Tag: Editing (Page 3 of 5)

Korean Air to Issue $817 Million in New Shares as Virus Strains Industry

May 14, 2020 / WIL BALDWIN

SEOUL (Reuters) – South Korea’s largest airline, Korean Air, plans to sell around 1 trillion won ($816.55 million) in new shares in its biggest rights issue in 20 years to raise funds amid mounting strains in the industry due to the pandemic.

Korean Air is the latest carrier to raise funds as travel restrictions imposed by governments around the world have led to airlines grounding their fleets worldwide.

Korean Air separately plans to receive 1.2 trillion won in support from South Korean state-owned banks.

About 79 million newly issued shares, to be listed on July 29, will be first bought by the carrier’s shareholders, including holding company Hanjin Kal which has a 30% stake in the carrier, followed by general public, the company said in a statement.

“Korean Air will continue to carry out self-rescue measures to overcome the dismal business environment due to COVID-19,” the company said.

Korean Air had 70% or more of its employees working in South Korea take a six-month leave of absence in April. Woo Kee-hong, the airline’s president, warned in March that the coronavirus outbreak could threaten its survival if the situation becomes prolonged.

Korean Air also picked last month a preferred bidder to buy its real estate and non-core assets, which some analysts value at about 400-500 billion won.

Korean Air had a debt-to-equity ratio of about 870% as of end-2019. It is expected to announce January-March quarter earnings later this week.

A spokeswoman for Korean Air said it was operating just 10% of its previously planned international schedule, and 60% of its domestic schedule.

The airline said it expects its June international schedule to rise to 20% of its previous plan, as it announced the addition of more international passenger flights to prepare for increased travel demand once COVID-19 restrictions are relaxed.

United Airlines Holdings Inc said earlier this month it plans to raise $2.25 billion through a bond offering, after announcing a public offering to raise more than $1 billion in April.

In March, Singapore Airlines said it would issue S$5.3 billion ($3.70 billion) in new equity and up to S$9.7 billion($6.78 billion) via mandatory convertible bonds in a rights issue backed by state investor Temasek Holdings.

($1 = 1,224.6700 won)

(Reporting by Joyce Lee; Editing by Simon Cameron-Moore and Louise Heavens)

Korean Air’s passenger planes are parked following outbreak of COVID-19, at Incheon International Airport

Azul Airlines to Delay 59 Embraer Airplanes Until After 2024

May 14, 2020 / WIL BALDWIN

SAO PAULO, May 14 (Reuters) – Brazilian airline Azul SA said on Wednesday it had agreed with planemaker Embraer SA to delay the delivery of 59 E2 jets, with a list price of 24.5 billion reais ($4.16 billion), to 2024 or later.

The planes had been initially set for delivery from 2020 to 2023, according to an Azul securities filing.

Azul said the agreement was a step to shore up its business amid the COVID-19 pandemic, which also led it to reduce its April capacity by 90% in comparison to the same month in 2019.

($1 = 5.8852 reais)

(Reporting by Alberto Alergiri; Editing by Sandra Maler)

Qantas Pauses Airplane Deliveries from Airbus and Boeing

May 10, 2020 / WIL BALDWIN

Qantas planes are seen at Kingsford Smith International Airport in Sydney, Australia

SYDNEY (Reuters) – Qantas Airways Ltd <QAN.AX> said on Monday it had advised Airbus SE <AIR.PA> and Boeing Co <BA.N> that it did not expect to take delivery of any new planes in the near term as it grapples with a plunge in demand due to the coronavirus pandemic.

The airline had expected to add three Boeing 787-9 jets to its fleet by the end of 2020 and to start taking delivery in August of the first of 18 Airbus A321neos due by 2022.

There is no longer a specific timeline for them to arrive because the market is too uncertain, a Qantas spokesman said, confirming a report on travel website Executive Traveller.

Many carriers around the world have grounded the bulk of their fleets and halted aircraft deliveries in response to the pandemic, leading Airbus and Boeing to cut production rates.

Qantas last week said it had shelved plans to order this year up to 12 A350s capable of the world’s longest commercial flights from Sydney to London. It said it was reviewing its fleet with the expectation that most international travel could take years to rebound.

More than 25,000 of the airline’s staff have been stood down until at least the end of June as the carrier is flying only 5% of its pre-crisis domestic passenger network and 1% of its pre-crisis international network.

An Airbus spokesman said his company did not comment on delivery schedules for airlines. Boeing did not respond immediately to a request for comment.

(Reporting by Jamie Freed; Editing by Himani Sarkar)

Former Garuda Indonesia CEO Jailed for Eight Years for Bribery

May 8, 2020 / WIL BALDWIN

AKARTA (Reuters) – An Indonesian court on Friday jailed Emirsyah Satar, a former chief executive of Garuda Indonesia, for bribery and money laundering related to procurement of planes and engines from Airbus and Rolls-Royce, his laywer said.

Satar’s lawyer Luhut Pangaribuan said his client had been given an eight-year sentence and fined S$2 million ($1.4 million) by the country’s corruption court.

Indonesia’s Corruption Eradication Commission (KPK) had indicted Satar, CEO of Garuda from 2005 to 2014, over payments from a businessman via a third party for the procurement by Garuda Indonesia of Roll-Royce Trent 700 engines and Airbus A320 and A330 planes.

The indictment also related to the procurement of Airbus planes for PT Citilink Indonesia, a unit of Garuda.

In 2017 Rolls-Royce agreed to pay authorities more than $800 million to settle charges after an investigation by the U.S. Justice Department and Britain’s Serious Fraud Office into alleged bribery of officials in six countries in schemes that lasted more than a decade.

Airbus in February this year agreed to pay a record $4 billion in fines after reaching a plea bargain with prosecutors in Britain, France and United States over alleged bribery and corruption stretching back at least 15 years.

Satar, who had previously denied wrongdoing, will decide next week whether to appeal against his sentence, said Pangaribuan.

($1 = 1.4139 Singapore dollars)

(Reporting by Agustinus Beo Da Costa; Writing by Ed Davies; Editing by David Goodman)

Aer Lingus to Review Social Distancing Following Packed Flight

May 5, 2020 / WIL BALDWIN

LONDON (Reuters) – Irish airline Aer Lingus said it was reviewing its social distancing procedures after a flight on Monday was packed with passengers.

European flights have all but come to a standstill during the coronavirus pandemic with only a few services operating for essential travel such as people going to work or being repatriated, or for cargo.

While there is no visibility on when travel restrictions will ease, airlines are considering how to safely restart services and give passengers confidence to fly.

Aer Lingus, owned by IAG <IAG.L>, said it would consider how it operates after its Belfast to London Heathrow flight on Monday had “unexpectedly high loads” and that due to the level of the demand for the route, it could need to make changes.

“Aer Lingus is reviewing its processes and procedures applicable to the operation of this service,” an Aer Lingus spokeswoman said, adding that safety was its top priority.

Some airlines have discussed leaving middle seats empty on flights to enable social distancing, while other airlines such as Germany’s Lufthansa <LHA.DE> and Hungary’s low cost airline Wizz Air <WIZZ.L> have made it compulsory for passengers to wear face masks on flights.

(Reporting by Sarah Young and Ian Graham; Editing by Kirsten Donovan)

FILE PHOTO: The Aer Lingus EI-DER Airbus A320 makes its final approach for landing at Toulouse-Blagnac airport

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

Norwegian Air Shareholders Vote in Favor of Rescue Plan

May 4, 2020 / WIL BALDWIN

OSLO (Reuters) – Norwegian Air <NAS.OL> shareholders backed its financial survival plan on Monday, with more than 95% of votes cast supporting the conversion of nearly $1 billion of debt into equity and raising more cash from its owners.

Approval of the scheme is a vital part of the struggling airline’s plan to tap government credit guarantees as it seeks to overcome the coronavirus crisis, which has compounded its already deep financial problems.

Airlines around the world have been hit hard by the impact on travel of the pandemic, with many forced to turn to governments for state aid to avoid bankruptcy.

The airline, which at the end of last year had amassed debts of around $8 billion, said ahead of the meeting that it had won “strong support” from aircraft lessors for its plan.

With 95% of its fleet grounded due to the coronavirus pandemic, Norwegian Air has said it could run out of cash by mid-May unless shareholders supported the plan.

On Sunday it said bondholders had signed up to the plan, which was narrowly rejected in a vote on Thursday.

Norwegian Air said lessors are now willing to convert at least $730 million of debt into equity, up from $550 million earlier, and talks are ongoing for possible further conversion.

“With the significant contributions from lessors and bondholders, the company expects to convert more than 10 billion crowns ($958 million) in debt to equity,” it said.

Based on the results from the shareholders’ meeting, the company will now proceed with the conversion of bonds and lease debt to shares, as well as the public offering of up to 400 million ($38.4 million) from the sale of new stock, it said.

The debt conversion and share sale will allow Norwegian Air to tap government guarantees of up to 2.7 billion crowns, which hinge on a reduction in leverage, on top of 300 million crowns it has already received.

The plan will hand majority ownership to the airline’s creditors and could leave current shareholders with just 5.2%.

The loan could keep Norwegian Air going until the end of 2020, although further cash may be needed as it eyes a gradual ramp-up next year and normalisation in 2022, albeit with a reduced fleet.

Norwegian Air is only paying invoices vital to maintaining minimum operations, such as salaries for staff still employed and critical IT infrastructure. It has put payments for ground handling, debt and leases on hold.

The Oslo Bourse said it had halted trade in Norwegian Air’s shares until the outcome of the vote is presented.

(Reporting by Terje Solsvik; Editing by Christian Schmollinger, Jason Neely and Alexander Smith)

FILE PHOTO: A Norwegian Air plane is refuelled at Oslo Gardermoen airport

Airbus to Furlough 3,200 Staff at Broughton Factory in Wales

April 28, 2020 / WIL BALDWIN

LONDON (Reuters) – Airbus <AIR.PA> will furlough around 3,200 staff at its Broughton factory in Wales, the European planemaker said on Monday after it warned staff that the coronavirus crisis had put its survival at stake.

Airbus has given its starkest assessment yet of damage from the crisis, telling the company’s 135,000 employees to brace for potentially deeper job cuts as it grapples with the impact of the COVID-19 pandemic on the aerospace sector.

Earlier this month, the group said it would furlough some 3,000 French workers by tapping a government-backed scheme for four weeks.

“Airbus confirms it has agreed with its social partners to apply the government’s Job Retention Scheme for approximately 3,200 production and production-support employees at its commercial aircraft site in Broughton,” it said in a statement.

Britain’s job retention scheme allows employers to furlough staff and claim cash grants up to 80% of wages, capped at 2,500 pounds per worker.

Airbus will top up gross salaries to bring pay up to 85-90% of pay, in accordance with an agreement signed with trade union representatives.

The deal affects the majority of the production and production support teams in Broughton, the north Wales factory which assembles wings.

Furlough periods will be staggered, with all starting in the next three weeks and lasting for at least three weeks.

The move does not affect Airbus’ 3,000 staff in Filton, western England, where wings are designed and supported.

(Reporting by Alistair Smout; editing by Stephen Addison)

United Airlines Sells 22 Airplanes to Bank of China Aviation

April 20, 2020 / WIL BALDWIN

HONG KONG, April 19 (Reuters) – United Airlines will sell and lease back 22 planes to Bank of China (BOC) Aviation, a statement from the aircraft investor released to the Hong Kong Stock Exchange said on Sunday.

The deal involves six Boeing 787-9 aircraft and 16 Boeing 737-9 MAX aircraft from United Airlines, the statement said.

The Singapore-based BOC Aviation did not reveal how much the purchase was worth but said the planes would be leased back to United on long-term agreements.

United said on Wednesday it had reduced its flight schedule in May by 90% and expects similar cuts for June as a result of the coronavirus pandemic.

The U.S. airline also said it flew less than 200,000 people in the first two weeks of April, a 97% drop from the more than 6 million people it flew during the same time in 2019.

BOC Aviation, which focuses on aircraft leasing, has a fleet of 567 planes owned, managed or on order as at the end of March, the statement said

The transaction was finalised on Friday and the deal is expected to close later this year, the statement said.

(Reporting by Scott Murdoch. Editing by Jane Merriman)

CDB Financial Scraps Purchase of 29 Boeing 737 MAX Jets

April 20, 2020 / WIL BALDWIN

SYDNEY (Reuters) – China Development Bank (CDB) Financial Leasing Co said on Monday it had agreed with Boeing Co <BA.N> to cancel the purchase of 29 undelivered 737 MAX jets, adding to a string of recent cancellations of the grounded airplane.

The model has been grounded globally for more than a year following deadly crashes in Indonesia and Ethiopia.

“In light of evolving aviation market dynamics, we’ve been working together with Boeing over many months to re-calibrate our MAX orderbook to be in line with our long-term view of the market and related opportunities,” Xuedong Wang, chairman of CDB Financial unit CDB Aviation, said in a statement.

The lessor said it retained an order for another 70 of the planes that also have yet to be delivered.

Boeing recorded a total of 150 MAX cancellations in March, including 75 from Irish leasing company Avolon. Boeing remains in talks with regulators seeking approval to return the plane to service, but its customers have also seen a sharp fall-off in demand due to the coronavirus pandemic.

Boeing said in a statement it continued to partner with leasing company customers to help them balance their portfolios in a challenging market.

“As we work to return the 737 MAX to service, our focus remains on addressing our customers’ fleet needs while optimising the delivery of the more than 4,000 airplanes in our 737 backlog,” it said.

“As market conditions normalise, Boeing anticipates that lessors who have restructured or reduced their orderbooks will continue to add MAX aircraft to their portfolios through sale leaseback agreements with airlines,” the planemaker said. “Longer term we expect these lessors will again place orders for direct MAX purchases.”

CDB Financial Leasing said that all 737 MAX 10 jets still on order will be switched to the smaller 737 MAX 8 model, and 20 deliveries will be deferred to dates in 2024, 2025 and 2026.

(Reporting by Jamie Freed; additional reporting by David Shepardson in Washington Editing by Tom Hogue and Muralikumar Anantharaman)

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