Monday, January 21st, 2019


Lessors struggle to repossess jets from Avianca escalates

At least 20 jets are at the center of a struggle by lessors to obtain possession after the ailing Brazilian airline fell behind with lease payments. Last Friday (Jan.18) Brazil’s aviation regulator ANAC confirmed it would no longer ground ten jets, while another lessor ramped up its efforts to take possession of a further ten aircraft.

Both Aircastle Ltd and General Electric Capital Aviation Services (GECAS) have struggled to take back possession of these aircraft after Avianca filed for bankruptcy protection back in December 2018. Last Thursday ANAC confirmed it would ground ten aircraft at the request of GECAS, but a day later advised it was no longer prepared to intervene in the dispute.

Separate to GECAS’ dispute, a representative for U.S.-listed Aircastle confirmed last Friday the firm would be filing an appeal of a legal order that stayed repossession of Avianca Brasil’s planes for 15 days until Feb. 1. Aircastle has 10 planes on lease to Avianca Brasil which is its biggest customer. According to Reuters, Avianca Brasil said in a statement that it “continues operating normally,” but did not directly address a question on how an appeal from Aircastle could affect its operations.

According to the legal order which the lessors signed, the 15-day stay on repossessions was requested by a bankruptcy judge in Sao Paulo after the airline and its lessors failed to reach an agreement at a hearing last Monday. However, Aircastle said in a statement that the leasing firms did not agree with the judge’s decision, commenting that “His decision is completely contrary to the
Cape Town Convention.” This was in reference to a little-known international treaty that allows for swift repossession of aircraft which both Brazil and the United States have signed.

Beach Aviation Group

SMBC Aviation Capital orders 65 A320neo Family aircraft

Aircraft lessor SMBC Aviation Capital has boosted its total order book for the A320neo Family to 181 aircraft after signing a firm order for an additional 65 A320neo Family aircraft (15 A321neo and 50 A320neo). The order was finalised in 2018 and included in the year-end order figures.

In addition the agreement includes an upsizing of 15 A320neo from a pre-existing order to 15 of the largest member of the single aisle, the A321neos, taking SMBC Aviation Capital’s total for the type to 30. With its unbeatable seat mile cost, longer range and wider cabin, the A321neo offers airlines the flexibility to expand their networks using wide-body cabin products on new longer haul routes which were not previously possible with a single aisle.

Bell Boeing awarded US$144 million for V-22 support

The Bell Boeing Joint Program Office has been awarded an estimated $143,863,184 firm-fixed-price requirements contract for performance-based logistics and engineering support for the V-22 platform.

This is an 11-month base contract with four one-year option periods. Locations of performance are Texas and Pennsylvania for V-22 aircraft belonging to the U.S. Navy, U.S. Air Force and U.S. Marine Corps. The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania.

In July, Bell Boeing received a US$4 billion contract that included the manufacture and delivery of 39 CMV-22B aircraft for the Navy; 14 MV-22B aircraft for the Marine Corps; and one CV-22B for the Air Force.

Under this performance-based logistics (PBL) contract, which expands on work done since 2008 and now adds support for the Navy’s CMV-22B variant, Bell Boeing will focus on improving aircraft maintainability and mission readiness for the Navy, Air Force and Marine Corps V-22

GA Telesis

GA Telesis buys two E170 aircraft on lease with Republic Airways

GA Telesis (GAT) has completed the acquisition of two Embraer E170 aircraft, which are subject to multi-year leases with Republic Airline, last month, which increases its total fleet with Republic to eight aircraft.

“Republic Airline has been a great airline partner for GA Telesis, and we are very pleased toincrease our exposure to such an outstanding operator,” commented Marc Cho, President of GA Telesis’ Leasing Investment Financing & Trading (LIFT) Group.

The transaction was executed by GA Telesis Aviation Investments 2 LLC (GAIN 2) an aviation investment vehicle managed by GA Telesis Capital Management and co-funded by GAT and Wafra Capital Partners with a commitment of US$500 million. Over the past several months, GA Telesis has acquired 12 aircraft into GAIN 2 valued at over US$200 million.

DAE’s managed aircraft portfolio grows to 54 aircraft

Dubai Aerospace Enterprise (DAE) is continuing to make strong progress in building its managed aircraft portfolio. In 2018 DAE concluded transactions adding 19 aircraft to the portfolio valued at over US$500 million, taking DAE’s total managed fleet to 54 aircraft.

DAE is growing its managed portfolio both through sales of assets targeted for divestment and by working with investors to identify portfolios specifically suited to their needs and available in the market. DAE’s Aircraft Investor Services (AIS) service offering provides investors access to the full expertise across the DAE platform including substantial in-house capabilities related to asset re-marketing, asset valuation, asset disposition strategy, maintenance condition forecasting and valuing, asset surveillance, and credit analysis. 


€175 million revolving credit facility for Finnair

On January 18, 2019, Finnair has signed a binding €175 million syndicated revolving credit facility for general corporate purposes. The coordinating bookrunner and mandated lead arranger for the facility is Nordea Bank. Danske Bank, OP Corporate Bank, Skandinaviska Enskilda Banken AB (publ) and Swedbank AB (publ) act as bookrunners and mandated lead arrangers in the facility.

The loan replaces the existing €175 million syndicated revolving credit facility dated 22 June 2016, which was unutilised. The new credit facility carries a three-year tenor and has two one-year extension options. The financial covenant of the loan is adjusted gearing of 175 percent and all other terms of the facility are substantially in line with the previous transaction.

WestJet takes delivery of first 787 Dreamliner

Boeing has delivered the first of ten 787 Dreamliners to WestJet, marking the start of the airline's global expansion. Having long operated a fleet of Boeing single-aisle jets, WestJet will use the super-efficient, long-range 787-9 Dreamliner to profitably serve new international routes.

This spring, WestJet will use the 787-9 – the longest-range Dreamliner that can fly 7,635 nautical miles (14,140km) – to offer the first-ever flight connecting Calgary and Dublin. The airline will also offer non-stop Dreamliner service between Calgary and London Gatwick and Calgary and Paris.

WestJet's 787-9 will accommodate 320 passengers in a three-class configuration. The Dreamliner's passenger-pleasing interior, which includes large windows, lower-cabin altitude and smooth-ride technology, complements WestJet's all-new business cabin featuring the carrier's first lie-flat seats.


Alaska Airlines names three new vice presidents

The Alaska Airlines board of directors has elected three new company officers: Constance von Muehlen, senior vice president of maintenance and engineering; Ron Calvin, vice president of inflight; and Jenny Wetzel, vice president of labor relations.

Beginning Jan. 21, von Muehlen will lead Alaska's maintenance and engineering employees, and all safety, compliance and operational performance of the airline's mainline Boeing and Airbus fleet. Most recently, von Muehlen led Horizon Air's operational performance strategy as the airline's chief operating officer, where she oversaw the customer service, inflight, pilot, maintenance and system operations control teams. Prior to Horizon, von Muehlen was Alaska's managing director of airframe, engine and component maintenance.

Calvin is an Alaska Airlines veteran with more than 32 years of service. In his new role, he'll provide strategic and operational leadership for the inflight division, working with our outstanding flight attendants who – day after day – make our guests' journeys remarkable with the genuine, caring service Alaska is known for.

As vice president of labor relations, Wetzel will serve as the strategic executive advisor on all labor relations efforts. She will be responsible for all labor matters at Alaska Airlines and lead the collective bargaining process for the airline. She joins Alaska Airlines from Kaiser Permanente and before that Group Health in Seattle where she was the vice president of employee and labor relations since 2015.


Airport operator Swedavia to lay off 125 employees

airport operator Swedavia is laying off 125 employees as a result of an ongoing change and efficiency programme. The measures are aimed at ensuring Swedavia’s cost-effectiveness and long-term competitiveness.

"We are now creating conditions to remain competitive and in order to develop our operations in the long term. In an industry that has narrow margins, we also need to adapt to a changing world with decelerating passenger growth that both we and our customers are facing," says Jonas Abrahamsson, president and CEO of Swedavia.

The layoffs were announced on January 15 and include jobs in the Group’s corporate units as well as at Swedavia’s airports, but mainly in Stockholm and Gothenburg.

Negotiations with Swedish trade unions will begin at once. The aim is for the measures to be implemented by the end of June 2019. Swedavia today has about 3,100 employees.


Austrian Airlines to invest more than €200 million to expand Airbus fleet

Austrian Airlines has managed the turnaround after a tough restructuring period and now operates profitably. The airline is also headed towards positive operating earnings in 2018 following strong passenger growth of more than one million customers, comprising a year-on-year rise of 8.5%. The solid demand by passengers and increasing competition in Vienna has led the red-white-red national carrier to lay the strategic foundations for the future. The airline’s Airbus fleet will already be expanded from the current 36 planes to a total of 46 aircraft over the next three years. At the same time, Austrian Airlines will phase out its 18 turboprop aircraft with 76 seats. On balance, the flight offering from Vienna will be expanded by more than ten percent, in light of the fact that jets belonging to the Airbus A320 family are considerably larger than the turboprops.

In April Lufthansa Aviation Training (LAT) will already begin construction work on expanding the simulator training center at Vienna Airport in order to create sufficient space for two additional A320 flight simulators for pilot training purposes. Completion of the extension project involving costs of €20 million is planned for the first quarter of 2020. At present four simulators are being operated in Vienna (for Dash, Embraer and A320 aircraft).

Triggered by plans to phase out the Dash aircraft, Austrian Airlines intends to reorganize decentralized bilateral flight traffic between Austria and Germany within the Lufthansa Group. For example, it is much easier for Lufthansa to fly from its (centralized) flight hub in Frankfurt than vice versa. “We are already holding talks with our sister companies in the Group”, von Hoensbroech says. Austrian Airlines considers decentralized flight traffic to encompass all of its flights which do not depart from Vienna Airport, for example on the Salzburg-Frankfurt or Linz-Düsseldorf routes. Flights between Vienna and the federal provinces of Austria will remain unaffected at the moment. As already announced, the four aircraft currently deployed by the Group sister airline SWISS in Switzerland under a wet lease agreement will be transferred to Vienna at the end of the winter flight schedule.

In this connection, Austrian Airlines will transfer all existing decentralized flight crew bases located in Altenrhein, Graz, Innsbruck, Klagenfurt, Linz and Salzburg to Vienna. The 200 impacted employees will be offered the opportunity to work in Vienna.

Fleet decision, network simplification and transfer of the decentralized crew bases are three main aspects of the 10-point program called #DriveTo25, which the Austrian Airlines Management Board presented to the general public today. The new strategy was already acknowledged and approved at the most recent meeting of the Supervisory Board of Austrian Airlines held at the end of November 2018.

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