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LATEST NEWS
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Thursday, April 9th, 2020
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Stelios Haji-Ioannou, founder of Europe’s second-largest low-cost carrier easyJet, is looking to oust the carrier’s current chief financial officer, Andrew Findlay, and non-executive director Andreas Bierwirth, in an attempt to have an order for 107 jets with Airbus canceled.
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Haji-Ioannou was opposed to the purchase of the jets, valued at approximately US$5.5 billion, from the very beginning, but with easyJet deciding to ground its entire fleet during the coronavirus pandemic he feels this is not a time to be making major capital expenditures when there are other debts that still need repaying. He was referring to the repayment of a U.K. government loan in March 2021 and is threatening legal action if easyJet ends up paying Airbus but is unable to meet its other financial commitments.
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easyJet has confirmed that it had received notices from UBS Private Banking Nominees and Vidacos Nominees, both of the investment firms having Haji-Ioannou as a major shareholder, to requisition a general meeting to remove Findlay and non-executive director Andreas Bierwirth.
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“We remain absolutely focused on removing expenditure from the business, engaging with all of our business partners and suppliers including Airbus, and on safeguarding jobs and short-term liquidity,” an easyJet spokeswoman advised in an email. The carrier said accessing the government’s COVID Corporate Finance Facility was in the best interests of the company and that Andrew Findlay had the board’s full support.
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Spirit AeroSystems has announced a series of additional actions the company is taking to reduce costs and preserve liquidity in light of the economic impacts of the COVID-19 pandemic and continued uncertainty in the industry.
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On April 6, Spirit AeroSystems received notice from Boeing that all deliveries to Boeing's Washington state and South Carolina facilities are suspended until further notice due to Boeing's indefinite production suspension at the sites. As a result, Spirit has halted production for Boeing programs, subject to certain exceptions, performed at its facilities in Wichita, Kansas, and in Tulsa and McAlester, Oklahoma for an indefinite period of time. Spirit Defense work as well as Airbus and other non-Boeing work will continue at such facilities.
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In light of the 737 MAX production suspension that began on January 1, 2020, Spirit initiated the following actions to reduce costs: the company implemented workforce reductions of 2,800 employees in Wichita, Kansas and 400 employees in Oklahoma and initiated a voluntary retirement program for 850 hourly and salaried workers. Furthermore, Spirit deferred over US$120 million of capital expenditures and extended union contracts for employees represented by the IAM and IBEW for three years.
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The company negotiated an amendment to its credit facility providing for covenant relief into 2021 and secured a US$375 million short-term delayed draw term loan facility. Spirit reduced its cash dividend to a penny per share .
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Spirit negotiated a new production agreement with Boeing and extended the MAX contract three years to 2033. The company received US$225 million advance from Boeing and deferred repayment of US$123 million advance from Boeing to 2022.
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Air Lease Corporation (ALC) announced an update on deliveries, sales and new significant financing occurring in the first quarter of 2020.
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As of March 31, 2020, ALC’s fleet was comprised of 301 owned aircraft in its operating fleet and 82 managed aircraft with 399 new aircraft on order from Boeing and Airbus set to deliver through 2026.
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During the first quarter ALC delivered eight new aircraft including two Airbus A320neos, four Airbus A321neos, two Boeing 787-10s, and acquired one Airbus A330-300 in the secondary market. Aircraft investments in the quarter totaled approximately US$700 million.
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The company has sold three aircraft to Thunderbolt Aircraft Lease Limited III during the quarter. Sales proceeds for the quarter totaled approximately US$65 million.
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ALC issued US$1.4 billion of senior unsecured medium-term notes comprised of US$750.0 million due 2025 at a fixed rate of 2.30% and US$650.0 million due 2030 at a fixed rate of 3.00%. The company upsized its senior unsecured revolving credit facility to US$6.1 billion from US$5.8 billion.
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Lockheed Martin has appointed Yvonne Hodge Senior Vice President of Enterprise Business Transformation, effective June 15. Hodge currently serves as Vice President of Business Innovation Transformation & Enterprise Excellence of the company’s Space business area.
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In her new role, Hodge will be responsible for developing strategies and implementing integrated, cross-functional solutions that transform operations through technology, culture, and processes. She will lead the corporation’s Digital Transformation, Enterprise Transformation and Enterprise Information Technology global teams. She will report to the incoming president and CEO, Jim Taiclet.
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JetBlue will temporarily consolidate operations in five major metropolitan areas in the U.S between April 15 and June 10. The revised schedules are aimed at reducing excess flying during a time of unprecedented low demand for air travel while maintaining a critical level of service across the airline’s network for those who absolutely must fly.
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“We face new challenges every day and can’t hesitate to take the steps necessary to reduce our costs amidst dramatically falling demand so we can emerge from this unprecedented time as a strong company for our customers and crew members,” said Scott Laurence, head of revenue and planning, JetBlue.
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Effective April 15 through June 10, JetBlue will consolidate its operations in Boston, Los Angeles, New York City, San Francisco and Washington D.C. with flights operating at one or two airports in each metro area.
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JetBlue also intends to file an exemption request with the U.S. Department of Transportation (DOT) to temporarily suspend flying at other airports where the airline typically operates only a handful of daily flights and where current demand does not support JetBlue service.
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Leonardo has closed the acquisition of Kopter Group AG (Kopter) from Lynwood (Schweiz). The purchase price, on a cash and debt free basis, consists of a US$185 million fixed component plus an earn-out mechanism linked to certain milestones over the life of the program, starting from 2022.
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The acquisition of Kopter allows Leonardo to further strengthen its position in the rotorcraft sector, in line with the Industrial Plan’s objectives for the reinforcement of the core businesses.
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Airbus is revising its production rates downwards to adapt to the new Coronavirus market environment. In the first quarter of 2020, Airbus booked 290 net commercial aircraft orders and delivered 122 aircraft. A further 60 aircraft were produced during the quarter, which remain undelivered due to the evolving COVID-19 pandemic.
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36 aircraft were delivered in March across the different aircraft families, down from 55 in February 2020. This reflects customer requests to defer deliveries, as well as other factors related to the ongoing COVID-19 pandemic.
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The new average production rates going forward are: A320 to rate 40 per month, A330 to rate 2 per month and A350 to rate 6 per month. This represents a reduction of the pre-coronavirus average rates of roughly one third. With these new rates, Airbus preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves.
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Air Canada has released that it intends to adopt the Canada Emergency Wage Subsidy (CEWS) for the benefit of its 36,000 Canadian-based employee workforce. The Government of Canada has announced the CEWS on April 1, 2020, in order to help employers keep and/or return Canadian-based employees to payrolls for the Program Term of March 15, 2020 to June 6, 2020 in response to challenges posed by COVID-19.
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Air Canada's intention to adopt the CEWS has also received the support of all of its Canadian-based unions: ACPA, CALDA, CUPE, IAMAW and Unifor.
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As Air Canada (including subsidiaries Air Canada Rouge and Air Canada Vacations) has suffered a drop in consolidated revenues of more than 30% and expects to continue to do so for the program term, it will apply for the CEWS retroactively to March 15, 2020 and retain or return affected employees to its payroll for the Program Term.
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In addition to the temporary workforce reductions, other measures implemented by Air Canada include a company-wide cost reduction and capital deferral program, now estimated to be at least CA$750 million for the year, increased from the previous target of CA$500 million. Furthermore, Air Canada will draw down operating lines of credit of approximately CA$1 billion, to provide additional liquidity.
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Calin Rovinescu, Air Canada's President and Chief Executive Officer, and Michael Rousseau, Air Canada's Deputy Chief Executive and Chief Financial Officer, have agreed to forgo 100% of their salary. Senior Executives will forgo between 25% up to 50% of their salary while members of Air Canada's Board of Directors have agreed to a 25% reduction. All other Air Canada managers will have their salaries reduced 10% for the entire second quarter.
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Air Canada suspended its share repurchase program in early March 2020.
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