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Monday, August 9th, 2021

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1,000 jobs at risk in Germany if Airbus can’t hive off Premium Aerotec

Europe’s Airbus has warned that if it is unable to hive off its small parts manufacturing business Premium Aerotec, then it will be forced to reduce that company’s workforce by approximately 1,000 out of its current 2,500 staff according to REUTERS news agency. Four months ago Airbus outlined plans for a company shake-up which included splitting off Premium Aerotec in Germany, with part of the business being combined with other Airbus manufacturing plants and the remainder forming a new business which would specialize in the mass production of small detail parts.

Premium Aerotec manufactures components for commercial and military aircraft, predominantly in Augsburg and Varel. Premium Aerotec has been making a loss for a number of years and Airbus sees its only route to profitability would be under new ownership whereby additional work could come in the form of working for competitors or to attract new customers from different industry sectors. Switzerland’s Montana Aerospace has already expressed interest.

Airbus claims that at current costing levels, Premium Aerotec provides parts at between 25% and 30% higher cost than alternative suppliers. IG Metall, the German trade union, is against the spinoff as it sees job cuts and less favorable working conditions would be the result of a break-up of the unit where Airbus aircraft fuselages are also assembled.

“Our analysis, which we shared with employee representatives at the end of July, clearly showed that the internal route would be much more painful for employees to achieve competitive cost structures,” an Airbus spokesperson said, adding that: “The window of opportunity to reposition is now, before production rates return to pre-crisis levels.”


Panasonic Avionics launches full cabin 4K in-flight entertainment system with Cathay Pacific

Panasonic Avionics has launched the first full cabin 4K ultra-high-definition in-flight entertainment (IFE) with Cathay Pacific Airways (Cathay Pacific).

Its 4K screens are taking to the skies on the airline’s new fleet of Airbus A321neo aircraft, incorporating on-demand services with one of the largest movie and TV libraries available on a regional single-aisle aircraft.

The rollout of Panasonic Avionics’ screens will also include Bluetooth audio streaming, enabling Cathay Pacific’s passengers to watch the latest Hollywood blockbusters in 4K using their own Bluetooth-enabled headphones.

The new IFE experience will be featured in all cabins on Cathay Pacific’s A321neo fleet. The airline’s economy class seats will feature 11.6-inch personal screens, while business class will feature 15.6-inch personal screens.

Rolls-Royce reports good start to the year with improving cash flow and profits

Rolls-Royce Group's underlying revenue from continuing operations for the first half year of 2021 was £5.2 billion, down 2%, reflected a more balanced contribution from the business units compared with the prior period. It included a positive £160 million Civil Aerospace LTSA revenue catch-up compared with a £ (866) million negative revenue catch-up in first half 2020.

Group underlying operating profit from continuing operations of £307 million included significant cost savings from the restructuring program, primarily in Civil Aerospace, and favourable timing and mix of activity in Defense and Power Systems. The prior period comparative underlying loss of £ (1.6) billion included £ (1.2) billions of one-off charges mostly related to the impact of COVID-19 on Civil Aerospace.

In Civil Aerospace, Rolls-Royce’s first half operational performance saw an overall improvement with a recovery in business aviation and domestic large engine flying activity together with substantial cost benefits from its fundamental restructuring program, which is reducing the size of its cost base by around a third. Large engine LTSA flying hours were 43% of the 2019 level, up from the 34% in H2 2020; 92 large engine major shop visits were completed, and 100 large engines were delivered. The Group has already seen a return to 2019 levels of flying activity for its business aviation engines and for large engines operated on domestic flying routes. However, international travel is recovering more gradually, hindered by global variation in vaccination rates and ongoing travel restrictions.

The Group’s liquidity position was strong with £7.5 billion of liquidity including £3.0 billion in cash at the end of the half year after repaying the 2021 €750 million loan notes and the £300 million Covid Corporate Financing Facility (CCFF) loan in the first half. Net debt (before leases) was £ (3.1) billion at the period end. The Group signed an extension to the 2022 £1 billion unused loan facility to 2024, consequently it has no debt maturities before 2024 (excluding ITP Aero).

Free cash outflow of £ (1.2) billion represented a significant improvement on the prior year period of £ (2.9) billion, which included a £ (1.1) billion negative impact from the cessation of invoice factoring. The £0.6 billion underlying improvement reflected good progress on cost reduction, stronger operating performance, and reduced capital expenditure.


Aergo Capital completes acquisition of two wide-body aircraft by way of sale and leaseback with Iberia

Aergo Capital has completed the sale and leaseback of two Airbus A330-200 aircraft, bearing manufacturers serial numbers 1864 and 1882. Both aircraft are subject to long-term leases with Iberia.

Fred Browne, Chief Executive Officer of Aergo, commented: “We are extremely happy to partner with Iberia and further strengthen our relationship with IAG by adding one more carrier to the portfolio. We found Iberia to be proactive and fully supportive in this transaction, resulting in a smooth closing process. We are looking forward to further developing our relationship with the Group & Iberia”

Justin Bradburn, Principal Carval Investors. “We are delighted to close this transaction and broaden the growing relationship with Iberia and the IAG group”.

Frontier Airlines' employees have to be fully vaccinated against COVID-19 by October 1

Frontier Airlines has announced a policy for all direct employees to be fully vaccinated against COVID-19 by October 1, 2021. The latest action comes as COVID-19 cases – specifically of the Delta variant – have rapidly increased throughout the U.S.

“As we continue to watch the rapid increase of new COVID-19 cases across the United States caused by the Delta variant, I am concerned for the well-being of our team members, their families and friends,” said Barry Biffle, president and CEO, Frontier Airlines. “Safety is of the utmost importance at Frontier and we need to take every step possible for us to keep our teams safe, protect the operation and protect our passengers. The time has come to do what we can to help put an end to COVID-19.”

Frontier employees that choose not to or are unable to get vaccinated will be asked to provide proof of a negative COVID-19 test on a regular basis. Frontier recognizes the value its union leaders provide and invites them to work with airline leadership to establish testing protocols that work for employees, their health and the overall safety of the workforce.

Frontier has been at the forefront of health safety throughout the pandemic and implemented an employee mask requirement in April 2020, followed by a requirement that all passengers wear masks less than a month later. Additionally, in early 2020, the airline enhanced onboard cleaning utilizing fogging technology and added a health acknowledgement affirming customers understand COVID-19 protocols and have not been recently exposed to the virus or experienced known symptoms. A vaccination policy is a clear next step for the airline as it remains committed to the health and safety of all passengers and crew members.


Spirit AeroSystems reports improved second quarter 2021 results

Spirit AeroSystems second quarter of 2021 revenue was US$1.0 billion, up 55% from the same period of 2020, primarily due to higher production deliveries on the Boeing 737 and Airbus A320 programs and increased revenue from the recently acquired A220 wing and Bombardier programs. These increases were partially offset by the lower wide-body production rates due to reduced international air traffic resulting from the impacts of COVID-19. Deliveries increased to 243 shipsets during the second quarter of 2021 compared to 159 shipsets in the same period of 2020, including Boeing 737 deliveries of 35 shipsets compared to 19 shipsets in the same period of the prior year.

Spirit’s backlog at the end of the second quarter of 2021 was approximately US$34 billion, with work packages on all commercial platforms in the Boeing and Airbus backlog.

Operating loss for the second quarter of 2021 was US$97.7 million, as compared to operating loss of US$367.0 million in the same period of 2020. The decreased loss was primarily driven by lower forward loss charges, lower costs related to excess capacity and lower losses on disposal of assets in the second quarter of 2021 compared to the second quarter of 2020. Second quarter 2021 earnings included US$47.5 million of excess capacity costs and US$9.9 million of favorable cumulative catch-up adjustments. Additionally, the second quarter of 2021 included net forward loss charges of US$52.2 million, primarily driven by Boeing 787 engineering analysis and rework. In comparison, during the second quarter of 2020, Spirit recorded US$194.1 million of net forward loss charges, excess capacity costs of US$82.8 million and US$37.7 million of unfavorable cumulative catch-up adjustments. Additionally, during the second quarter of 2020, Spirit recognized loss on disposal charges of US$22.9 million related to certain long lived assets on the Boeing 787 and Airbus A350 programs.

Other income for the second quarter 2021 was US$31.1 million, compared to a net expense of US$6.4 million for the same period in the prior year. The increase primarily reflects income related to the Belfast pension plan during the second quarter of 2021, as well as a non-cash expense of US$14.7 million recognized in the second quarter of 2020 resulting from the voluntary retirement program (VRP) offered during 2020 that did not recur in 2021.

JetBlue intents to keep headquarters in New York City

JetBlue, New York’s Hometown Airline®, has announced plans to double down on its commitment to New York by maintaining its headquarters in the city and advancing plans to expand its flagship terminal at John F. Kennedy International Airport (JFK). These initiatives further strengthen JetBlue’s presence in New York, where it has already announced plans to substantially increase flying and bring more low fares and more jobs to JFK, LaGuardia, and Newark as part of its Northeast Alliance with American Airlines.

After an in-depth review and competitive bid process, JetBlue intents to keep its headquarters in New York City when its current office lease expires in 2023. The decision comes as the airline industry is recovering from the financial impact of the pandemic, which has also shifted how people will work in office environments in the future.

JetBlue plans to stay at its current home in the Brewster Building at 27-01 Queens Plaza North in Long Island City, where the company has been based since 2012 and is home to its iconic rooftop sign. JetBlue intends to negotiate and execute a lease over the next few months and then re-design its office space to be responsive to rapidly evolving workplace trends that have accelerated during the pandemic.

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