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LATEST NEWS
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Tuesday, May 26th, 2020
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After many weeks of protracted negotiations, Deutsche Lufthansa AG (Lufthansa), Germany’s largest and Europe’s second-largest carrier has announced it has come to a deal with the German government over a rescue package valued at €9.0 billion. The airline, which also includes subsidiaries Germanwings, Austrian Airlines, Swiss International Airlines and Brussels airlines has agreed to give the government a 20% stake in the carrier through the German Economic Stabilization Fund set up to assist companies hit by the Covid-19 pandemic.
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The government is injecting up to €5.7 billion into the airline, earning a return that starts at 4% this year and next before increasing. The package will also include a three-year credit facility of up to €3.0 billion, most of which will come from Germany's state-owned development bank, KfW. Additionally, the government will acquire a 20% stake in Lufthansa for €2.56 per share, or approximately €300 million, with an option to increase its stake to 25% plus one share, enabling it to block any potential takeover. It has agreed to sell its shares in full by the end of 2023, subject to full repayment of its investment and the share price being above the purchase price.
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"Before the pandemic, the company was healthy and profitable and had good prospects for the future, but it faces an existential emergency because of the current corona crisis," the government said in a statement. "The federal government's stabilization package takes into account the needs of the company as well as the needs of taxpayers and employees of the Lufthansa Group."
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However, it is not all positive news for Lufthansa as, having posted a first-quarter 2020 loss of €1.2 billion, it will be shutting down its low-cost subsidiary Germanwings, while also shedding 10,000 jobs. (€1.00 = US$1.09 at time of publication.)
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Virgin Orbit has released that it has conducted a launch demonstration of its innovative air-launched rocket in the skies over the Pacific Ocean just off the California coast. The company successfully completed all of its pre-launch procedures, the captive carry flight out to the drop site, clean telemetry lock from multiple dishes, a smooth pass through the racetrack, terminal count, and a clean release.
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After being released from the carrier aircraft, the LauncherOne rocket successfully lighted its booster engine on cue but then an anomaly occurred early in first stage flight, and the mission safely terminated. The carrier aircraft Cosmic Girl and all of its crew landed safely at Mojave Air and Space Port, concluding the mission.
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“Our team performed their prelaunch and flight operations with incredible skill today. Test flights are instrumented to yield data and we now have a treasure trove of that. We accomplished many of the goals we set for ourselves, though not as many as we would have liked,” said Virgin Orbit CEO Dan Hart. “Nevertheless, we took a big step forward today. Our engineers are already poring through the data. Our next rocket is waiting. We will learn, adjust, and begin preparing for our
next test, which is coming up soon.”
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Brussels Airlines will restart its commercial flights from its hub at Brussels Airport on June 15. Based on market demand and ongoing travel restrictions, the airline will offer an adapted and downsized summer schedule, which will consist of approximately 30% of Brussels Airlines' originally planned summer schedule in Europe and 40% of the long-haul summer program. Between June 15 and August 31, the company will gradually add destinations to its flight network to reach 59 destinations in 33 countries in Europe, Africa and the U.S. by August.
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The offer will gradually be built up from June 15 onwards to reach 240 weekly flights by August, which represents 30% of the originally planned summer schedule in Europe and 40% of the long-haul program. In Europe, a total of 45 destinations will be served in 20 countries, including Spain, Portugal, Greece, Italy, France and Denmark. On its long haul network, the airline will (subject to local governmental approval) serve 13 out of its 17 African destinations and in the U.S. New York JFK will join the schedule again. One new destination that was planned to be inaugurated in March, will join the network during the course of next year: Montreal in Canada.
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The U.K. Maritime and Coastguard Agency (MCA) will upgrade to Leonardo’s latest Osprey radar to support missions such as search and rescue, border protection, fishery and pollution patrols. The Osprey 30 radar will be installed on-board the two customised Beechcraft King Air aircraft provided to the U.K. MCA by U.K.-based aviation services company 2Excel.
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Currently, the U.K. MCA is operating Leonardo’s Seaspray 7300E radar, which has been employed to great effect in support of regular fishery and pollution patrols around the U.K. The radar comes equipped with Leonardo’s patented small target detection capability, allowing it to spot shipwrecked individuals in the water at long range, even in the most difficult environmental conditions and sea states. Additionally, the radar provides the ability for MCA crews to identify oil spills and rogue polluters at very long range, day or night.
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LATAM Airlines Group S.A. and its affiliates in Chile, Peru, Colombia, Ecuador and the United States have initiated a voluntary reorganization and restructuring of its debt under Chapter 11 protection in the United States with the support of the Cueto and Amaro families and Qatar Airways, two of the largest shareholders of LATAM.
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In light of the effects of COVID-19 on the worldwide aviation industry, this reorganization process provides LATAM with an opportunity to work with the group’s creditors and other stakeholders to reduce its debt, access new sources of financing and continue operating, while enabling the group to transform its business to this new reality.
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The group has secured the financial support of shareholders, including the Cueto and Amaro families, which have lasting ties to LATAM, and Qatar Airways, to provide up to US$900 million in debtor-in-possession (DIP) financing. These partners have a profound understanding of the industry, the group and its operational challenges. Their support demonstrates a belief in LATAM and its affiliates and its long-term sustainability. To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing. In addition, as of the filing, the group had approximately US$1.3 billion in cash on hand.
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LATAM and its affiliates are also in discussions with their respective governments of Chile, Brazil, Colombia and Peru to assist in sourcing additional financing, protect jobs where possible and minimize disruption to its operations.
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Mitsubishi Heavy Industries, parent company of Mitsubishi Aircraft, has announced that all facilities in America associated with the development of its SpiceJet aircraft are to close with the loss of approximately 600 jobs.
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The recently rebranded SpaceJet project has been beset with problems since it was first launched as the Mitsubishi Regional Jet in 2008 and is many years behind schedule as well as frequently bleeding cash. In 2019 development costs ran at US$1.3 billion.
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Closures involve the Renton and Moses Lake plants in Washington, with the loss of 400 and 200 jobs respectively. Mitsubishi’s aviation operations have been hard hit by the coronavirus pandemic, especially its supply of major parts for Boeing jets.
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“Due to the budget directives, Mitsubishi Aircraft will close its overseas locations and consolidate activities at its headquarters in Nagoya, Japan,” company spokesman Jeff Dronen told The Seattle Times via email. “This will impact the majority of our employees in the United States,” he said, adding: “We have had to make difficult decisions that will significantly reduce our global activities and will have a major impact on our organization.”
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