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Friday, November 9th, 2018
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LATEST NEWS
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At the same time as releasing third-quarter 2018 figures, Bombardier, the Canadian plane and train manufacturer, has announced its intention to streamline the business in an attempt to reduce annual expenditure by US$250 million at full run rate through the loss of up to 5,000 jobs by 2021. According to the company, this will be achieved through “a company-wide restructuring initiative focused on optimizing production and management processes, flattening management structures.”
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Bombardier will achieve this through the launch of “a new enterprise-wide productivity program to further streamline, lean out and simplify the Company. The initiative includes two actions. First, with the heavy aerospace investment phase successfully completed, Bombardier will right-size and redeploy its central aerospace engineering team. Key engineering team members will be redeployed to the business segments, with the largest group moving to Business Aircraft, to ensure they have all the necessary capabilities for future business jet development programs.”
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Bombardier also announced the sale of a number of non-core assets, in line with its strategy of focusing on growth opportunities in its Transportation, Business Aircraft and Aerostructures segments. The Company entered into definitive agreements for the sale of the Q Series aircraft program and de Havilland trademark to a wholly owned subsidiary of Longview Aviation Capital Corp. for approximately US$300 million; and the sale of Business Aircraft’s flight and technical training activities to CAE and the monetization of royalties for approximately US$800 million.
Both transactions are expected to close by the second half of 2019, following the usual regulatory approvals. Net proceeds from the transactions are expected to be approximately US$900 million after the assumption of certain liabilities, fees, and closing adjustments.
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A summary of the quarter’s results is as follows: Earnings up 48% year over year to US$271 million on US$3.6 billion revenues. Free cash flow usage improved by US$125 million, 25% year over year.
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Ryanair has signed a Collective Labour Agreement (CLA) framework and Social Plan with Ver.di, the German cabin crew union, to cover all of Ryanair’s German based cabin crew. This agreement (which is now subject to a cabin crew ballot) confirms the application of German labour law to Ryanair’s cabin crew and delivers pay increases and other benefits for all Ryanair German based cabin crew over the next two years.
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Ryanair also confirmed that its Italian cabin crew have voted overwhelmingly (88%) in favour of the CLA signed recently between Ryanair and the 3 main cabin crew unions FIT CISL, ANPAC, and ANPAV. This CLA, which delivers pay and benefit improvements, will now apply to all of Ryanair’s cabin crew in Italy for the next 3 years.
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Over the past week, Ryanair has also signed new recognition agreements with cabin crew unions in Greece (RACU) and Sweden (UNIONEN). Ryanair will now work with these unions on long term CLAs to cover cabin crew in Greece and Sweden.
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Satair and Senior Metal Bellows, signed a new distribution agreement, which is an extension to an existing agreement signed in 2017.
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The new agreement covers the aftermarket for Europe and Asia and all commercial aerospace aftermarket products of Senior Metal Bellows, including compressors, bellows, thermal valves, accumulators, feedthroughs and much more.
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The extended agreement, which has taken effect, is exclusive in Europe, Africa, South America and Asia (non-exclusive in China). The agreement does not cover North America, which will continue to be handled directly by Senior Metal Bellows.
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easyJet has partnered with CAE, a global leader in aviation training, who will deliver a fleet of brand new flight simulators to the airline and establish three new European easyJet pilot training locations, which are set to become the most modern pilot training facilities in Europe.
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As part on the new agreement, CAE will build a new state-of-the-art training centre in London Gatwick with a dedicated space to serve easyJet’s training needs and deploy a total of nine Airbus A320-family full-flight simulators (FFSs) and three flight training devices (FTDs) in the new London Gatwick centre and two additional training locations in Manchester, UK and Milan, Italy. The centres will be ready for training starting in the second half of 2019.
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easyJet will be utilising CAE’s latest generation of flight simulators, including the CAE 7000XR FFS equipped with the CAE Tropos™ 6000XR visual system, and will be the first airline to train its pilots using CAE’s latest generation of FTDs, the CAE 600XR. These simulators are among the most advanced pilot training technologies available in the industry today.
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Airbus Group has reported consolidated net income of €1,453 million (9m 2017: € 1,398 million) and earnings per share of € 1.88 (9m 2017: € 1.81(1)) included a negative impact from the foreign exchange revaluation of financial instruments partly offset by the positive revaluation of certain equity investments. The finance result was €-413 million (9m 2017: € +101 million). Net income also reflects a higher effective tax rate from the reassessment of tax assets and liabilities.
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Consolidated revenues increased to €40.4 billion (9m 2017: €38.0 billion), mainly driven by Airbus and including the perimeter changes. At Airbus, a total of 503 commercial aircraft were delivered (9m 2017: 454 aircraft), comprising 8 A220s, 395 A320 Family, 31 A330s, 61 A350 XWBs and 8 A380s. Airbus Helicopters delivered 218 units (9m 2017: 266 units) with revenues stable on a comparable basis. On a reported basis, Helicopters’ revenues reflected the perimeter change from the sale of Vector Aerospace in late 2017. Revenues at Airbus Defence and Space reflected a stable core business and the perimeter change mainly related to the divestment of Defence Electronics in February 2017 and Airbus DS Communications, Inc. in March 2018.
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Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled €2,738 million (9m 2017: €1,208 million).
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Airbus’ EBIT Adjusted of €2,340 million (9m 2017: €806 million) was driven by the A350 performance and higher deliveries, particularly for the A320neo.
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Consolidated free cash flow before M&A and customer financing amounted to €-4,169 million (9m 2017: €-3,344 million) and now includes the A220. It reflects progress on aircraft deliveries but also the on-going ramp-up and some finished aircraft. Consolidated free cash flow of €-3,928 million (9m 2017: €-3,208 million) included around €0.4 billion of net proceeds from divestments at Airbus Defence and Space. Cash flow for aircraft financing was limited.
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The consolidated net cash position on September 30, 2018 was €7.2 billion (year-end 2017: €13.4 billion) after pension funding of €1.0 billion in the third quarter. The gross cash position was €18.3 billion (year-end 2017: €24.6 billion).
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With regard to full-year deliveries, the A320neo ramp-up is ongoing but the level of disruption resulting from the late availability of engines in the first half of 2018 as well as some internal industrial challenges make the full-year 2018 target a greater stretch. A lot remains to be done before the end of the year to fulfill commitments. The A330neo delivery schedule has been adjusted to reflect the engine partner’s latest 2018 outlook. Furthermore, Airbus is actively working to resolve certain commercial challenges on the A330ceo and A380 programmes that are targeted for completion by the year-end.
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AAR, a global provider of aftermarket aviation services for commercial airlines, has signed a long-term contract with Ameco, an MRO expert in RB211 repair and disassembly, on Wednesday at MRO APAC. The deal positions AAR to provide long-term support to customers in the market for this Rolls-Royce engine.
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The agreement includes AAR’s cooperation with Ameco to provide RB211 repair/exchange and leasing services, highlighting AAR’s flexibility for its customers in more than 100 countries around the world.
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“We are looking forward to a long and stable partnership with AAR,” said Bin Teng, General Manager of Marketing and Sales, Ameco. “Our relationship will prove beneficial to both parties over the next 15 years.”
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SIAEC Group has recorded a profit attributable to owners of the parent of S$78.5 million for the half year ended 30 September 2018.
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Revenue of S$509.0 million saw a decrease of S$38.5 million or 7.0%, mainly from lower airframe and fleet management revenue. Expenditure came down by S$21.2 million or 4.2%, mainly from lower material and subcontract services costs, as well as an exchange gain of S$1.7 million compared to an exchange loss of S$2.8 million in the corresponding period last year. Operating profit at S$21.5 million was S$17.3 million or 44.6% lower.
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Share of profits of associated and joint venture companies increased S$18.4 million or 41.8% to S$62.4 million, with the engine and component centres contributing S$62.1 million, an increase of S$18.0 million or 40.8%, while the airframe and line maintenance segment earned a profit of S$0.3 million, a turnaround from a S$0.1 million loss incurred in the same period last year.
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China will need over 7,400 new passenger aircraft and freighters from 2018 to 2037, with a total market value of US $1,060 billion, according to Airbus’ latest China Market Forecast. It represents more than 19% of the world total demand for over 37,400 new aircraft in the next 20 years.
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According to Airbus’ 2018-2037 Global Market Forecast, new deliveries of passenger and freight aircraft for China will be more than 7,400 over the next 20 years. In the Small segment, typically covering the space where most of today’s single-aisle aircraft compete, there is a requirement for 6,180 new aircraft; in the Medium segment, for missions requiring additional capacity and range flexibility, represented by smaller widebodies and longer-range single-aisle aircraft, Airbus forecasts demand for 870 passenger and freight aircraft. For additional capacity and range flexibility, in the Large segment where most A350s are present today, there is a need for 240 aircraft. In the Extra-Large segment, typically reflecting high capacity and long range missions by the largest aircraft types including the A350-1000 and the A380, Airbus forecasts demand for 130 aircraft.
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By 2037, the propensity for the Chinese population to fly will more than triple from 0.4 trips per capita today to 1.4. Private consumption from a growing middle class (550 million people today to 1.15 billion by 2037) is expected to be the main driver of future air traffic growth. Today this private consumption accounts for 37% of the Chinese economy, a share that should rise to 43% by 2037.
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With these strong growth drivers, China will become the lead country for passenger air traffic, for both domestic and international markets as passenger traffic for routes connecting China are forecast to grow well above the world average, at 6.3% over the next 20 years. Domestic China traffic has grown fourfold over the last 10 years with double digit growth rates and is expected to become the largest traffic flow in the next 10 years. International traffic from/to China has almost doubled over the last 10 years.
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With aviation continuing to prove an extremely efficient way to move people and goods around the country, domestic air traffic in China will become the world’s number one traffic flow, tripling from today’s already impressive levels. Flows between China and the USA, Europe and Asia-Pacific are expected to be amongst the fastest growing globally, with average annual growth rates of 5.7%, 4.9% and 5.9% respectively. Between 2018 and 2037, the average annual growth rate for all international traffic from/to mainland China is forecast to be 6.3%.
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Aeronautical Engineers (AEI) has signed a contract with Automatic to provide the company another B737-400SF freighter. In the beginning of this year, AEI celebrated delivering its 100th B737-400SF freighter conversion and orders for the conversion platform remain strong.
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The Automatic B737-400 (MSN 25853) commenced modification yesterday and will be re-delivered in early March 2019. The completed B737-400SF will be operated by UK-based Titan Airways and represents the airline’s second -400 series freighter. Commercial Jet’s Dothan, Alabama facility is handling the modification touch-labor and maintenance requirements for the aircraft.
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WestJet announced October 2018 traffic results with a load factor of 80.9%, a decrease of 0.8 percentage points year over year. Traffic increased 7.4% year over year, while capacity grew 8.5% over the same period. WestJet welcomed an additional 86,000 guests in October, a year over year increase of 4.4%. Year to date traffic growth continues to outpace capacity additions.
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TrueNoord, the independent regional aircraft lessor, has secured new investment from existing and new investors. This brings total equity available to nearly US$400 million to expand TrueNoord’s aircraft portfolio and partially refinance the existing fleet as it embarks upon the next phase of growth. It complements a senior secured debt facility of US$500 million which was announced in July.
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Following the equity and debt raise, TrueNoord is targeting an acceleration of its growth plans with a strategy to substantially grow its existing fleet of 30 Embraer, Bombardier and ATR aircraft within the next five years, and building on its strong presence in Europe through further expansion in Asia, Africa and the Americas. New equity was raised from its original investors, Bregal Freshstream, BlackRock and Aberdeen Standard, alongside further investment from a number of new investors including Capital Dynamics, Euro Private Equity and Flandrin, amongst others. The US$500 million secured debt facility was arranged and fully underwritten by Morgan Stanley, NORD/LB Norddeutsche Landesbank and Barclays.
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TrueNoord focuses on the acquisition of relatively young aircraft with leases attached to stable and well-positioned airlines. The Company is well-placed to take advantage of the inherent growth potential of the regional aircraft leasing market and, since launching, has developed an extensive network of airline, technical, financial and OEM contacts that is, in the specialist regional aircraft lessor market, second only to Denmark-based lessor Nordic Aviation Capital (NAC) in terms of scale.
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UTC Aerospace Systems and Lufthansa Technik have signed a life of program component service agreement for maintenance of Geared Turbofan (GTF) engine accessories integrated and supplied by UTC Aerospace Systems for the A320neo
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Under this agreement, Lufthansa Technik will develop repair capabilities for certain UTC Aerospace Systems' GTF engine accessories. UTC Aerospace Systems will provide GTF engine accessory parts and certain repair services to Lufthansa Technik. By cooperating in repair development and sharing maintenance practices, both companies will be able to offer improved aftermarket services aimed at reduced operating costs.
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AeroCentury Corp., an independent aircraft leasing company, has reported a third quarter net loss of US$4.5 million, compared to a net loss of US$81,000 for the second quarter of 2018 and net income of US$0.4 million, for the third quarter of 2017. The results announced are for the period ended September 30, 2018, and therefore, do not reflect the combined operations of the Company and its newly acquired subsidiary, JetFleet Holding, which was acquired on October 1, 2018.
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In the first nine months of 2018, the Company reported a net loss of US$4.2 million, compared to net income of US$1.4 million in the first nine months of 2017.
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The first nine months of 2018 included US$1.6 million of other income resulting from payments received from a lessee of three aircraft that were returned to the Company during 2017. The Company is accounting for the payments from this lessee as they are received, and they are recorded in other income. The third quarter and first nine months of 2018 also included US$2.4 million of losses related to the sale of two off-lease turboprop aircraft, as well as impairment provisions totaling US$2.7 million on four other off-lease turboprop aircraft that have been identified for sale.
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UPCOMING EVENTS
February 19 - 20, 2019 – Palma de Majorca, Spain
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