ACG closes jumbo bond
Aviation Capital Group (ACG) has closed its sale of $1 billion 5.500% senior unsecured notes due 2024. ACG intends to use the net proceeds for general corporate purposes, including repayment of outstanding indebtedness and the purchase of commercial aircraft. The Notes are recourse only to ACG and are not guaranteed by ACG’s parent company, any of ACG’s subsidiaries, or any third party. Joint active bookrunners were JPMorgan, Credit Agricole-CIB, Credit Suisse, Societe Generale and Wells Fargo. Passive bookrunners were Barclays, Mizuho, Morgan Stanley, MUFG and RBC.
Aercap buys back $1.45bn in outstanding notes
Aercap has bought back $1.45 billion of outstanding notes as part of a debt tender exercise. The company purchased almost $744 million of bonds which holders offered from a $1 million notes issuance due to mature in December 2020. It also bought $376 million of $650 million of outstanding notes maturing in January 2022 and acquired almost $335 million of nearly $500 million of notes that mature in April 2021. The weighted average annual coupon of these bonds is 7.5%. All the bonds have an acceptance priority of between 1 and 3.

GECAS appoints Alan Buckley as SVP & Regional Manager for Commercial, Europe & Canada
GECAS has appointed Alan Buckley to its senior executive team as Senior Vice President (SVP) and Regional Manager for Commercial, Europe & Canada. He has worked in the aviation industry for 18 years, having begun his career with Shannon Aerospace in 1997. He joined GECAS in 2003 and has held a variety of senior positions in the company since then. Prior to his new appointment, he was SVP of Aircraft Trading at GECAS and before that was SVP in Asset Management. Buckley also previously held the role of Managing Director for Global Programs at GE Capital Equipment Finance in Dallas, Texas.

In his new role, Buckley will be responsible for developing and executing the commercial strategy for GECAS in the region which includes Canada and 37 countries in Western and Central Europe. He will also be responsible for helping to support the business through Covid-19, working with its airline customers and partners to navigate the impact of the pandemic on the global aviation sector, and recently joined the council of Aircraft Leasing Ireland as the GECAS representative. He succeeds Declan Hartnett, who is retiring after 32 years at the company.

New chair for ALI
Aircraft Leasing Ireland (ALI), the representative body for aircraft leasing companies in Ireland, has announced the appointment of Declan Kelly as its new Chair. He will replace David Swan who served as the founding Chair of the body over the past two years. Kelly will serve as Chair until July 2022. He began his career with Aer Lingus, later joined GPA and has previously held a series of senior roles within GECAS, including most recently as Chief Commercial Officer. In addition, Marie-Louise Kelly, CFO of ORIX Aviation has been appointed to the role of Vice Chair and will assume the role of Chair following Declan’s tenure.

Embraer delivered four commercial planes in Q2
Embraer delivered a total of 17 jets in the second quarter of 2020, including four commercial aircraft and 13 executive jets. This was less than half the number of aircraft delivered in the first six months of 2019. As of June 30, its firm order backlog totalled $ 15.4 billion. In the commercial aviation segment, Embraer delivered the 1,600th E-Jet, which was received by Helvetic Airways, which is also converting orders for four of E190-E2s to E195-E2s. Helvetic’s order is now for a total of eight E190-E2s, four E195-E2s, and with purchase rights for a further twelve EJets-E2. Congo Airways has also converted its firm order, placed in December 2019, for two E175 aircraft, with purchase rights for two more, into a firm order for two E190-E2 jets, with purchase rights for a further two aircraft.

Jet Time files for bankruptcy
Danish airline Jet Time has filed for bankruptcy but intends to re-emerge as a new charter company, Jettime A / S. Jet Time planes have been grounded since March 23 and 95% of its employees have been let go. According to owner Lars Thuesen the second quarter of this year the company received salary compensation and subsidies for fixed expenses, but insufficient to sustain the operations. He intends to bring some employees, five B737 aircraft, technical platforms and take-off and landing permits from the old Jet Time into the new company.

Cathay Pacific profit warning
Cathay Pacific Group expects to incur a net loss attributable to shareholders of approximately HK$9.9 billion ($1.3 billion) for the first half of 2020. This includes impairment charges amounting to approximately HK$2.4 billion, which mainly relate to 16 aircraft that are unlikely to re-enter meaningful economic service again before the 2021 summer season, together with certain airline service subsidiaries assets. The figure also compares to a net profit of HK$1.3 billion for the same period in 2019. The company’s shareholders have approved the carrier’s HK$39 billion recapitalization plan and management will make recommendations to the board on the future size and shape of the airlines by the fourth quarter. Cathay Pacific is deferring delivery of a number of Airbus aircraft by up to two years, and is in “advanced negotiations” with Boeing about delaying the delivery of the 777-9 widebody, in a bid to produce cash savings in the short to medium-term.


Icelandair Group expects $100m operating loss
In a business update Icelandair Group said it had an operating loss of around $100-110 million in Q2 during a period on sales of approximately $60 million. Last year in the same period it incurred an operating loss of $24 million on revenues of $403 million. The carrier says it has commenced the final stages of its negotiations with stakeholders, including pilots, mechanics and cabin crew, to enable it to issue new shares and complete its financial restructuring.

China traffic update
China’s three largest airlines, China Southern, Air China and China Eastern, all saw traffic in June running at around half the level of last year. China Southern’s overall passenger traffic in June was 7.2 million pax, down 53.4 per cent year-on-year, with domestic traffic down 33.48 per cent, regional traffic down 98.38 per cent and international traffic down 95.2 per cent. Air China carried 4.5 million passengers in the same month, just under 36,000 of whom were international passengers. This was a 9.5 per cent overall increase in numbers from May 2020, but 51.5 per cent below June 2019. China Eastern carried 5.3 million passengers, with a 26.6 per cent decline in domestic capacity and a drop of 51.5 per cent in traffic overall.

SR Technics to focus on core activities
Swiss-based MRO SR Technics has secured a CHF120 million ($127 million) additional credit line from its existing consortium of banks, supported by 60 per cent surety by the Swiss Confederation. With this additional line of credit, SR Technics will review the breadth of its service offering with the aim of focussing engine services and line maintenance, complemented by additional services provided by independent subsidiaries. By the end of 2020 the company also expects to have ceased the provision of design engineering solutions and will have restructured its flight-hour-based component services, progressively reducing it, while concentrating more on component repairs and trading activities.
airBaltic secures €250 million in new equity
Shareholders in Latvia’s carrier airBaltic have approved an additional €250 million ($285 million) equity investment by the Republic of Latvia. Martin Gauss, the CEO of airBaltic, said this investment would ‘facilitate the successful growth of airBaltic leading to an IPO in the future.’ Last April, the airline’s Supervisory Board approved a new business plan which foresaw adapted operations using just 22 of its Airbus A220-300 aircraft during 2020 – 2021, with an increase to 50 A220-300s by end 2023 and options for an additional 30 A220-300s remaining in place to cover future growth.

Air Serbia in debt restructuring talks with Etihad
Air Serbia is in discussions with a special purpose vehicles set-up by Etihad Airways in 2015, Etihad Airways Partners I BV and Etihad Airways Partners II BV, over the restructuring of its debt. Air Serbia said in a statement it had sent its creditors at EAP I BV and EAP II BV a joint proposal with the revised amounts and loan repayment deadlines, ‘in good faith that a mutually acceptable solution can be reached through negotiations’. In September 2015, Air Serbia took a loan for $52.9 million from EAP I BV which matures in September 2020 with an annual interest rate of 6.96 per cent. It also agreed a loan for $63 million with EAP II BV on May 20, 2016, which matures next June.

Virgin Atlantic recapitalises
Virgin Atlantic has begun a solvent recapitalisation of the airline and its holiday business. Based on a five-year business plan, and with the support of shareholders, Virgin Group, and Delta, new private investors and existing creditors, it paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.The refinancing package, worth GBP1.2 billion over the next 18 months, will support other measures already underway, including cost savings of GBP280 million per year and GBP880 million re-phasing and financing of aircraft deliveries over the next five years. Shareholders are providing GBP600 million, including a GBP200 million investment from Virgin Group, and the deferral of GBP400 million of shareholder deferrals and waivers. New partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing GBP170 million of secured financing and creditors will accommodate GBP450 million of deferrals

Bondholders still seek Virgin Australia deal
Bondholders in Virgin Australia have submitted an updated proposal to take over the company as an alternative to the approach from Bain Capital selected by administrator Deloitte. The new proposal from Broad Peak Investment Advisers and Tor Investment Management is substantially the same as the approach they lodged last month. Virgin Australia entered voluntary administration in April owing $4.89 billion to creditors. The original proposal by Broad Peak and Tor – which hold around A$300 million of the airline’s A$2 billion of unsecured bonds – involved interim funding to allow Virgin to continue operating. A spokesman for the bondholders said they were seeking to work with Deloitte to receive access to stakeholders and information ahead of an August 26 meeting at which a deal for the future running of the company is to be finalised.

Cargojet raise C$100m
Cargojet has entered into an agreement with a syndicate of underwriters, co-led by RBC Capital Markets, CIBC Capital Markets and Scotiabank, for purchase of C$100 million listed senior unsecured hybrid debentures due June 30, 2026 at a price of C$1,000 per debenture. Underwriters have an option to purchase additional C$15 million. The proceeds will be used to pay down the company’s revolving credit facility and free the funds for future estimated capital expenditure. The company has also amended its syndicated committed revolving credit facility in order to, among other things, increase the revolving credit limit from $510 to $600 million and to extend the maturity date to July 16, 2025.

DHL Express orders four BCFs
DHL Express is to add four 767-300 Boeing Converted Freighters (BCF) as part of fleet modernisation programme. ‘We are excited to introduce additional Boeing 767 freighters to the DHL Express air network,’ said Geoff Kehr, senior vice president, Global Air Fleet Management, DHL Express.

World's first hybrid electric 70+ seater aircraft
Electric Aviation Group, a UK-based engineering and development firm, has unveiled its design for a Hybrid Electric Regional Aircraft (HERA) and expects its first plane to be in service by 2028. The claimed features of the airline include low noise pollution, innovative airborne battery regeneration to minimise turn-around time, thermal management of motors and power electronics and exceptional short take-off-and-landing capability. Launched at the virtual Farnborough Airshow, the company anticipates an aircraft that will initially offer 800 nautical miles range capable carrying over 70 people.