Tag: liquidity (Page 2 of 3)

Delta Launches $6.5 Billion Debt Deal Backed by Frequent Flyer Program

September 14, 2020 / WIL BALDWIN

CHICAGO, Sept 14 (Reuters) – Delta Air Lines said on Monday it is seeking to raise $6.5 billion through new bonds and loans backed by its SkyMiles loyalty program, further bolstering liquidity to weather a drastic downturn in travel demand due to the COVID-19 pandemic.

The airline said it would use the loyalty program as collateral to secure the new loans and issuance, as it continues to burn through about $27 million in cash each day.

U.S. airlines have cut costs and raised debt to survive what they call an unprecedented industry crisis. The situation is not expected to improve until there is a meaningful recovery in demand.

With its latest financing deal, Delta will not pursue a $4.6 billion federal loan available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, officials said, even as it continues to lobby for a second round of federal payroll grants.

Atlanta-based Delta is among U.S. airlines to have tapped funds under a $25 billion made available primarily in grants under the CARES Act to cover employees’ payroll through September, but not a separate $25 billion package in secured loans.

The loan program has attractive financing terms but restricts executive compensation and share buybacks.

The airline has said it could furlough nearly 2,000 pilots in October without more federal aid, but believes it can avoid any flight attendant furloughs through the winter thanks to strong demand for voluntary departures or leaves.

Delta had $15.7 billion in liquidity at the end of June, which it said equaled about 19 months of financial runway at a daily burn rate of $27 million.

It still has unencumbered assets worth $6 billion to $7 billion, primarily in the form of spare aircraft parts and engines, if needed, officials said.

Delta did not disclose the value of the loyalty program or the terms of the new financing, which mirrors a debt deal by United Airlines in June backed by its $20 billion MileagePlus program.

Delta’s shares, which have lost about 46% this year, closed at $31.70 on Friday.

(Reporting by Tracy Rucinski; Editing by Ana Nicolaci da Costa)

Air France KLM Announces Second quarter 2020 Results

August 2, 2020 / WIL BALDWIN

Click the link below to view the entire press release!

https://www.airfranceklm.com/sites/default/files/q2_2020_press_release_en_final.pdf

EU Clears 7 Billion Euros in State Aid for Air France-KLM

May 4, 2020 / WIL BALDWIN

BRUSSELS (Reuters) – The European Union’s competition watchdog on Monday approved French state aid worth 7 billion euros ($7.66 billion) for Air France <AF.PA>, saying the support would provide cash to soften the economic shock of the coronavirus pandemic.

Airlines across Europe have sought state rescues as coronavirus lockdowns have forced them to ground their fleets for more than a month, with no end in sight.

“This 7 billion euro French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak,” the EU’s top competition official Margrethe Vestager said in a statement.

The European Commission noted the importance of Air France, with more than 300 planes, to the French economy and the role it has played in repatriating stranded citizens and transporting medical supplies.

The Commission said in its statement that the support will take the form of a state guarantee on loans and a subordinated shareholder loan to the company by the French state.

The French and Dutch governments each hold close to 14% of the Air France-KLM group, which was created by the 2004 merger between the two national carriers.

(Reporting by Gabriela Baczynska and Robin Emmott, editing by Ed Osmond and Barbara Lewis)

FILE PHOTO: Air France airplanes on the tarmac at Paris Charles de Gaulle airport in Roissy-en-France

EasyJet Says Can Ride Out 9 Month Shutdown and Slow Recovery

April 18, 2020 / WIL BALDWIN

FILE PHOTO: EasyJet planes parked at Luton airport after the airline grounded its entire fleet

LONDON (Reuters) – EasyJet can survive a nine-month shutdown thanks to its measures to contend with the coronavirus crisis and is planning for a slow recovery, the British airline said on Thursday.

As airlines worldwide battle for survival after lockdowns and travel bans brought the sector to a virtual standstill, EasyJet announced a new fleet plan to manage its emergence from the enforced hibernation.

The UK-based company said it will start to shrink its fleet and the number of planes it operates will not reach pre-crisis levels until 2022, signalling that it does not expect a quick recovery for the industry.

“We’ve been able to adapt ourselves to reduced demand for the next couple of years, then have the flexibility to increase as demand picks up again,” Chief Executive Johan Lundgren told reporters.

The industry is split on how quickly the sector can recover. Lufthansa, plane manufacturers and airline body IATA have warned that it will be a slow process. EasyJet’s bigger low-cost rival Ryanair, meanwhile, has predicted a swift rebound in traffic.

Lundgren said that, while he does not expect the grounding of easyJet’s fleet to last nine months, the company would remain cash-positive even if that were the case and could survive for longer than that by seeking additional funding.

Among the steps it is taking, easyJet is in talks over the sale and leaseback of some planes to leasing companies, with expected proceeds of up to 550 million pounds ($687 million).

“Overall, the company has presented a very credible response to the crisis,” said Goodbody analyst Mark Simpson.

In addition to the deferral of new orders and non-renewal of leases, easyJet said it now plans to sell six aircraft.

The airline, however, has faced calls from its founder and biggest shareholder, Stelios Haji-Ioannou, to terminate its 4.5 billion pound order with Airbus for 107 new jets.

He escalated his row with management on Thursday, issuing a statement saying he planned to call for the removal of Lundgren as well as chairman John Barton at forthcoming meetings. He said Lundgren should not send money to Airbus for planes while running an “aircraft parking lot”.

CASH PILE

Through various funding initiatives, easyJet expects to generate total additional liquidity of about 1.85 billion to 1.95 billion pounds, leading to a notional cash balance of about 3.3 billion pounds.

Given the level of continued market uncertainty, the company said it is not possible to provide guidance for the remainder of the 2020 financial year.

However, it said winter bookings are well ahead of those at the same stage last year, with Lundgren adding that he expects there to be pent-up demand for holidays as people emerge from lockdown.

But travel restrictions are likely to ease slowly and easyJet will have to be flexible, the CEO said. “I don’t think this is going to be a case of let’s just open everything up,” he added.

Measures under consideration include disinfecting aircraft and steps to ensure social distancing on planes.

“We will clearly look to have the middle seat empty as we start,” Lundgren said. “I think that is actually what the customers would like to see.”

EasyJet shares were up 2.2% at 616 pence at 1207 GMT, having lost more than 50% year to date.

($1 = 0.8007 pounds)

(Reporting by Sarah Young; Editing by Kate Holton and David Goodman)

GSV Bids $2.5 Billion for Malaysia Airlines

April 7, 2020 / WIL BALDWIN

FILE PHOTO: A Malaysia Airlines plane is seen at Kingsford Smith International Airport in Sydney

KUALA LUMPUR (Reuters) – Privately held Golden Skies Ventures (GSV) has made a $2.5 billion offer to fully take over the holding company of ailing state carrier Malaysia Airlines, with financing from a European bank, its executives told Reuters on Monday.

GSV, which was set up by former Malaysia Airlines officials and professionals with aviation experience, made the proposal a month ago, as airlines around the world were hammered by travel restrictions following the coronavirus pandemic.

“We have secured in excess of $2.5 billion from the bank. We will take about three to four months to get the long-term financing,” Chief Executive Shahril Lamin told Reuters in a phone interview.

GSV said it also has a commitment from a Japanese private equity firm to inject immediate funds into the aviation group through an equity deal.

It declined to name the firms involved, adding it was in talks with other foreign banks and private equity firms for further funding.

GSV has submitted its proposal to Morgan Stanley which has been hired by the aviation group’s sole owner, sovereign wealth fund Khazanah Nasional Bhd.

Sources have previously said Japan Airlines Co Ltd, domestic carriers AirAsia Group Bhd and Malindo Air have shown interest in Malaysia Airlines.

GSV said it would assume most of the airline’s debt that is being held by the government in outstanding Islamic bonds.

Khazanah and Morgan Stanley did not immediately respond to emailed requests for comment.

GOLDEN SHARE

The proposal includes keeping the government’s so-called golden share which allows it majority voting rights and maintains Malaysia Airlines’ flag carrier status.

GSV expects it will have ample liquidity to help the airline operate comfortably for up to 18 months.

It intends to reinstate Malaysia Airlines as a premium long-haul airline by expanding its flight network and maximising utilisation of its 81-plane fleet. It also plans to keep other business units such as the budget airline, cargo freighter and maintenance repair and overhaul unit.

“It’s still a viable venture, it has inherent strengths. We are saying we won’t lay off the 13,000 frontline employees and we are not going to asset-strip the airline,” Deputy Chief Executive Ravindran Devagunam said.

The firm aims to achieve positive earnings before interest, taxes, depreciation and amortisation within three years of taking over, and targets 15 billion ringgit ($3.5 billion) in revenue in 2025.

Plans for a listing or possible listing of its units are on the cards in three to five years, they said.

Ravindran said the firm is banking on pent-up travel demand when the coronavirus is contained. “Regardless of how long (the virus) will take this year, we are looking at an uptick in the business from summer 2021.”

($1 = 4.3450 ringgit)

(Reporting by Liz Lee; Editing by David Holmes and Edwina Gibbs)

Rolls-Royce Scraps Dividend & Targets Due to Coronavirus

April 6, 2020 / WIL BALDWIN

(Reuters) – British aero-engine maker Rolls-Royce will abandon its targets on profits, cash and deliveries, and suspend its dividend, as airlines around the world ground planes due to the coronavirus outbreak, the Financial Times reported late on Sunday.

Rolls-Royce is also aiming to announce new credit facilities in excess of 1 billion pounds ($1.22 billion) to bolster liquidity, the newspaper said https://on.ft.com/2ULsL7q.

Rolls-Royce, which makes engines for large civil and military planes, has been hit hard by the pandemic as its airline customers park hundreds of planes.

In March, engine flying hours were down by about 40%, the newspaper said, citing a source. The company is paid by airlines based on how many hours its engines fly.

At the end of February, Rolls Royce had forecast 2020 free cash flow of 1 billion pounds, excluding any material impact from COVID-19. The group will ditch that pledge, the FT said.

The dividend payment of 11.7 pence per share, which has been frozen since 2016, will also be suspended, the newspaper added.

Rolls-Royce declined to comment.

In addition, the FT said the company on Monday will reopen its civil aerospace facilities in the UK with a fraction of the normal workforce, after suspending operations in March.

The company could also eventually furlough some 50% of its 7,500 UK shop-floor workers, with wages supported by government subsidy, two sources told the newspaper.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Daniel Wallis and Richard Pullin)

Rolls Royce engine of the first Fiji Airways A350 XWB airliner is seen at the aircraft builder’s headquarters of Airbus in Colomiers near Toulouse

Volaris Announces Temporary Capacity Reduction

April 2, 2020 / WIL BALDWIN

PRNewswire/ — Volaris (NYSE: VLRS), the ultra-low-cost airline serving Mexico, the United States and Central America, announces that pursuant to a decree published in the Official Gazette of the Federation, the Government of the United Mexican States, acting through the General Health Council (Consejo de Salubridad General (“GHC”)) declared a health emergency due to force majeure, as a result of the disease epidemic caused by the virus SARS-CoV-2 (COVID-19), known as Coronavirus, which will be in effect until April 30, 2002 (the “Declaration of Emergency”)

The Declaration of Emergency and the health security measures announced by the GHC, such as the suspension of non-essential activities in the public, private and social sector, as well as the call to the population to comply with stay at home, will impact the demand for passenger air transportation whilst the Declaration of Emergency is in effect.

As a result, from the date hereof, Volaris will make an additional capacity reduction to that which was advised on March 24, 2020. Capacity measured by available seat miles (ASMs) for the month of April, 2020 will reduce to approximately 80% of total operation versus the schedule originally published.

Volaris will continue to provide relevant market updates should further capacity, governmental travel restrictions or other liquidity preserving measures need to be implemented.

Boeing Statement on Passage of CARES Act

March 26, 2020 / WIL BALDWIN

We thank the Administration, especially the President and Secretary Mnuchin, as well as the Senate for working together to take swift bipartisan action to support the American economy, including the 2.5 million jobs and 17,000 suppliers that Boeing, the aerospace industry and the U.S. rely on to maintain our world leadership in commercial, defense and services. The bill’s access to public and private liquidity, including loans and loan guarantees, is critical for airlines, airports, suppliers, and manufacturers to bridge to recovery.

Boeing’s top priority is to protect our workforce and support our extensive supply chain, and the CARES Act will help provide adequate measures to help address the pandemic. We have also taken a number of measures for affordability and liquidity as we navigate the challenges our industry currently faces, including forgoing pay for our CEO and board chairman, suspending our dividend until further notice, and extending our existing pause of any share repurchasing until further notice.

We appreciate the House taking swift action to support the American people.

Norwegian Air Gets Guarantee From Norwegian Government

March 25, 2020 / WIL BALDWIN

Norwegian is pleased to announce that two Nordic banks have obtained credit committee approval to provide a guarantee for the required 10 percent for the first tranche of 300 million Norwegian kroner (NOK). Norwegian will secure the necessary headroom to pursue further guarantees from the Norwegian Government.

Government measures
On Thursday 19 March, the Norwegian Government proposed a guarantee of NOK 6 billion for the Norwegian airline industry, of which up to NOK 3 billion is directed to Norwegian. The guarantee will be up to 90 percent from the Norwegian Government provided that financial institutions contribute with the remaining 10 percent. The guarantee scheme will consist of three tranches with a maximum two years maturity.

Since Thursday evening Norwegian has worked with banks and financial institutions and is pleased to announce that two Nordic banks have obtained credit committee approval to contribute with the 10 percent required in guarantee for Tranche I and to provide the NOK 300 million in financing backed by the guarantee from the Norwegian Government. The Company is working with the banks and the Norwegian Export Credit Guarantee Agency (“GIEK”), who will administrate the guarantee scheme, on the documentation in order to obtain the NOK 300 million in liquidity as soon as possible.

The Company is now working with GIEK and the Ministry of Trade, Industry and Fisheries to clarify the criteria and terms related to the remaining tranches under the scheme and to obtain further guarantees from financial institutions in order to back such remaining tranches. Norwegian will update the market with its further plan of action and implications for its stakeholders as soon as the criteria and terms have been finalized. The Government guarantee scheme is crucial for the Company as the current state of the capital markets in combination with the challenging times for the airline industry limit the options available. The first NOK 300 million will create necessary headroom to pursue the remaining tranches of the guarantee scheme.

Operational update
Currently, most of the fleet is grounded and Norwegian has reduced its operations to a minimum. The airline will now primarily operate domestically in Norway and Sweden and between the Nordic capitals, in order to deliver on its corporate responsibility of maintaining critical infrastructure so that people and necessary goods and medical supplies can be transported during this unprecedented crisis. The limited schedule will remain in place until further notice. In addition, Norwegian has conducted repatriation flights together with the authorities in order to get citizens of Norway, Denmark and Sweden back home.

In order to reduce cost, Norwegian has temporarily laid off approximately 90 percent of its workforce and will continue to implement additional cost measures going forward.

The Qantas Group Completed New Round of Debt Funding

March 25, 2020 / WIL BALDWIN

The Qantas Group has completed a new round of debt funding, securing $1.05 billion in additional liquidity to strengthen its position as it manages through the Coronavirus outbreak.

This debt has been secured against part of the Group’s fleet of unencumbered aircraft, which were bought with cash in recent years. The loan has a tenure of up to 10 years at an interest rate of 2.75 per cent.

This funding increases the Group’s available cash balance to $2.95 billion with an additional $1 billion undrawn facility remaining available.

The Group’s net debt position remains at the low end of its target range, at $5.1 billion, with no major debt maturities until June 2021. In line with the rest of the Qantas debt book, the new funding contains no financial covenants.

With a further $3.5 billion in unencumbered assets, the Qantas Group retains flexibility to increase its cash balance as a prudent measure in the current climate. As previously announced, various steps have been taken to significantly reduce activity levels and costs given the dramatic revenue impact of the Coronavirus pandemic and the related travel restrictions on Jetstar and Qantas passenger services.

Qantas Group CEO Alan Joyce said: “Over the past few years we’ve significantly strengthened our balance sheet and we’re now able to draw on that strength under what are exceptional circumstances. Everything we’re doing at the moment is focused on guaranteeing the long term future of the national carrier, including making sure our people have jobs to return to when we have work for them again.”

Seven of the Group’s 11 wholly-owned Boeing 787-9’s have been securitised against this funding.

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