aviation group, Wing Spirit will use its HondaJets to provide luxury inter-island transportation throughout the Hawaiian Islands. They are also exploring using HondaJets as air ambulances and for aviation education opportunities throughout the Hawaiian Islands. The aircraft serving as air ambulances will be outfitted with custom medevac configurations, marking the first time this design has been implemented in the HondaJet program’s history.

ST Engineering's Aerospace sector secures contracts worth US$809 million for 2nd quarter 2019

Singapore Technologies Engineering has reported that its Aerospace sector has received a number of contracts in the second quarter 2019, worth about US$809 million, from airframe to engine MRO services and support. These contracts include a multi-year agreement from a long-time customer to provide heavy maintenance services to their entire fleet of Boeing 717s, agreements from AirAsiaX Berhad and Beibu Gulf Airlines also for heavy maintenance, and a number of agreements for engine maintenance.

The sector gained further traction in its unmanned aerial solutions with a contract win for its latest smart drone system, DroNet, to be applied in security and surveillance missions as an end-to-end solution.

The Electronics sector received new orders globally worth $702m for smart mobility, satellite communications, Internet of Things (IoT), cybersecurity, public safety and security, and defence.

Southwest reports second quarter revenues of US$5.9 billion, up 2.9%

Southwest Airlines' second quarter 2019 total operating revenues increased 2.9%, year-over-year, to an all-time quarterly record of US$5.9 billion, despite the negative revenue impacts as a result of flight schedule adjustments due to the MAX groundings. Second quarter 2019 net income was US$741 million compared with second quarter 2018 net income of US$733 million. Second quarter 2019 operating revenue per ASM (RASM, or unit revenues) increased 6.8%, year-over-year, driven largely by a passenger revenue yield increase of 4.2%, year-over-year, and a load factor increase of 1.7 points, year-over-year, to an all-time quarterly record of 86.4%.

Based on the most recent guidance from Boeing, Southwest currently estimates regulatory approval of MAX return to service during the fourth quarter 2019. Therefore the carrier will proactively extend the MAX-related flight schedule adjustments through January 5, 2020.


FPG Amentum opens Hong Kong office

FPG Amentum, the Dublin-headquartered aircraft leasing / management company has announced the opening of its newly set-up 100% subsidiary FPG Amentum HK Ltd.

Through the Hong Kong presence the group will further strengthen its growing Asia-activities. Initially the focus is on airline and lessor relationships, debt sourcing & structuring, technical
services and operations.

HOP! extends relationship with Spairliners for component support

Spairliners GmbH and HOP!, a subsidiary airline of the AIR FRANCE Group, have extended their business relationship by signing a long-term contract for the comprehensive component support of HOP!'s E-Jet fleet.

HOP! currently operates a fleet of 15 Embraer E170 and 11 Embraer E190. During the next two years HOP! will add an additional six brand new E190 to its fleet and will then operate 32 E-Jet aircraft. This contract includes a dedicated on-site stock for HOP!'s exclusive use in Paris- Charles de Gaulle, improved logistic processes and a customized and automated IT-interface.

Spairliners will provide its Component Services from its pool location in Paris.

West Star Aviation approved for winglet installation on Citation Sovereign

West Star Aviation will offer Winglet Technology's winglet installation for the Citation Sovereign model. Current certified installation of the Transitional winglet for the Sovereign model can be completed at the Grand Junction facility, one of four West Star full-service Textron Aviation Approved Service Center locations, where West Star has already installed two sets to date.

"We are dedicated to building on specialized capabilities for the Citation airframe and this addition enhances the wide array of services available for the convenience and satisfaction of our Sovereign customers," stated Dave Krogman, General Manager, Grand Junction.

AJW Group purchases multiple engines for teardown

AJW Group has purchased three engines CFM56-5B, CFM56-7B, V2500-A5 for teardown. The purchase of the engines was completed on July 3, 2019 and the repaired and certified engine parts will be used to bolster AJW’s strategically located inventory to support its customers worldwide.

The Group has also recently purchased a package of fan blades including; CFM56-5B, LEAP-1A and Trent 700, which will provide inventory for its comprehensive Fan Blade Exchange Programmes.


Air Astana and S7 Siberia airlines sign codeshare agreement

Air Astana and Russian private airline S7 Airlines, have strengthened their co-operation by signing a codeshare agreement for flights between Russia and Kazakhstan. Effective for flights operated from July 15, 2019, Air Astana flights from its hubs at Nur-Sultan and Almaty, to Novosibirsk and St. Petersburg, now carry the code of S7 Airlines. Similarly, S7 Airlines’ services from Nur-Sultan and Almaty to Novosibirsk now carry the code of Air Astana.

The Agreement enables passengers of both airlines to purchase tickets travel across the combined network seamlessly. S7 Airlines passengers from across Russia will now have access to ten weekly flights connecting the S7 Airlines hub in Novosibirsk to and from the Kazakh capital, Nur-Sultan. With the increased number of frequencies marketed by each carrier on the route, flight connections are improved and total trip times are reduced.

Similarly, Air Astana’s code being placed on S7 Airlines services between Almaty and Novosibirsk will provide Air Astana’s domestic, regional and international passengers with more choice of connecting flights. Passengers travelling between Nur-Sultan or Almaty and Stockholm, Sweden can also now use the growing S7 Airlines hub in St. Petersburg to reach their destination.

MTU Aero Engines raises earnings and cash flow forecast at half-year

At half-year, MTU Aero Engines AG has raised its forecast for 2019. The company is now projecting an adjusted EBIT margin in the region of 16%. The original forecast had been 15.5 % (2018: 14.7 %). “The increase in the earnings outlook mainly reflects two factors: One is that our MTU Maintenance Zhuhai site in China developed somewhat more positively than anticipated. In addition, changes in the product mix also had a positive effect,” said Reiner Winkler, CEO of MTU Aero Engines AG. Net income adjusted is expected to increase in line with EBIT adjusted (EBIT adjusted, 2018: €671.4 million, net income adjusted, 2018: €479.1 million). The cash conversion rate – that is, the ratio of free cash flow to net income adjusted – is expected to lie between 65 and 70% in 2019. MTU’s previous forecast specified a target range between 55 and 65% (2018: 42%).

In the first six months of 2019, MTU generated revenues of €2,243.0 million, which is 4% higher than in the first six months of 2018 (1-6/2018: €2,148.6 million). Adjusted for one-time effects arising from internal changes in contracting and invoicing processes, the growth in revenues expressed in euros would have amounted to around 12%. The group’s operating profit increased by 9% from €334.6 million to €365.2 million. The EBIT margin rose from 15.6% to 16.3%. Net income increased by 10 % to €261.0 million (1-6/2018: €237.0 million).

MTU has maintained its forecast for an increase in revenues to around €4.7 billion (2018: €4.6 billion), based on the expectation that the commercial series production business will grow organically by a percentage in the low teens, and that spare parts sales will increase by a percentage in the mid-to-high single digits. Revenues in the military engine business are expected to increase by around 10%. A high single-digit percentage organic growth rate is expected in the commercial maintenance business.

The area in which MTU recorded the highest revenue growth in the first six months of 2019 was the commercial engine business, where revenues increased by 13 % from €687.0 million to €773.0 million. The major part of these revenues was attributable to the V2500 engine for the classic A320 family and the PW1100G-JM for the A320neo.


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