PARIS (Reuters) – Airbus <EADSY> posted its biggest January order haul in at least 15 years on Thursday as it booked a major leasing order that has been in the pipeline for several months, and carried out 31 aircraft deliveries.
The European planemaker said it had taken orders for 296 aircraft in January, including the recently finalised order for 102 planes from Air Lease Corp <AL> as well as 100 jets from U.S. low-cost carrier Spirit Airlines <SAVE>. After cancellations, it started the year with 274 net orders.
Cancellations included 20 single-aisle jets from Colombia’s Avianca, balanced by 20 orders for broadly similar aircraft from leasing company BOC Aviation in what some industry sources have described as a swap to ease their financing. Neither firm was available for comment.
Lufthansa <LHA.DE> canceled two A350 wide-body jets.
Rival Boeing, whose sales and deliveries have been affected by the grounding of its 737 MAX, has yet to post January data.
Airbus said on Thursday its deliveries from an overseas assembly plant in China had been halted amid the coronavirus outbreak. Airbus has joined other local companies in extending a routine shutdown planned for Chinese New Year, due to the impact of the health scare on its supply chains and logistics.
Airbus is expected to give targets next week and barring a worsening of the coronavirus crisis could shoot for record deliveries of at least 900 jets in 2020 as Boeing remains on a backfoot due to the MAX grounding, industry analysts say.
(Reporting by Tim Hepher; Editing by Alexandra Hudson)
FILE PHOTO: Logo of Airbus is pictured at the aircraft builder’s headquarters of Airbus in Colomiers near Toulouse
OSLO (Reuters) – Norwegian Air’s turnaround gathered pace last month as the budget carrier removed unprofitable routes from its network and boosted the income from remaining flights, sending its shares up almost 6% in early trade.
The airline’s yield – income per passenger carried and kilometre flown – rose 15% to 0.40 Norwegian crown ($0.0435), its monthly traffic report showed on Thursday, beating a 0.37 crown forecast in a Reuters poll of analysts.
The company cut its capacity by a bigger-than-expected 29% in January from a year earlier. Analysts had expected a 22.2% decline in capacity for the month.
Norwegian’s shares traded 4.3% higher at 39.66 crowns by 0839 GMT, but are still down 46% in the last 12 months.
“I am pleased that we continue to deliver on the strategy of moving from growth to profitability,” Chief Executive Jacob Schram, in office since the start of the year, said in a statement.
Norwegian has shaken up the transatlantic travel market with low fares, but breakneck expansion and the grounding of its Boeing MAX fleet also brought mounting losses, forcing the company repeatedly to raise cash from owners.
Seeking to turn itself around and avoid joining the ranks of collapsed airlines, the company announced in October it would cut its capacity by 10% in 2020 from 2019.
Another measure, revenue per available seat kilometre, or RASK, grew by 22% year-on-year to 0.32 crowns, beating the 0.30 crowns predicted by analysts, and Norwegian also raised its fuel hedges to guard against a spike in prices.
The increase in RASK pointed to better operating margins at the carrier, said Danske Bank analyst Martin Stenshall, who holds a buy recommendation on the stock.
Norwegian on average filled 80.9% of seats in January, up from a load factor of 76.1% a year ago and beating an average forecast of 80.6%.
Routes between Ireland and the United States and Canada were cut from Norwegian’s schedule last September, and in December the company announced the sale of its domestic business in Argentina.
The cutbacks may also alleviate the pressure on rivals such as Scandinavian Airlines, which now faces less head-to-head competition on routes between Europe and the United States.
($1 = 9.1879 Norwegian crowns)
(Editing by Gwladys Fouche and Barbara Lewis)
Norwegian Air Sweden Boeing 737-800 plane SE-RRJ approaches Riga International Airport in Riga
LONDON/FRANKFURT, Feb 5 (Reuters) – China’s HNA Group is resuming efforts to find a buyer for airport luggage handler Swissport despite facing a loss of several hundred million dollars on its initial $2.8 billion investment, four sources familiar with the matter told Reuters.
The Chinese conglomerate has rekindled talks with several heavyweight investment funds as it needs to raise cash to cut its debts, the sources said.
Rothschild is helping HNA identify prospective bidders, who are hoping to buy the Zurich-based business on the cheap after previous attempts to sell it stalled last year, the sources said, speaking on condition of anonymity because the process is not public.
U.S. buyout funds Apollo Global Management Inc and Cerberus as well as Canadian asset manager Brookfield have come forward to revisit a possible acquisition of Swissport, the sources said.
Two other U.S. investors – Bain Capital and Centerbridge Partners – are also looking to take part in a new auction, two of the sources said, adding interest from industry buyers had waned.
HNA is hoping to limit its losses and recoup at least $2.3 billion from the sale, one of the sources said.
But offers are expected to value Swissport at about $2 billion, two of the sources said, with one adding Apollo had previously offered $2.1 billion.
This means HNA may need to swallow a loss of more than $500 million to offload the business, which has annual core earnings of about $270 million, they said.
HNA, Apollo, Cerberus, Brookfield and Bain declined to comment, while Centerbridge was not available.
HNA bought Swissport for 2.7 billion Swiss francs ($2.8 billion) in 2016 in a deal that was meant to complement its sprawling portfolio of investments in aviation, logistics and tourism.
But the Chinese giant had to look into cashing out at the start of 2018 when its liquidity challenges turned it into one of China’s most indebted companies and forced it to quickly sell assets.
The 20-year old company, led by chairman Chen Feng, came under pressure after embarking on an aggressive M&A spree in the United States and Europe with deals worth an overall $50 billion.
It made a push into the travel and tourism industry, buying a 25% stake in Hilton Worldwide Holdings Inc in 2016 and then branched out into financial services, becoming the leading investor in Deutsche Bank.
But its M&A binge resulted in cash flow problems, prompting a review of all its business interests overseas.
HNA initially considered a possible listing of Swissport on the Swiss SIX Exchange in 2018, but then opted for an outright sale.
Apollo and Cerberus, which bought Paris-based Worldwide Flight Services (WFS) in 2018, were both initial contenders for Swissport, but negotiations stalled after the Swiss company secured a refinancing package in August.
($1 = 0.9727 Swiss francs)
(Reporting By Pamela Barbaglia and Clara Denina in London and Arno Schuetze in Frankfurt; Editing by Mark Potter)
CHICAGO, Feb 5 (Reuters) – United Airlines Holdings Inc announced on Wednesday an agreement to purchase a flight training academy in Phoenix in a move aimed at bolstering its pilot pipeline as the industry faces a global shortage.
To address a tight U.S. labor market created by years of slow pilot hiring, a wave of pending retirements and new rules that in 2013 increased the number of required training hours, U.S. airlines have been taking steps to attract young aviators.
Chicago-based United, which is looking to hire more than 10,000 pilots by 2029, will be the first major U.S. carrier to run its own academy.
“We think this program will alleviate any shortage we would have had and that’s its purpose,” Curtis Brunjes, United’s managing director of pilot strategy, told reporters.
The school, currently operating as Westwind School of Aeronautics, will be renamed United Aviate Academy in September.
United expects approximately 300 graduates in 2021 and wants to expand capacity to accommodate 500 graduates per year, Brunjes said, noting that the academy is among the airline’s most aggressive steps on pilot hiring since the 1960s.
One area of focus at the school will be training for loss of control incidents, a leading cause of plane disasters, that goes beyond the current U.S. Federal Aviation Administration requirements.
Some of the enrollees will come from Aviate, a recruitment program that United launched last year offering students and pilots from 15 schools and regional carriers a path to a job at the major.
American Airlines Group Inc and Delta Air lines Inc have similar career programs.
United – which plans to design the academy’s curriculum in concert with the Air Line Pilots Association, International – is offering financing options for training and will also launch a scholarship program focused on women and minorities.
It did not disclose financial details of the purchase, with Brunjes saying only that the company paid “more than asset value, but not hugely more.”
The financial benefit down the line will be ensuring that regional carriers, which operate a significant amount of U.S. airlines’ domestic capacity at a lower cost, have enough pilots to fly the routes that United wants to contract.
In recent years, regional carriers have had to double salaries and offer sign-on bonuses to attract pilots to the field, driving up costs.
Boeing Co expects 800,000 new pilots will be needed over the next 20 years to meet growing demand for air travel.
(Reporting by Tracy Rucinski; Editing by Steve Orlofsky)
DEARBORN, Mich. (Reuters) – Investors sent Ford Motor Co shares skidding on Tuesday after the company delivered a weaker-than-expected 2020 forecast, warning of higher warranty costs, lower profits at its credit arm and continued investments in future technology such as self-driving cars.
Shares in the No. 2 U.S. automaker plunged 9.4% in after-hours trading, shaving more than $3 billion off the company’s value. In comparison, electric carmaker Tesla closed up nearly 14%, pushing its market cap to $160 billion, more than four times the size of Ford’s $36.4 billion.
“The results were not OK in 2019,” Ford Chief Financial Officer Tim Stone told reporters at the company’s headquarters outside Detroit.
“As I look to 2020 and beyond, I’m very optimistic,” he said, while cautioning that Ford’s lower guidance does not yet account for the potential impact of the coronavirus outbreak in China.
In an after-hours call with financial analysts, Chief Executive Jim Hackett was more blunt about the challenge of balancing Ford’s protracted turnaround efforts with its continuing work on future technology, including electric and self-driving cars.
“I don’t think this company can keep straddling the old and new worlds forever … This company has to change,” Hackett said.
Ford said it expects 2020 operating earnings to be in the range of 94 cents to $1.20 a share. Analysts were expecting $1.26 a share.
Stone said Ford expects to continue its quarterly dividend of 15 cents, which could cost the company $2.4 billion in 2020. Asked about continuing the dividend after lowering its 2020 guidance, Hackett said, “We like to return value to shareholders.”
The disappointing 2020 forecast, coming after Ford previously trimmed its 2019 outlook, is a blow for Hackett, who took the helm in May 2017.
He has been asking investors to be patient with a restructuring that has seen the formation of a wide-ranging alliance on commercial, electric and autonomous vehicles with Volkswagen AG <VOWG_p.DE> and the sale of its money-losing operations in India to a venture controlled by India’s Mahindra & Mahindra.
But by Ford’s own accounting, the restructuring is far from complete. It has booked $3.7 billion of the projected $11 billion in charges it previously said it would take, and expects to book another $900 million to $1.4 billion this year.
For the fourth quarter of 2019, Ford reported a net loss of $1.7 billion, or 42 cents a share, compared with a loss of $100 million, or 3 cents a share, a year earlier.
The quarter included a loss of $2.2 billion due to higher contributions to its employee pension plans, something it disclosed last month.
Revenue in the quarter fell 5% to $39.7 billion, above the $36.5 billion Wall Street had expected.
Ford’s adjusted free cash flow fell 67% in the fourth quarter to $500 million, including the $600 million cost of bonuses related to a new labor deal with the United Auto Workers union. The UAW deal also played a role in driving North American automotive profit margins down to 2.8% in the fourth quarter.
Ford said its operating losses in China last year totaled $771 million, including a loss of $207 million in the fourth quarter. It lost $1.5 billion in 2018. Ford’s market share in China in the fourth quarter fell to 2% from 2.3% last year.
In December, Ford said it would halve its operating loss in 2019 and nearly halve it again in 2020, followed by further improvement in 2021.
However, that forecast was before the appearance of the fast-spreading coronavirus and its crippling effects on China’s economy.
Ford’s China sales fell about 15% in the fourth quarter and 26% for the year as it continued to lose ground in its second-biggest market. Ford has been struggling to revive sales in China since its business began slumping in late 2017.
Detroit rivals General Motors Co and Fiat Chrysler Automobiles are scheduled to report their results on Wednesday and Thursday, respectively.
(Reporting by Ben Klayman and Paul Lienert; Editing by Tom Brown)
SAO PAULO, Feb 4 (Reuters) – Shares in Brazil’s Gol rose as much as 5.5% on Tuesday after the budget airline said it had signed a codeshare agreement with American Airlines.
“When this is approved by Brazilian and U.S. authorities, Gol’s new codeshare will allow its customers to connect to more than 30 destinations in the USA,” Gol said in a statement, adding that American will now offer more U.S.-South American flights than anyone else.
The flights will operate from Gol’s hubs in São Paulo, Rio de Janeiro, Brasilia and Fortaleza, and will be added to current regular flights to Miami and Orlando.
Investors cheered the news, pushing Gol’s shares up as much as 5.5% to 36.25 reais, making it one of the biggest gainers on the Ibovespa. At midday in Sao Paulo trading, Gol shares were up 4.6% and the benchmark index was up 1.5%.
“The partnership will increase the quantity and quality of its flights, offering the more daily flights between South America and the United States than any other partner,” analysts at Guide Investimento said in a client note on Tuesday.
The agreement will make it easier for customers to purchase flights for both airlines using a single reservation. It will also integrate check-in, boarding and baggage checking throughout the trip, and include the air miles program.
(Reporting by Paula Laier Writing by Jamie McGeever Editing by Jonathan Oatis)
KUALA LUMPUR (Reuters) – Shares of Malaysia’s AirAsia Group <5099.KL> fell on Monday, after allegations by Britain’s Serious Fraud Office that Airbus <EADSY> paid a bribe of $50 million to win plane orders from Asia’s largest budget airline group.
AirAsia shares fell as much as 11% to 1.27 ringgit – their lowest since May 2016 – while those of AirAsia X tanked 12% to their all-time low of 11.5 Malaysian sen.
Malaysia’s anti-graft agency is investigating the allegations from Britain. AirAsia has said it never made any purchase decisions that were premised on Airbus sponsorship, and that it would fully cooperate with the Malaysian Anti-Corruption Commission (MACC).
Malaysia’s Securities Commission said on Sunday it would also examine whether AirAsia broke securities laws.
The allegations were revealed on Friday as part of a record $4 billion settlement Airbus agreed with France, Britain and the United States. Prosecutors said the company had bribed public officials and hidden payments as part of a pattern of worldwide corruption.
Airbus said at the weekend it would not comment on the Malaysian investigations.
Analysts said the accusation against AirAsia comes at a particularly bad time as airlines grapple with a slowdown in business because of the fast-spreading coronavirus epidemic that has killed more than 300 people in China and disrupted air travel.
“Besides being embroiled in this corruption scandal, we expect a tough operating environment to persist over the medium term with maintenance cost remaining high … and concerns over the Wuhan virus outbreak which could derail propensity for air travel in the region,” Malaysia’s Kenanga Investment Bank wrote in a research note.
TA Securities downgraded AirAsia Group stock to “sell” from “buy”.
“We choose the ‘sell first, ask questions later’ approach to avoid the uncertainty in association with the corruption investigation by MACC, where the impact on AirAsia could be significant in terms of corporate governance,” it said in a note.
(Reporting by Krishna N. Das; Editing by Himani Sarkar and Christopher Cushing)
FILE PHOTO: Thai AirAsia Airbus A320 plane prepares for take off at Don Mueang International Airport in Bangkok
Organisers expect reduction in exhibitors, visitors
South Korea’s air force reviewing participation
By Jamie Freed and Allison Lampert
SYDNEY/MONTREAL, Feb 3 (Reuters) – Some aerospace companies including business jet manufacturers Textron Inc and General Dynamics Corp’s Gulfstream division said they no longer planned to attend the Singapore Airshow due to the new coronavirus epidemic.
The trade portion of Asia’s biggest airshow, held every two years, is set to begin on Feb. 11 under the shadow of the fast-spreading virus that has prompted Singapore to deny entry to any non-resident with a recent history of travel to China, where the virus originated.
The death toll from the coronavirus has risen to 361 in China, bringing the number of confirmed infections to 17,205 in the country. The flu-like virus, which can be transmitted from person to person, has spread to more than two dozen other nations and regions.
Experia Events, the organiser of the Singapore Airshow, said last week the show would continue as planned, but the government measures meant it would “undoubtedly see a reduction in terms of the number of expected exhibitors and visitors this year”.
The organiser said there would be doctors and medics on standby to attend to visitors who were feeling unwell.
In 2018, there were 54,000 trade attendees from 147 countries and 1,062 participating companies who come to network, examine products and sign deals covering commercial aviation, defence, maintenance and repair operations and business jets.
Typically, it is not a major show for commercial plane orders but talks during the show can set the stage for deals that are completed later in the year.
Boeing, Airbus and Lockheed Martin Corp , among the biggest exhibitors, said they still planned to attend the show.
Textron and Gulfstream said their decision to not attend was a precautionary measure to protect the health of employees.
Russian aerospace group Rostec plans to send a reduced delegation to the show, Russian media reported. Rostec did not respond immediately to a request for comment.
A spokesman for South Korea’s Air Force said on Monday it was reviewing whether to participate in the Singapore Airshow, but it had not made a final decision.
The deputy administrator of the Civil Aviation Administration of China, Li Jian, is no longer listed as a speaker at a pre-show leadership conference on Feb. 10.
Commercial Aircraft Corp of China (COMAC), which is developing the C919 narrowbody jet, had been due to attend the show before the travel ban was announced.
COMAC did not respond immediately to a request for comment.
(Reporting by Jamie Freed in Sydney and Allison Lampert in Montreal; additional reporting by Anshuman Daga in Singapore, Joyce Lee in Seoul and Brenda Goh in Shanghai; Editing by Himani Sarkar)
WASHINGTON/CHICAGO (Reuters) – Delta Air Lines Inc <DAL> and American Airlines Group Inc <AAL> decided on Friday to temporarily suspend all remaining U.S.-China flights after the U.S. State Department elevated a travel advisory over concerns about the coronavirus.
U.S. officials were due to hold a call with airlines later on Friday to discuss the Chinese flights. Some airline officials worried that if they did not voluntarily halt flights it would prompt the Trump administration to take formal action, potentially complicating any subsequent flight resumption.
The United States told citizens on Thursday not to travel to China due to the epidemic that has infected nearly 10,000 people and been declared a global emergency.
Pilots and flight attendants have been demanding airlines stop flights to the country, with American Airlines’ pilots filing a lawsuit on Thursday seeking an immediate halt.
“The decision to file a lawsuit was made out of concern for the safety of our pilots,” said Dennis Tajer, a spokesman for the Allied Pilots Association which represents American’s pilots.
As of Thursday United Airlines Holdings Inc <UAL> was still planning to operate some flights from San Francisco, even after its pilots union told its members they would be allowed to drop their trip without pay if they were concerned about flying to the country.
Delta and American had both announced lighter schedules to China earlier this week.
On Friday, American said operations to and from China would be halted starting on Friday through March 27. The carrier will continue to fly to Hong Kong.
Delta said its last China-bound flight departing the United States will leave on Monday, Feb. 3, with the last U.S. return flight departing China on Feb. 5.
The Delta suspension is set to last through April 30.
U.S. airline shares have posted heavy losses this week on concerns of the financial impact of the virus.
Other airlines that have stopped their flights to mainland China include Air France KLM SA <AFLYY>, British Airways <ICAGY>, Germany’s Lufthansa <DLAKY> and Virgin Atlantic.
Major Chinese carriers were still operating flights to and from the United States as of Friday.
(Reporting by David Shepardson and Tracy Rucinski; Editing by Nick Zieminski and Tom Brown)
FILE PHOTO: Delta Airlines sit at Reagan National Airport outside Washington.
WASHINGTON/PARIS/SINGAPORE (Reuters) – A pilots union filed a lawsuit on Thursday seeking to immediately halt American Airlines U.S.-China service, as cabin crews worldwide voiced unease about exposure to the rapidly-spreading coronavirus which has killed more than 170 people in China.
Sri Lankan Airlines staff wear masks at Bandaranaike International Airport after Sri Lanka confirmed the first case of coronavirus in the country, in Katunayake
The Allied Pilots Association, which represents American Airlines pilots, cited “serious, and in many ways still unknown, health threats posed by the coronavirus.”
American, the largest U.S. carrier, did not immediately comment on the suit, filed in a Texas court. The Fort Worth, Texas-based airline announced on Wednesday it would next month suspend flights from Los Angeles to Beijing and Shanghai, but continue flights from Dallas.
The World Health Organization on Thursday declared the coronavirus outbreak in China a global emergency as cases spread to 18 countries.
The lawsuit came as an increasing number of airlines stopped their flights to China. Air France-KLM, for example, suspended its Beijing and Shanghai flights after cabin crews demanded an immediate halt.
Others that have dropped mainland Chinese destinations besides Wuhan, the outbreak’s center, include British Airways and Germany’s Lufthansa. Wuhan is closed to commercial air traffic.
Virgin Atlantic also said on Thursday it would suspend its daily operations to Shanghai from Sunday for two weeks because of the safety of customers and staff and a declining demand for tickets, but would continue flights to Hong Kong.
Other major carriers have kept flying to China, but protective masks and shorter layovers designed to reduce exposure have done little to reassure crews.
Thai Airways is hosing its cabins with disinfectant spray between China flights and allowing crew to wear masks and gloves.
“I don’t think it’s safe at all even with gloves and masks, because you catch it so many ways, like your eyes,” said one flight attendant, who spoke on condition of anonymity.
“My friends also feel unsafe and don’t want to fly,” she said. “When we fly, we don’t sleep a lot.”
Delta Air Lines and United Airlines are operating fewer China flights, with Delta offering food deliveries so crew can stay in their hotels.
Korean Air Lines Co Ltd and Singapore Airlines are sending additional crew to fly each plane straight back, avoiding overnight stays.
The South Korean carrier also said it was loading hazmat suits for flight attendants who might need to take care of suspected coronavirus cases in the air.
The outbreak poses the biggest epidemic threat to the airline industry since the 2003 SARS crisis, which led to a 45% plunge in passenger demand in Asia at its peak in April of that year, analysts said.
(Reporting by Laurence Frost, Aradhana Aravindan, Chayut Setboonsarng, David Shepardson and Tracy Rucinski Additional reporting by Caroline Pailliez in Paris, Josephine Mason in London, John Geddie in Singapore, Panu Wongcha-um in Bangkok, Jamie Freed in Sydney and Joyce Lee in Seoul; Writing by Jamie Freed and Tracy Rucinski; Editing by Marguerita Choy)
FILE PHOTO: An American Airlines Airbus A321 plane takes off from Los Angeles International airport
