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Thursday, July 14th, 2022

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Turkey looks to protect domestic airlines by restricting rules for pilots to work abroad

The Turkish government has taken relatively draconian steps to stop an exodus of its home-grown pilots from working for foreign carriers as demand for travel ramps up worldwide. Turkish pilots are especially sought after by Gulf state carriers and North American airlines. Last month, Germany said it will fast-track work permits and visas for several thousand foreign airport workers, mainly from Turkey, to help to ease summer travel chaos.

The Turkish government has now made it impossible for pilots to leave their employment with a Turkish carrier unless the carrier provides them with a consent letter. While pilots will still be permitted to resign their position with a Turkish carrier, without the consent letter from their employer, the Turkish government will delay the processing of their application for verification, which would be required by the pilots’ new employers.

Carriers across the globe are struggling to recruit sufficient staff to cope with the bigger-than expected-surge in post COVID-19 air travel. As examples, at the beginning of the year American startup discount carrier Avelo was prepared to offer a 50% increase in a standard captain’s pay and 30% for a first -year first officer, as well as a US$20,00 signing bonus. Breeze, another American startup carrier was offering just over a 30% jump in an Airbus A220 captain’s pay, while Sun Country boosted first-year salaries between 35% and 45%. In the regional sector, GoJet not only increased salaries last December, but it also increased signing bonuses to US$40,000 for captains and US$20,000 for first officers.

The Hava-Is union in Turkey has made it clear it considers this new restriction to be an intervention to pilots’ freedom of labour and individual rights and will be meeting with transportation ministry and civil aviation officials to discuss the changes. (£1.00 = US$1.20 at time of publication).

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IATA: premature return to pre-pandemic slot rules risks continued passenger disruption

The International Air Transport Association (IATA) expressed concern that a premature return to pre-pandemic slot use rules in the EU this winter risks continuing disruption to passengers.

The European Commission has announced it intends to return to the longstanding 80-20 slot use rule, which requires airlines to operate at least 80% of every planned slot sequence. Global slot rules are an effective system for managing access to and the use of scarce capacity at airports. The system has stood the test of time and while airlines are keen to restart services, the failure of several key airports to accommodate demand, coupled with increasing air traffic control delays, means a premature return to the 80-20 rule could lead to further passenger disruption.

The evidence so far this summer has not been encouraging. Airports had the 2022 summer season schedules and final slot holdings in January and didn’t evaluate how to manage this in time. Airports declaring that full capacity is available and then requiring airlines to make cuts this summer shows the system is not ready for reviving “normal” slot use this winter season (which begins at end of October).

“The chaos we have seen at certain airports this summer has occurred with a slot use threshold of 64%. We are worried that airports will not be ready in time to service an 80% threshold by the end of October. It is essential the Member States and Parliament adjust the Commission’s proposal to a realistic level and permit flexibility to the slot use rules. Airports are equal partners in the slot process, let them demonstrate their ability to declare and manage their capacity accurately and competently and then restore the slot use next summer,” said Willie Walsh, IATA’s Director General.

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Delta Air Lines posts June-quarter 2022 profit

Delta Air Lines (Delta) has reported financial results for the June-quarter 2022. Delta reported operating revenue of US$13.8 billion and operating income of US$1.5 billion with operating margin of 11%. Operating cash flow was US$2.5 billion at the end of the quarter with total debt and finance lease obligations of US$24.8 billion.

Delta's June-quarter 2022 adjusted financial results was as follows: the company reported operating revenue of US$12.3 billion, 99% recovered versus June quarter 2019 on 82% capacity restoration. Operating income was US$1.4 billion with operating margin of 11.7%, the first quarter of double-digit margin since 2019. Free cash flow at the end of the quarter was US$1.6 billion after investing US$864 million into the business. Payments on debt and finance lease obligations was US$1.0 billion, US$13.6 billion in liquidity and adjusted net debt of US$19.6 billion.

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Malaysia Airlines signs five-year deal with SITA to boost connectivity agross its global operations

Malaysia Airlines has renewed its partnership with SITA for a comprehensive upgrade that will link its global operations to its hub in Kuala Lumpur with fast, secure and reliable network connectivity.

As part of the five-year agreement, Malaysia Airlines will leverage SITA Connect, specifically designed for the air transport industry, to meet the airline’s needs in and outside airports. SITA Connect will lower connectivity costs, improve the quality of service, enable ease of access to new features and applications and facilitate passengers' check-in process worldwide, benefiting from SITA's global presence at over 650 airports across 220 countries and territories.

SITA Connect will also provide network connectivity that allows team members to access central systems from anywhere, supporting the airline’s worldwide operation for employees working remotely. Security was a key factor in selecting SITA’s solution to support the airline’s critical operational systems.

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Air France-KLM and Apollo sign definitive agreement for €500 million investment

Air France-KLM and Apollo Global Management have announced the signing of a definitive agreement for Apollo-managed funds and entities to make a €500 million investment into an ad hoc operating affiliate of Air France that will own a pool of spare engines dedicated to the airline’s engineering and maintenance activities.

Under this agreement, Apollo affiliated entities will subscribe to perpetual bonds issued by the ad hoc operating affiliate, which will be accounted as equity under IFRS. The proceeds of the transaction will enable Air France-KLM and Air France to further redeem the French State perpetual bonds, in accordance with article 77 bis of the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak”, hence pursuing the redemption of the French State aid.

As a result of the transaction, Air France-KLM will benefit from lower financing costs. The perpetual bonds will bear an interest rate of 6% for the first 3 years and gradual step ups and caps will be applied thereafter. Air France will have the ability to redeem the bonds at any time after year three.

This structure will incur no change of ownership, operational and social aspects of Air France Engineering and Maintenance activity. In the future, it could also help finance the acquisition of additional spare engines to support Air France’s fleet renewal programme. There will be no change in the way Air France uses the spare engines and no impact on Air France or Air France-KLM employees’ contracts.

The transaction, expected to close later in July, is a part of the recapitalisation measures announced on February 17, 2022.

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Aventure acquires GOL Boeing 737NG

Aventure Aviation has acquired its fifth Boeing 737NG for 2022. Teardown for this recently retired GOL Airlines aircraft, MSN 28584, will be performed by Jetyard in Marana, Arizona, U.S.A.

Parts will be relocated to Aventure's Atlanta warehouse, where it will join an extensive stock of existing 737NG inventory.

"With passenger travel on the rise and an increase in 737NG cargo conversions, this acquisition couldn't come at a better time," said Andrew Crombie, Aventure's product line director. "This part-out will allow us to continue to support our customers with the latest 737NG inventory."

Air Lease Corporation activity update for second quarter of 2022

Air Lease Corporation (ALC) has announced an update on aircraft investments and sales activity occurring in the second quarter of 2022.

As of June 30, 2022, ALC’s fleet was comprised of 392 owned aircraft and 89 managed aircraft, with 430 new aircraft on order from Boeing and Airbus set to deliver through 2028.

The company delivered 21 new aircraft from its order book including two Airbus A320neos, five Airbus A321neos, one Airbus A330-900neo, two Airbus A350s, nine Boeing 737-8s and two Boeing 737-9s. ALC purchased one new incremental Airbus A321neo, which was concurrently leased to an ALC customer. Aircraft investments in the quarter totalled approximately US$1.4 billion.

No aircraft sales occurred during the quarter.
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