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Wednesday, May 4th, 2022

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Sanctions see Avolon forced to record US$304 million impairment for Russian planes

Irish lessor Avolon, which has ten leased jets still trapped in Russia, has recorded a first-quarter US$304 million impairment to cover the full financial impact.

"While we continue to make every effort to recover these assets, we are recognising the full impairment this quarter, putting the financial impact of Russian sanctions firmly behind us," Avolon’s Chief Executive Dómhnal Slattery said in a statement.

The EU sanctions came into effect on March 28, as a consequence of Russia’s attack on Ukraine, after which all aircraft lease contracts with Russian carriers had to be cancelled. Consequently, over 400 leased aircraft, worth approximately U$10 billion, are currently trapped in Russia.

Overall, Avolon posted a net loss of US$182 million for the first quarter of 2022, and an adjusted net income of US$80 million excluding the impact of Russian sanctions. This means that Avolon had it strongest quarter since the outbreak of the COVID-19 pandemic and Slattery put the improvement down to the reopening of borders in Asia and increased trends in global flights, producing higher cash collection rates. At the end of March Avolon either owned or managed 592 aircraft.  

"This performance re-affirms the inherent strengths of our business and the absolute resilience of the aircraft leasing model, providing us with confidence in the outlook for the remainder of the year," Slattery added. (£1.00 = US$1.25 at time of publication).


Airbus deploys A220 on Asia-Pacific demonstration tour

Airbus has deployed the A220 passenger aircraft to the Asia-Pacific region as part of its latest demonstration tour. The aircraft, an airBaltic A220-300, made a demonstration flight in Sydney (Australia) and will next fly to Singapore. The week-long campaign will see the aircraft make another two stops in Hanoi (Vietnam) and Tokyo (Japan).

On each leg, invited guests will tour the airBaltic aircraft, which features a comfortable layout of 145 seats in a single class passenger cabin. Airbus executives will also give product briefings of the A220, and guests can enjoy a demonstration flight.

The A220’s range and capacity make it ideal for carriers that want to open new regional routes out of Asia-Pacific or require an aircraft for lucrative but thin routes out of the country. It also enables a more cost-efficient and seamless way to connect to and from international services to domestic and regional destinations.

The A220 is available in two versions, with the -100-variant seating between 100 and 130 passengers and the larger -300 variant seating between 130 and 160 in typical airline layouts. The A220 is also ideal for airlines that require an aircraft to complement the existing A320 family.

Asia-Pacific is a core market for Airbus, and it is the fastest growing market for air transport with 5.5% annual growth in passenger traffic (versus a global average of 4.3%). Today the region accounts for a third of the European manufacturer’s total order book and a third of its revenues.


IATA releases March 2022 data for global air cargo markets, showing drop in demand

The International Air Transport Association (IATA) has released March 2022 data for global air cargo markets showing a drop in demand. The effects of Omicron in Asia, the Russia – Ukraine war and a challenging operating backdrop contributed to the decline.

Global demand, measured in cargo tonne-kilometres (CTKs), fell 5.2% compared to March 2021 (-5.4% for international operations). Capacity was 1.2% above March 2021 (+2.6% for international operations). While this is in positive territory, it is a significant decline from the 11.2% year-on-year increase in February. Asia and Europe experienced the largest falls in capacity.

Several factors in the operating environment should be noted:

The war in Ukraine led to a fall in cargo capacity used to serve Europe as several airlines based in Russia and Ukraine were key cargo players. Sanctions against Russia led to disruptions in manufacturing and rising oil prices are having a negative economic impact, including raising costs for shipping.

New export orders, a leading indicator of cargo demand, are now shrinking in all markets except the U.S. The Purchasing Managers’ Index (PMI) indicator tracking global new export orders fell to 48.2 in March. This was the lowest since July 2020.

Global goods trade has continued to decline in 2022, with China’s economy growing more slowly because of COVID-19 related lockdowns (among other factors); and supply chain disruptions amplified by the war in Ukraine.

General consumer price inflation for the G7 countries was at 6.3% year-on-year in February 2022, the highest since 1982.


Fatigue Technology selects Wencor as preferred strategic partner

Fatigue Technology Inc. (FTI) has selected Wencor as a preferred strategic partner supporting its Cold Working tooling “CB” product line for the commercial maintenance and repair market.

“We are excited to partner with Fatigue Technology and its market leading products. Its diverse product and engineering capabilities, combined with our extensive technical sales capabilities and value-added services will enhance opportunities to the commercial MRO market. We pride ourselves on being able to provide innovative solutions to our customers that enable reliability, material availability and cost efficiencies,” said Wencor President of Distribution, Hunter Mitchem.

Wencor has been a trusted partner in aerospace and defense for over 60 years, offering CMM and DER repairs, PMA and an extensive network of distribution solutions to help make flights safer and more cost effective. The company supports most of the commercial airlines, repair stations and OEMs worldwide through its corporate affiliates Wencor, Soundair Aviation Services, PHS/MWA Aviation Services, Absolute Aviation Services, Aerospace Coatings International, Accessory Technologies Corporation, Fortner Engineering & Manufacturing, Silver Wings Aerospace, ASC International, Inc. and Kitco Defense. Wencor Group is headquartered in the Atlanta, Georgia area with additional offices in Utah, Miami, Seattle, California, Alabama, New York, Amsterdam, Singapore, Shanghai, and Istanbul.

FTI has been providing engineered solutions to the aerospace community, with expanded fastening solutions for both the production and sustainment arenas. In 2008, PCC, a worldwide, diversified manufacturer of complex metal components and products acquired FTI to add to its portfolio of companies within its Engineered Products Division. PCC is the market leader in manufacturing large, complex structural investment castings, airfoil castings, and forged components used in jet aircraft engines and industrial gas turbines. PCC is also a leading producer of highly engineered, critical fasteners for aerospace, automotive, and other markets, and supplies metal alloys and other materials to the casting and forging industry.


Airbus expands training portfolio to include Evidence Based Training

Airbus is expanding its flight training portfolio, by extending its Competency Based Training and Assessment (CBTA) offer to include Evidence Based Training (EBT). This new flight training concept will enable airlines to incorporate operational and training data in order to adapt training programmes for technical and non-technical skills.

EBT is currently being offered as an option to customers as an alternative to Recurrent Training & Checking (RTC) for pilots -traditionally a method that is oriented towards tasks and task-based training and assessment, or as an enhancement to CBTA- a technique which has been well implemented across the aviation industry since its launch by ICAO in the 2000s- that focuses on assessing the pilots’ performance, developing specific pilot competencies and providing pilots with targeted individual training needs, such as decision making and workload management.

In addition to this, EBT also addresses new regulations that are being recommended / made mandatory by airworthiness authorities around the world in acknowledgement of the innovations in aircraft technology and developments in aircraft operations that pilots are being faced with.

The appetite for EBT is being led by China, following requirements imposed by the Civil Aviation Administration of China (CAAC), who in 2020 launched a roadmap requiring all Chinese airlines to implement CBTA/EBT training by 2024.To that end, Airbus confirms that the fastest growing airline in China, Loong Air, operating scheduled passenger and cargo services out Hangzhou Airport is the first customer to sign for the EBT service offering.

In order to implement EBT, Airbus has signed a Memorandum of Understanding (MoU) with the French-based training data analytics company, Hinfact. The deployment of EBT involves Airbus and the airlines acquiring Hinfact’s specific training software compatible with any training data source, tablet and Full-Flight Simulator (FFS).

By combining operational data from the airline, plus training session data from FFS sessions, Hinfact software uses data analytics to identify competency improvement areas and suggest customised training sessions accordingly.


Chorus Aviation completes acquisition of Falko Regional Aircraft

Chorus Aviation (Chorus) has completed its acquisition of Falko Regional Aircraft Limited (Falko), as previously announced on February 27, 2022. This acquisition transforms Chorus into a premier full-service provider in regional aviation with unique capabilities to maximise value at every stage of an aircraft’s lifecycle. The completion of this transaction establishes Chorus as one of largest aircraft lessors focused solely on investing in the regional aircraft leasing space and results in a portfolio of 348 regional aircraft with an aggregate value of approximately US$4.5 billion which are owned, managed, and/or operated by Chorus subsidiaries.

As contemplated by the acquisition agreement, Chorus expects to acquire the beneficial interests in five aircraft trusts on a deferred basis prior to the end of the second quarter of 2022 (subject to the satisfaction or waiver of specified conditions applicable to those transactions) bringing the total to 353 aircraft.

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Tamar Jorssen
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Email: tamar.jorssen@avitrader.com
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