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
The logo of IndiGo Airlines is pictured on passenger aircraft on the tarmac in Colomiers near Toulouse
NEW DELHI (Reuters) – India’s air safety watchdog said IndiGo must do more to fix its aircraft fitted with Pratt & Whitney engines, linked to in-flight shutdowns, as it fears the budget airline may not meet its Jan. 31 deadline to replace them.
Deliveries of new planes taken by IndiGo must be used to replace the aircraft that are fitted with the problem Pratt engines, the Directorate General of Civil Aviation (DGCA) said on Monday. Those planes should then be grounded until their engines are replaced with new ones, after which they can fly again.
Indigo is the biggest customer of Airbus A320neo jets.
The regulator’s move effectively prevents India’s top airline from expanding its network until it has replaced all the Pratt & Whitney engines.
United Technologies’ Pratt & Whitney engines have consistently caused issues since they entered into service in 2016, forcing IndiGo to ground its planes several times.
In a recent review meeting with the airline, the DGCA felt that the steps taken by IndiGo so far to replace all the engines “do not instil enough confidence with regard to the timely completion of the said task”.
“If left unaddressed, we may find ourselves in a situation, in which, we remain saddled with large number of aircraft with unmodified engines … and we are left with the only option i.e. to ground them,” the regulator said in the statement.
On Nov. 1 the regulator had ordered the airline to replace all P&W engines on its fleet of almost 100 twin-engined Airbus A320neo family aircraft with new power units by Jan. 31, 2020.
If the replacement is not complete, all planes that still have unmodified engines will be grounded and could cause “large scale disruptions” in operations. The latest directive is aimed at preventing such a situation, the DGCA said.
IndiGo, owned by InterGlobe Aviation, said the current schedule remains intact, and it is working with P&W and Airbus to meet the DGCA guidelines.
(Reporting by Aditi Shah, editing by Louise Heavens)
Nov 4 (Reuters) – IAG, the parent of British Airways and Spain’s Iberia, announced a 1 billion euro ($1.12 billion) takeover of Spain’s Air Europa to boost its presence on routes to Latin America and the Caribbean.
The deal follows a setback in Latin America for IAG after Chile’s Supreme Court ruled against a plan that would have allowed it to bolster cooperation with partners in the oneworld airlines alliance.
BA parent IAG ups bet on Latin America with Air Europa takeover Ryanair Chief Executive Michael O’Leary attends a Reuters Newsmaker event in London
Chile’s LATAM Airlines in September then announced it planned to leave the alliance, opting instead for a tie-up with SkyTeam member Delta Air Lines.
IAG shares initially rose more than 2% following the Air Europa takeover announcement but some analysts said IAG may have to shed routes in order to win regulatory approval.
IAG shares were up 1.2% at 1315 GMT.
Ryanair CEO Michael O’Leary said his company will ask the UK’s market watchdog to force IAG to make divestments as part of its Air Europa takeover, a deal he said would be bad for competition.
“Potential remedies, perhaps in the form of slot release or behavioural restrictions, may be required and these could impact the potential synergies,” an analyst at Liberum wrote in a note.
IAG also owns carriers Iberia Express, Level, Ireland’s Aer Lingus and Vueling.
“We are not convinced that having just another brand platform is the optimal move, and could see it potentially combining with Level, Vueling or potentially Iberia Express after some time,” analysts at Bernstein said.
FILE PHOTO: An Air Europa-branded Boeing 737 MAX aircraft is seen grounded at a storage area in an aerial photo at Boeing Field in Seattle
Air Europa serves 69 destinations, including long-haul routes to the Americas and the Caribbean. It had a fleet of 66 aircraft at the end of 2018.
Air Europa’s Spanish parent company Globalia earlier this year received authorisation from the Brazilian government to explore the possibility of flying domestic routes within Latin America’s largest economy.
It is unclear if that authorisation will remain with Globalia or be transferred to IAG.
Air Europa will initially keep its brand and as it gets integrated into the existing hub at Madrid it will be a standalone operation run by Iberia boss Luis Gallego, IAG said.
It will also withdraw Air Europa from the SkyTeam alliance once the deal is completed. Air Europa has a joint venture with Air France-KLM.
“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” said Gallego, adding that Madrid had the potential to serve as a gateway between Asia and Latin America.
IAG said it expected the Air Europa deal, which will be funded through external debt, to close in the second half of next year and for it to add to its earnings in the first full year after the closure.
($1 = 0.8951 euros) (Reporting by Yadarisa Shabong in Bengaluru; additional reporting by Andres Gonzalez in Madrid and Marcelo Rochabrun in Sao Paulo, editing by Patrick Graham and Jason Neely)
An Air Europa Boeing 737 airplane takes off at the airport in Palma de Mallorca
Record U.S. tariff award over Airbus aid could fuel trade tensions Logo of Airbus is pictured at the aircraft builder’s headquarters of Airbus in Colomiers near Toulouse
BRUSSELS/PARIS (Reuters) – Transatlantic trade ties face renewed disruption this week when global arbiters are expected to grant the United States a record award allowing it to hit European imports with billions of dollars of tariffs in a long-running aircraft subsidy dispute.
The World Trade Organization (WTO) has found that both European planemaker Airbus <EADSY> and its U.S. rival Boeing <BA> received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years.
Both sides have threatened tariffs after the Geneva body found neither adhered fully to its findings. However, the United States has a head start, with the European Union having to wait until early in 2020 to hear what level of retaliation it can exact over Boeing.
The WTO is expected this week to reveal the amount of EU goods the United States can target. People familiar with the case say the three-person tribunal is expected to award it around $7.5 billion, a record for the 24-year-old watchdog.
Such retaliation rights are rarely granted by the WTO – most parties reach settlements – and in many cases complainants do not exercise their rights. The United States though has indicated it will target EU goods to the fullest extent.
It has already published a $25 billion list from which it will pick items to target from aircraft and aerospace parts to wine, cheese and luxury goods.
The WTO award in the world’s largest corporate trade dispute could fuel already strained trade tensions, diplomats say.
EU manufacturers are already facing U.S. tariffs on steel and aluminum and a threat from U.S. President Donald Trump to penalize EU cars and car parts. The EU has in turn retaliated.
Trade talks between the two, designed to ease tensions and ward off the threat of a tit-for-tat tariff war, have not gone well. The two sides have made some progress on regulatory cooperation, but a proposed deal to reduce duties is stuck, with Washington saying agriculture should be included and Brussels insisting it cannot.
The Trump administration has concluded that tariffs were effective in bringing China to the negotiating table over trade, and in convincing Japan to open its agricultural market to U.S. products. Washington is unlikely to skip the opportunity to implement tariffs in the case over aircraft subsidies, according to current and former U.S. officials.
Airbus has said this would lead to a ‘lose-lose’ trade war.
Some U.S. airlines have urged the administration not to go ahead with the tariffs, saying they could lead to layoffs.
NO SETTLEMENT IN SIGHT
The parties could still theoretically resolve the issue and stave off sanctions, but both sides accuse the other of failing to respond to invitations to reach a negotiated settlement.
U.S. officials say the decision about next steps will be up to U.S. President Trump.
The EU cannot retaliate immediately to any tariffs as it did following the U.S. imposition of metal tariffs in 2018.
It can either wait until a pronouncement in the parallel Boeing case or possibly revive an existing right to hit $4 billion of U.S. imports in a WTO dispute over U.S. tax breaks for exports, even though the two sides settled in 2006. Such a move would likely be strongly contested by Washington.
EU trade chief Cecilia Malmstrom has urged Washington to hold off sanctions and seek an overall deal on aircraft support, but Washington has shown no sign it wants to talk.
A U.S. government official said Washington has been willing since the very beginning to negotiate a solution, but that the EU gave more support to Airbus rather than fixing the problem.
EU-U.S. trade relations are likely to be a major focus in Brussels during a parliamentary hearing of the next trade commissioner, Irishman Phil Hogan, on Monday, and of national trade ministers meeting on Tuesday.
(Additional reporting by Andrea Shalal in Washington, reporting by Philip Blenkinsop; Editing by Elaine Hardcastle)
Record U.S. tariff award over Airbus aid could fuel trade tensions FILE PHOTO: Boeing Co’s logo is seen above the front doors of its largest jetliner factory in Everett
NEW DELHI/BENGALURU (Reuters) – India’s SpiceJet Ltd could benefit from cash-strapped Jet Airways being forced to ground planes, and the low-cost carrier is in talks with lessors to lease some of those aircraft, a person with direct knowledge of the matter told Reuters.
Shares of SpiceJet rose as much as 7.2 percent on Wednesday in their biggest percentage gain since Dec. 18 as investors bet the airline could take advantage of Jet Airways’ woes.
SpiceJet last week was forced to ground its 12 Boeing Co 737 MAX 8 planes by India’s aviation watchdog, following safety concerns after the Ethiopian Airlines plane crash that killed 157 people.
SpiceJet and Jet Airways are the only carriers in India that operate this type of aircraft and have a total of about 400 on order. The airlines also operate the previous model, the 737-800 among other Boeing planes.
The 737-800 makes up the majority of the Jet Airways fleet, and the airline is now operating only 41 aircraft, the Directorate General of Civil Aviation (DGCA) said on Tuesday.
That means around two-thirds of its fleet is grounded for non-payment to lessors, maintenance or other reasons.
“Lessors are panicking as they haven’t been paid and if Jet goes for insolvency, their planes will be stuck in India, so many of them are chasing SpiceJet,” said the person quoted earlier.
The person said SpiceJet needs at least twelve 737s to cover the grounded MAX planes and it is negotiating for more. Jet Airways pilots are also queuing up to join the budget airline.
Jet Airways’ lessors have offered 50 aircraft to SpiceJet, according to a report by news wire IANS.
SpiceJet and Jet Airways did not immediately respond to a request for comment.
Jet Airways shares dropped about 7 percent on Wednesday as its financial crisis deepened, with the Indian government calling for an emergency meeting and pilots threatening to go on strike over unpaid salaries.
The government has asked state-run banks to rescue Jet Airways without pushing it into bankruptcy, two people within the administration have told Reuters, as Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election.
The 25-year-old airline has defaulted on loans after racking up over $1 billion in debt, and owes money to banks, suppliers, pilots and lessors – some of whom have started terminating their lease deals with the carrier.
This has forced Jet Airways to cancel hundreds of flights, leaving passengers stranded and angry. The number of Jet Airways flights has fallen by 80 percent from a year ago, according to the DGCA.
(By Aditi Shah and Tanvi Mehta, Additional reporting by Arnab Paul in Bengaluru, Editing by Sherry Jacob-Phillips and Shreejay Sinha)
FILE PHOTO: A Jet Airways passenger aircraft takes off from the airport in Ahmedabad, August 12, 2013. REUTERS/Amit Dave/File Photo
Bengaluru
(Reuters) – European aircraft maker Airbus deliveries of its A320neo
aircraft are back on track in India with fewer problems being seen with
the narrowbody jet’s Pratt & Whitney engines, a senior company
executive said on Wednesday.
“Pratt
has informed Airbus that engine issues have come down by a factor of
four in the last 12 months,” said Airbus’ India head Anand Stanley, on
the sidelines of the Aero India airshow in Bengaluru.
Last
month, India’s aviation safety watchdog forced airlines to make extra
checks on their Airbus A320neo aircraft fitted with Pratt & Whitney
engines, as part of new safety protocols after temporary grounding
orders affected the planes last year.
IndiGo, India’s biggest carrier by market share, and its low-cost rival GoAir, both fly the A320neos.
The
aircraft, which entered service in early 2016, boasts significant fuel
efficiency benefits, but it has been plagued by teething issues with its
engines that have forced Interglobe Aviation-owned IndiGo and Wadia
Group-owned GoAir to regularly ground a number of the planes.
This caused a backlog in deliveries of the planes by Airbus.
IndiGo
has over 60 A320neos in its fleet and is one of Airbus’ biggest global
customer with over 400 more A320neo and A321neo jets on order. GoAir has
about 30 A320neos in its fleet and over 100 more of the jets ordered.
Stanley
said that the reliability rate on A320neo engines is now 99.6 percent
and that it has retrofitted engines of about 95 percent of the A320neos
in service. It expects to finish work on the remainder in the next two
months.
(Reporting by Aditi Shah; Writing by Euan Rocha; editing by Emelia Sithole-Matarise)
