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Friday, August 5th, 2022

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Atlas Air Worldwide to be acquired by investment consortium for US$5.2 billion

Atlas Air Worldwide, a leading global provider of outsourced aircraft and aviation operating services and parent company of Atlas Air, Inc. and Titan Aviation Holdings, Inc., has announced that it has entered into a definitive agreement to be acquired by an investor group (the Consortium) led by funds managed by affiliates of Apollo together with investment affiliates of J.F. Lehman & Company and Hill City Capital in an all-cash transaction with an enterprise valuation of approximately US$5.2 billion.

Atlas Air Worldwide shareholders will receive US$102.50 per share in cash, which represents a 57% premium to the 30-day volume-weighted average trading price per share of Atlas Air Worldwide common stock as of July 29, 2022. The transaction is expected to close in the fourth quarter of 2022 or the first quarter of 2023, subject to customary closing conditions, including approval by Atlas Air Worldwide shareholders and receipt of regulatory approvals.

Apollo is a global, high-growth alternative asset manager with a focus on three business strategies: yield, hybrid, and equity. J.F. Lehman & Company is a private equity investment firm focused on the aerospace, defense, maritime and environmental sectors. Hill City Capital is an investment firm with investment research focused primarily in industrial, aerospace and transportation. (£1.00 = US$1.22 at time of publication).

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Spirit AeroSystems reports second-quarter operating loss of US$104.7 million

Spirit AeroSystems' revenue in the second quarter of 2022 was US$1.3 billion, up 26% from the same period of 2021. This increase was primarily due to higher production deliveries on the Boeing 737 programme as well as increased aftermarket revenue, partially offset by lower production volume on the Boeing 787 programme. Overall deliveries increased to 318 shipsets during the second quarter of 2022 compared to 235 shipsets in the same period of 2021. This includes Boeing 737 deliveries of 71 shipsets compared to 35 shipsets in the same period of the prior year and Boeing 787 deliveries of four shipsets compared to 11 shipsets in the second quarter of 2021.

Spirit’s backlog at the end of the second quarter of 2022 was approximately US$34 billion, with work packages on all commercial platforms in the Airbus and Boeing backlog.  

Operating loss for the second quarter of 2022 was US$104.7 million, compared to operating loss of US$97.7 million in the same period of 2021. This increase in operating loss was primarily driven by higher changes in estimates and losses related to Russia sanctions recorded during the second quarter of 2022, partially offset by higher production on the Boeing 737 programme. Second-quarter 2022 earnings included net forward loss charges of US$63.7 million and unfavorable cumulative catch-up adjustments of US$8.0 million. The forward losses relate primarily to the Boeing 787 and Airbus A220 programmes. The forward loss on the Boeing 787 programme is driven by the impact of production rate decreases and increased supply chain and other costs. The Airbus A220 programme forward loss is associated with the bankruptcy of a supplier and costs to relocate the work. The unfavourable cumulative catch-up adjustments were primarily driven by schedule changes, parts shortages and increased estimates for supply chain, freight and other costs on the Boeing 737 and Airbus A320 programmes. In relation to the sanctioned Russian business activities, Spirit recorded losses of US$41.9 million as well as the reversal of a previously booked forward loss reserve of $13.8 million. Excess capacity costs recorded during the second quarter of 2022 were US$44.9 million. In comparison, during the second quarter of 2021, Spirit recorded US$52.2 million of net forward loss charges, favourable cumulative catch-up adjustments of US$9.9 million and excess capacity costs of US$47.5 million.

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Iridium Partner SKYTRAC Satcom chosen for Joint Light Helicopter French Armed Forces programme

Iridium Communications has announced that Airbus Helicopters is providing the Joint Light Helicopter (Hélicoptère Interarmées Léger – HIL) French Armed Forces Programme with H160Ms that will be factory-equipped with Iridium partner SKYTRAC’s Iridium Certus Connected® SDL-700.

A multifunctional system, the SDL-700 is a satellite communication terminal, data acquisition, and onboard server system that utilizes Iridium Certus broadband connectivity to provide up to 704 Kbps of bandwidth to enable mission-critical capabilities onboard the H160Ms. The SDL-700 is the latest iteration of SKYTRAC’s flagship broadband satcom terminal, the SDL-350™.

Bombardier reports strong second-quarter 2022 results

Bombardier has reported strong financial results for the second quarter of 2022, marked by continued steady demand for new aircraft, strong aftermarket performance, robust free cash flow generation and high backlogs. Bombardier raised its full-year guidance on free cash flow, now expected to be better than the previously communicated target and reaffirmed guidance on aircraft deliveries, revenues and profitability metrics.

Bombardier's order backlog rose by 37% year-over-year to US$14.7 billion, with a unit book-to-bill of 1.8 for the second quarter, indicating continued high demand and strong order intake. Revenues of US$1.6 billion for the second quarter reflect 28 aircraft deliveries and a 22% year-over-year aftermarket revenue increase to US$359 million.

This past quarter saw Bombardier continue its margin expansion and reach an adjusted EBITDA of US$201 million, driven by continued progress on strategic priorities, this represents a 41% increase year-over-year.

Following the strong performance in the first half of 2022, Bombardier is revising its original 2022 free cash flow guidance to greater than US$515 million from greater than US$50 million due to stronger working capital performance and increased interest cost savings from accelerated deleveraging. The company reaffirms its original guidance on aircraft deliveries to exceed 120 units, revenues to exceed US$6.5 billion, adjusted EBIT and adjusted EBITDA to greater than US$375 million and greater than US$825 million respectively.

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Hans Airways’ first Airbus A330 arrives in the UK

Hans Airways, the UK’s new long-haul airline readying itself to fly to India, has celebrated the arrival of its first Airbus A330-200 on UK soil. The aircraft touched down from Palma Airport, Mallorca at Birmingham International Airport, welcomed by CEO Satnam Saini, COO Nathan Burkitt and CCO Martin Dunn for Hans Airways, ahead of formal technical handover and technical acceptance signing with the lessor.

Hans Airways has partnered with maintenance and repair overhaul specialist STS Aviation Services for re-registration tasks and entry into service modifications ahead of its important route-proving flight for the UK Civil Aviation Authority in the coming weeks. The A330 will fly as newly re-registered G-KJAS.

Since 2020, Hans Airways has maintained a close dialogue with the UK Civil Aviation Authority (CAA) on its progress.  Prior to arriving in Palma, the aircraft underwent a thorough 200-hour inspection in Abu Dhabi (UAE) by Etihad Engineering (work previously contracted by its former airline operator, Air Europa). The aircraft was required to return to Spain, its original country of registration for final contractual, administration, financial transfer and customs clearance. In Palma work included a final internal inspection of the engines and rectification of any defect identified on the airworthiness and positioning flight.

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Agility completes £763 million acquisition of Menzies Aviation

Agility, a supply chain services, infrastructure and innovation company, has finalised its acquisition of UK-based John Menzies PLC and will combine the business with its National Aviation Services (NAS) business to create a world leader in aviation services in 58 countries.

Once integrated, the combined company will operate as Menzies Aviation and will be the world’s largest aviation services company by number of countries and second largest by number of airports served.

Operating as Menzies Aviation, the combined company will provide air cargo services, fuel services and ground services at airports on six continents. Combined revenues of Menzies and NAS exceeded US$1.5 billion in 2021. The new company will have approximately 35,000 employees and operations at 254 airports in 58 countries, handling 600k aircraft turns, 2 million tonnes of air cargo and 2.5 million fuelling turns per year.

“Menzies and NAS will create the world leader in aviation services,” said Hassan El-Houry, who becomes Chairman of the combined company, having previously held the role of CEO at NAS .

“We will have the scale and resources to expand and grow as the industry recovers from the COVID-19 pandemic. Commercial aviation is a key engine of global economic growth, and our customers need partners they can count on as flight volumes return.”

The company’s customers will include Air Canada, Air China, Air France-KLM, America Airlines, British Airways, Cathay Pacific, EasyJet, Emirates, Ethiopian, FlyDubai, Frontier Airlines, IAG, Jazeera, Qantas Group, Qatar Airways, Southwest, Turkish, United Airlines, WestJet and Wizz Air.

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TrueNoord leases second Embraer E190 to Cobham Regional Services

Specialist regional aircraft lessor TrueNoord has completed the transition of a second Embraer E190 (MSN 1900099) to Cobham Regional Services on a six-year operating lease. The aircraft was integrated into Cobham’s fleet in May and is already operating charter flights from its base in Perth.

The smooth transition of this E190 from TrueNoord’s previous lessee, Mandarin Airlines, was particularly challenging due to pandemic restrictions. Jack Bos, TrueNoord Technical Director, explains how the team dealt with these added complexities, “At the time it was not possible to send inspectors to Taiwan without them having to quarantine for two weeks on arrival. We addressed this issue by hiring two experienced local consultants who sent daily reports including many detailed pictures. We had frequent contact with them throughout the transaction.”

Bos goes on to explain, “Our local consultants monitored the borescope inspection of the engines and APU on site and videos of the inspections were also reviewed remotely by an experienced engine specialist. We also employed the services of a local pilot to observe the demonstration flight.”

Cobham’s Business Development Director, Tim Pirga, comments that Cobham is pleased to have received a second Embraer E190 from TrueNoord – which has now entered service and is supporting natural resources projects in Western Australia.

Embraer posts earnings results for second quarter 2022

Embraer has reported consolidated revenues of US$ 1,018.9 million in the second-quarter of 2022 (2Q22), which represent a decrease of 9.9% y-o-y mostly driven by lower deliveries in Commercial and Defence & Security and partially offset by higher revenues in Services & Support.

Commercial Aviation reported revenue reduction of 23% y-o-y of US$299.9 million due to lower aircraft deliveries in the quarter. Executive Aviation 2Q22 revenues were US$266.7 million, which is 0.2% higher y-o-y.

Net profit attributable to Embraer shareholders and earnings per ADS for 2Q22 were US$74.2 million and US$0.40, respectively, compared to US$87.9 million in net income attributable to Embraer shareholders and US$0.48 in earnings per ADS in 2Q21.

Adjusted free cash flow for 2Q22 was US$91.2 million, a significant improvement compared to US$45.1 million reported in 2Q21 due to working capital optimisation, in light of production ramp-up and divestment of Évora’s facilities.
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