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LATEST NEWS
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Friday, April 24th, 2020
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In November 2019, International Airlines Group (IAG) agreed to buy Spanish-owned Air Europa for one billion euros (US$1.13 billion), subject to European regulatory approval. In March this year IAG, which also owns Spanish carriers Iberia and low-cost carrier Vueling, agreed to offload a number of routes to fellow Spanish carrier Volotea which would reinforce competition on overlap routes that might otherwise attract European regulatory objections.
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However, in light of the impact the COVID-19 pandemic has had on the commercial aviation industry, IAG is now looking to renegotiate the purchase price with Globalia, the Spanish tour operator which owns Air Europa. Currently, airline values are difficult to assess and the value of IAG, which also owns Aer Lingus, British Airways, IAG Cargo, LEVEL, Level Europe and Avios Group, has fallen by over 60 per cent this year.
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Luftfahrtgesellschaft Walter (LGW) has filed for insolvency in its own administration with the Düsseldorf Local Court. On Wednesday, April 22, attorney Dirk Andres was appointed as provisional administrator. Attorney Michael Wilbert will also join the company’s management as a further managing director.
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In view of the current economic situation in the aviation industry, there is currently no lasting positive economic perspective for the regional airline. The insolvency is thus a direct consequence of the travel restrictions and the general economic situation during the Corona pandemic, which has de facto paralysed global aviation.
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Dominik Wiehage, Managing Director of LGW: “We very much regret that we were forced to take this step by the Corona pandemic. We had our 15 De Havilland DHC-8 aircraft in a long-term cooperation exclusively with the Lufthansa subsidiary Eurowings. Eurowings had to decommission around 90% of its own fleet and terminate the wet lease contract with LGW at short notice in view of current developments. After the termination of the cooperation by Eurowings, we have made intensive efforts to find employment for our LGW aircraft throughout Europe and will continue to do so in our own management.
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Due to the almost complete standstill of air traffic, these efforts have unfortunately not been successful so far. As it is also impossible to estimate – as things stand today – whether we will receive public funds to bridge the period until air traffic resumes, especially on the regional routes served by the LGW, we must therefore draw the legally necessary conclusions. We are very sorry for the employees of the LGW – all of them are very well trained, very motivated and very customer-oriented employees, for whom we want to keep the option open, especially with our own management, of being involved again in a new start in air traffic."
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Luftfahrtgesellschaft Walter currently employs 354 people, 294 of them in the flying sector, 60 work on the ground in technology and administration for the company, which has its headquarters in
Düsseldorf. The fleet of 15 De Havilland DHC-8 is currently parked at the airport of the Slovakian capital Bratislava.
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Air New Zealand will not resume operation of its suspended Auckland-Buenos Aires and Los Angeles-London routes due to the deep impact of COVID-19 on forward travel demand. The airline has also taken the decision to postpone the commencement of its non-stop Auckland-New York service from October 29, 2020 until late 2021 at the earliest.
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Along with 95% of its international flying, Air New Zealand's Buenos Aires and Los Angeles-London routes are currently suspended through to June 30, due to government travel bans and low demand. Last year, the airline announced its plan to exit the Los Angeles-London route in October 2020 and in March brought forward the closure of its London cabin crew base.
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Air New Zealand Chief Networks, Strategy and Alliances Officer Nick Judd says demand for international travel has been tracking at about five percent of pre-COVID-19 levels into June.
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Moscow Domodedovo Airport has set up a coronavirus testing service. Passengers can take the test at the airport’s medical care facility.
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The testing procedure takes approximately 15 minutes and the results will be sent via email. Passengers have to provide an ID-card to take the test and have to be free of symptoms of respiratory disease.
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The airport medical staff wears personal protective equipment while conducting tests. The medical care room is cleaned thoroughly after every patient.
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The Lufthansa Group has published preliminary results for the first quarter of 2020.
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On a preliminary basis, Group revenues fell by 18% to €6.4 billion
(previous year: €7.8 billion) in the first quarter. In March alone, revenues declined by almost €1.4 billion. Cost reductions could only partially offset the revenue decline in the quarter. On a preliminary basis, the Lufthansa Group's Adjusted EBIT in the first quarter of 2020 amounts to around €-1.2 billion (previous year: €-336 million).
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The Group expects crisis-related asset impairments and the negative development of the value of fuel hedges to have a further significant negative impact on Group profit in the quarter. Details will be published in the quarterly financial statement, which has been postponed to the second half of May (originally scheduled to be published on April 30).
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At present, it is not possible to foresee when the Group airlines will be able to resume flight operations beyond the current repatriation flight schedule. The Group therefore expects a considerably higher operating loss in the second quarter compared to the first quarter. Available liquidity currently amounts to around €4.4 billion. Financing measures totaling around €900 million since mid-March have helped strengthen liquidity. In particular, bilateral credit lines were drawn down and short-term loans were taken out.
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However, in view of the business outlook, existing multi-billion liabilities related to trade payables and refunds of cancelled tickets as well as upcoming repayments of financial liabilities, the Group expects a significant decline in liquidity in the coming weeks. The Group does not expect to be able to cover the resulting capital requirements with further borrowings on the market. The Group is therefore in intensive negotiations with the governments of its home countries regarding various financing instruments to sustainably secure the Group’s solvency in the near future. The Management Board is confident that the talks will lead to a successful conclusion.
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Following the release of the International Civil Aviation Organization’s (ICAO) air travel forecast projecting a 1.2 billion travelers drop and US$160 billion to US$253 billion in revenue losses for the air travel industry in 2020.
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Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the future of the commercial aviation industry:
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“The hardest hit regions are set to be Europe, Asia-Pacific and North America, the dominant engines of air travel growth. In other words, air travel is set to disappear almost entirely in 2020. This projection is deeply problematic for the big players of the commercial aviation industry such as Boeing and Airbus and will likely result in successive cancelations of orders from clients wary of COVID-19’s long-term impact.
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“Boeing and Airbus have already seen multiple cancelations from airlines and leasing companies in 2020 so far. However, it would be wrong to reduce everything to COVID-19 as some more fundamental issues of the commercial aviation industry are also at play. Boeing has made unfortunate headlines with massive cancelations of B737 orders this year. While some cancelations have been connected to COVID-19 and the slowdown of activity - for example Avolon announcing 75 B737 cancelations at the beginning of April - other cancelations such as Air Lease Corporation’s or Air Canada’s earlier this year, could be explained by wider-scale strategic decision to slim order books in front of a pre-COVID-19 slowdown of the Asian market.
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“Boeing is of course confronted to the grounding of its best-selling B737 MAX since two successive crashes last year. This grounding has made the B737 a privileged target for cancelations when
things get rough for airlines. However, fuel efficient single-aisles are generally losing steam for other reasons, such as the collapse of oil price rendering cost-saving engines less essential than in the past. Airbus’s A320neo family registered 29 cancelations in 2020 so far, with most of them from
Avianca, a Columbian airline invoking business transformations. More cancelations are to be expected with the prolongation of the COVID-19 air travel ban, but the slimming down of airlines’ fleet is expected to be a longer-term trend.”
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Aeronexus, a leader in the wide-body VIP charter market, has acquired a controlling interest in the 10-year old aircraft management company, PRIVAJET of Malta, which will become an Aeronexus Group Company.
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PRIVAJET was specifically chosen to join the Aeronexus Group because of the synergy of its impeccable safety record, professional management and vast experience in the operation of large VIP Business Jets.
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Aeronexus has requested Gavin Harrison and Sven Petersen join the board of PRIVAJET given their decades’ long experience in aviation.
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“Building on our success in the wide-body VIP charter market, the opportunity to obtain a European AOC and bring PRIVAJET into the group comes at a very opportune time,” commented Gareth Evans, Head of Aeronexus’ UK-based Commercial team. Gareth and his team will continue to market, sell and organise all Aeronexus’ air charter activity.
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Delta Air Lines has reported financial results for the March quarter 2020, posting a net loss of US$534 million. Total revenue of US$8.6 billion, was down 18% versus prior year, with total unit revenue down 13%. Total expense decreased US$450 million driven by lower fuel, partially offset by higher revenue- and capacity-related expenses, with non-fuel unit cost (CASM-Ex) up 9% compared to the prior year.
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Fuel expense decreased 19% relative to March quarter 2019. Delta's fuel price for the March quarter of US$1.81 per gallon included a US$29 million benefit from the refinery.
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At the end of the March quarter, the company had US$6.0 billion in unrestricted liquidity
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STS Aviation Services (STS) has completed its long-running program to implement FOMAX modifications to easyJet’s fleet of aircraft. Since the partnership with easyJet began, the company has delivered 39 aircraft with a TDR of 96% based on planned hours. While aircraft came in for specific tasks, STS Aviation Services was able to ensure that 75% of all easyJet aircraft left its facility with no carry-forward items.
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Malcolm Welsby, Chief Technical Officer for STS Aviation Services, said: “Customer success lies at the core of everything we do here at STS Aviation Services, and when you bring together a leading MRO and an airline focused on efficiency, safety and customer satisfaction, the possibilities to create increased value are endless.”
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