Tag: grounded (Page 1 of 5)

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

Norwegian Air Could Run Out of Cash Unless Debt Plan Approved

April 27, 2020 / WIL BALDWIN

OSLO (Reuters) – Norwegian Air <NAS.OL> could run out of cash by mid-May unless its proposed financial rescue plan is approved by creditors and shareholders, the budget carrier warned on Monday.

If approved by bondholders, leasing companies and shareholders, the plan may help Norwegian survive the coronavirus outbreak, which has grounded 95% of its fleet, leaving just 7 aircraft in operation.

But the planned debt-to-equity swap will hand majority ownership of 53.1% to the company’s lessors, while bondholders would own 41.7%, leaving current shareholders with just 5.2%, it said.

The move would allow Norwegian to tap government guarantees of 2.7 billion crowns ($255 million), which are dependent on the company reducing its ratio of debt to equity, and which would come on top of 300 million crowns it has already received.

It is “critical to get access to the state aid package by mid-May before the company runs out of cash,” Norwegian said in a presentation to investors.

Rapid growth has made Norwegian Europe’s third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, but with the expansion came debts and liabilities of close to $8 billion by the end of 2019.

Last week, the company reported that four Swedish and Danish subsidiaries had filed for bankruptcy and that it had ended staffing contracts in Europe and the United States, putting some 4,700 jobs at risk.

Norwegian’s shares opened 8% lower on Monday and are down 86% year-to-date.

The company aims to gradually emerge from the COVID-19 crisis with both a short-haul and long-haul network in place, and is targeting a return to normal operations in 2022, it said.

The plan requires backing from bondholders in each of four separate votes planned for April 30, from shareholders in an extraordinary general meeting scheduled for May 4, and from leasing firms.

It maintained plans to raise up to 400 million crowns in cash from owners.

(Editing by Jan Harvey)

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)

A Boeing 737 Max aircraft is seen parked in a storage area at the company’s production facility in Renton

Norwegian Air Shares Plummet 60% After Proposed Rescue Plan

April 14, 2020 / WIL BALDWIN

OSLO (Reuters) – The shares of Norwegian Air plunged by more than 60% on Tuesday as they resumed trade after the airline proposed a financial rescue package on April 8 that would significantly dilute existing equity.

If approved by creditors and shareholders, the plan would convert $4.3 billion of debt into equity, and also raise some new equity, wiping out much of the remaining value of the company’s current shares.

The budget carrier has grounded most of its fleet due to the impact of the COVID-19 outbreak on travel and on March 16 announced the temporary layoff of 7,300 staff, about 90% of its workforce.

Norwegian’s shares plunged 62.5% in early trade to an all-time low of 3.10 crowns, valuing the company at just 500 million Norwegian crowns ($48.8 million).

Norwegian was facing financial problems even before the coronavirus outbreak. Before Tuesday’s fall, its shares were down 78% this year, underperforming other major European airlines, which were down between 30% and 60%.

The airline must now convince its creditors to agree to the rescue plan before it is put to a shareholders’ vote on May 4.

The Oslo stock exchange said on Tuesday that trading in Norwegian’s shares would be subject to special observation until there was further clarification of the airline’s situation.

Special observation is used under circumstances that may make the valuation of a security particularly uncertain, according to the market operator’s guidelines.

($1 = 10.2490 Norwegian crowns)

(Reporting by Terje Solsvik, editing by Gwladys Fouche/Victoria Klesty/Susan Fenton)

Passengers board a Norwegian Air plane in Kirkenes, Norway

Boeing Suppliers Hexcel & Woodward Scrap Merger Plan

April 7, 2020 / WIL BALDWIN

(Reuters) – Boeing Co suppliers Hexcel Corp and Woodward Inc on Monday called off their planned all-stock merger as widespread travel bans to curb the coronavirus pummels demand in the aerospace sector.

The companies, which make and supply aircraft parts, had agreed to a merger in January in a $6.4 billion deal.

“Although we are disappointed with this outcome, we are confident this is the right decision for our customers, our shareholders, and our employees,” the companies said in a joint statement.

The market rout triggered by the coronavirus pandemic and the resulting economic downturn has thrown a wrench into corporate deal making. Last month U.S. printer maker Xerox Holdings Corp walked away from its $35 billion hostile cash-and-stock bid for HP Inc.

Boeing, which halted the production of its grounded 737 MAX aircraft in January, said on Sunday it would extend the suspension of production at its Washington state facilities until further notice.

Boeing is Hexcel’s second-biggest customer, accounting for a quarter of the company’s annual sales. Hexcel also supplies Airbus SE.

Woodward gets about 15% of its annual sales from Boeing, its biggest customer.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta and Devika Syamnath)

Alaska’s RavnAir Files for Bankruptcy as U.S. Treasury Mulls Grants

April 7, 2020 / WIL BALDWIN

WASHINGTON, April 6 (Reuters) – RavnAir Group, the largest regional carrier in Alaska, filed for bankruptcy Sunday and grounded all of its 72 planes as it waits on a decision from U.S. Treasury for government assistance.

The Trump administration is weighing applications from numerous airlines as it considers how to disburse $25 billion in passenger airline grants, $4 billion for cargo carriers and $3 billion for airport contractors. Congress approved the bailout funds to help air carriers cover payroll costs.

RavnAir, which filed for Chapter 11 bankruptcy protection in Delaware, said Sunday it was suspending all operations and laying off all employees.

“We took these actions to ensure our airline has a future, and to give us time to ‘hit pause'” while it seeks Treasury grants and “other sources of financial assistance that will allow us to weather the coronavirus pandemic and emerge successfully once it has passed.”

In a letter posted Sunday, RavnAir Chief Executive Dave Pflieger said the airline was working to “resume the vital air service you depend on to get home to your families, to your businesses, to medical appointments, and to other duties that are essential to our communities and the state of Alaska.”

Delta Air Lines Inc, American Airlines Group Inc , Spirit Airlines Inc, Southwest Airlines Co , United Airlines Holdings Inc and JetBlue Airways Corp are among the airlines that confirmed they filed before a Friday deadline set by Treasury to get speedy consideration.

On Sunday, top Democrats including House Speaker Nancy Pelosi and Senator Charles Schumer urged Treasury Secretary Steven Mnuchin to move quickly and not impose unreasonable conditions on the grants. Airline unions and many Democrats object to Treasury demanding significant equity or warrants as a condition to the grants.

(Reporting by David Shepardson; Editing by Lisa Shumaker)

British Airways Suspending Flights from London Gatwick

March 31, 2020 / WIL BALDWIN

LONDON, March 31 (Reuters) – British Airways said it is temporarily suspending flights from Gatwick Airport in southern England, Britain’s second busiest airport, due to the coronavirus.

BA’s boss warned earlier in March that the airline was in a battle for survival and would have to cut jobs and park planes.

“Due to the considerable restrictions and challenging market environment, like many other airlines, we will temporarily suspend our flying schedule at Gatwick,” a BA spokesman said.

BA said it will contact affected customers. The airline continues to operate some flights from its main hub at Heathrow.

Parent company IAG said flying capacity would be down 75% in April and May.

Rival airline easyJet said on Monday that it had grounded its entire fleet.

Gatwick Airport said last week it would shut one of its two terminals on Wednesday.

(Reporting by Sarah Young)

Nikki Haley Resigns from Boeing Board over Request for Government Financial Assistance

March 20, 2020 / WIL BALDWIN

(Reuters) – Former U.N. ambassador Nikki Haley has resigned from Boeing Co’s board after opposing its bid for government financial assistance due to the crisis caused by the coronavirus outbreak.

“I cannot support a move to lean on the federal government for a stimulus or bailout that prioritizes our company over others and relies on taxpayers to guarantee our financial position,” Haley said in a letter to the company’s management released by Boeing on Thursday.

“I have long held strong convictions that this is not the role of government.”

Haley, a former South Carolina governor, has often been mentioned as a future presidential candidate. “The board and executive team are going in a direction I cannot support,” she wrote.

When asked to respond to Haley’s concerns, Boeing said only the company appreciated her service on the board and wished her well.

Boeing this week said it was seeking on behalf of itself and the aviation manufacturing industry at least $60 billion in government loan guarantees and other assistance. The sector faces huge losses from the coronavirus pandemic as airlines halt flights and some delay orders.

A Senate Republican proposal introduced Thursday would allow aviation manufacturing firms like Boeing to seek collateralized loans and loan guarantees from a $150 billion fund but not provide any cash. The final decision on eligibility would be up to the U.S. Treasury.

“We are not bailing out the airlines or other industries – period,” said Senator Richard Shelby, a Republican who chairs the Appropriations Committee.

To ensure the government is compensated for risks in making loans, the U.S. Treasury could seek equity, warrants stock or other instruments to ensure the government participates in any gains.

Haley’s resignation letter was dated Monday, the same day Boeing confirmed it was in talks to seek short-term assistance from the U.S. government.

Boeing has racked up nearly $19 billion in costs tied to its 737 MAX aircraft, which has been grounded for the past year after two fatal crashes in five months. The company has been working to win approval for the plane to return to service.

(Reporting by Ankit Ajmera in Bengaluru and David Shepardson in Washington and Michelle Nichols in New York; Editing by Arun Koyyur and Tom Brown)

Qantas Shares Near $2 After Morning Drama

March 19, 2020 / WIL BALDWIN

Qantas Group shares came perilously close to dropping below $2 on the day the airline announced it was suspending two-thirds of its staff.

Shares plummeted from $2.53 on Wednesday to a low of $2.03 before making a partial recovery to close out the day on $2.14. In December, stocks in Qantas were selling for $7.46.

Virgin Australia had a difficult day itself, with shares closing down 12 per cent to just $0.059.

Earlier in the day, Qantas Group dramatically said it was cancelling all international flights from late March and “standing down” 20,000 employees.

Click the link below to read the full story!

https://australianaviation.com.au/2020/03/qantas-shares-near-2-after-morning-drama/

Brazil’s GOL Sees 737 MAX Flying by April, Compensation Talks Ongoing

January 21, 2020 / WIL BALDWIN

DUBLIN (Reuters) – Brazilian low-cost carrier GOL, which has 130 of Boeing’s grounded 737 MAX jets on order, expects to be flying the jet by April and hopes to secure a compensation deal within months, chief financial officer Richard Lark said on Monday.

“We at GOL are planning April” for the jet’s return to service, Lark told journalists. He said he expected to finalize a deal with Boeing within months that would “make investors whole” for losses associated with the delivery delays.

(Reporting by Conor Humphries; editing by David Evans)

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