American-China Southern: That is the way to do it – if there is no other choice
American Airlines is seeking to increase its footprint in the China/USA market at the fastest possible speed with the lowest possible risk as it looks to close out a US$200m investment in China Southern Airlines to purchase around a 2% stake in the Chinese carrier, which will include a non-voting seat on the board of China Southern Airlines. This deal, is successful, will create a powerful alliance if it leads to a codeshare agreement between the two.
American is following in the footsteps of Delta Air Lines and China Eastern Airlines’ 2015 deal where Delta paid US$450m for a 3.55% stake. That deal has been beneficial to Delta thus far, but let us not be in any doubt whatsoever, both the Delta move and the American move this week were brought about because Chinese authorities have been somewhat protectionist in their allocation of slots to US airlines. American, after being awarded a non-stop route from Los Angeles International Airport to China by the U.S. Department of Transportation, spent a great deal of time and money lobbying Chinese authorities for slots at Beijing Capital International. That was met by indifference by the Chinese – Beijing offered terms that were commercially non-viable, before withdrawing that offer after President Trump won the election. On the September 16, 2017 the right to run the slots will be withdrawn from American by the US Department of Transport.
Chinese authorities seem to have denied American slots in an effort to protect Air China’s non-stop monopoly on the same route. Maybe it is the case that Capitol Hill need to look again at how the bilateral flight access agreements with China are working and if they are in any way fairly balanced, or indeed if they are being misused by Chinese authorities. Such an investigation would fit well with the Tump administration’s remit and may well be expected.
Some will argue that by investing in airlines that are in effect Chinese government-owned, which in recent years have been propped-up by the central government, US carriers are taking-on some risk in a world where the US could very easily be at political loggerheads with China. But both the management team at American and Delta before them are spending very little in return for access to China and as such it is a good option in the short term which shareholders will no doubt commend.
If this deal closes and American invests in China Southern, the latter’s SkyTeam membership must be questioned as it will not sit with American’s OneWorld loyalty program and no doubt Delta will have something to say on the matter.
Voting for the Aviation 100 MRO Global awards is now open
The time has come to celebrate the maintenance, repair and overhaul aviation sector. Please cast your votes for the leading companies and individuals in the following categories:
The winners will be announced at the inaugural Dublin Aviation Summit exhibition and conferences, including the Asset Management & Aircraft Lifecycle Conference, being held at the RDS on May 15-17. The Aviation 100 MRO Global Awards gala dinner will take place on the evening of May 16. To nominate your company and peers for these categories, please use the survey link but you can also contact us with more supporting information: email@example.com.
If you want to meet decision makers from major Lessors, Airlines and a broad spectrum of contacts from the aviation industry this is the ideal opportunity to promote your business. As well as booking exhibition space, there are also high-profile sponsorship opportunities to ensure you are noticed at the event.
Airline News Finnair to temporarily suspend its Miami route for summer 2017, flights resume in October
Finnair is making changes to its traffic program for the summer 2017 season, due to operational reasons which relate to a temporary shortage of crew and aircraft. Finnair will suspend its flights between Helsinki and Miami between May 4 and September 29 and will also cancel two of its weekly frequencies on its Helsinki-Chicago route during the month of May.
“We are very sorry about the disruption this is causing our customers, and we are doing our best to offer suitable alternative routings for them,” says Juha Järvinen, Chief Commercial Officer at Finnair. “We are contacting all customers with bookings on the affected flights to offer an alternative routing. In case a suitable alternative routing cannot be found, customers may apply for a ticket refund. Finnair continues to offer Miami as a destination throughout the summer with our joint business partners American Airlines, British Airways and Iberia.”
Flights to Miami will resume on October 1 with three weekly frequencies.
Nordica to fly to Tallinn from Pulkovo airport.
On May 15, 2017, Nordica will commence scheduled service from Tallinn to Pulkovo St. Petersburg airport. The airline will operate up to 13 flights a week on Bombardier CRJ900 aircraft accommodating up to 88 passengers. Time of travel is 50 minutes and flights are operated in codeshare with LOT Polish Airlines.
“Renewal of the Tallinn flights is long awaited for Pulkovo airport. Estonian capital has always been a highly demanded destination with St. Petersburg residents both as a tourist and business route, as well as a transit point for further travel,” said Evgeniy Ilyin, Chief Commercial Officer of Northern Capital Gateway LLC, managing company of Pulkovo airport.
“This route is certainly long-awaited for both business and holiday travelers,” said Nordica’s Chief Commercial Officer Kristel Penu. “The flights also open up transit opportunities for flying from St Petersburg to our other Nordica’s destinations via Tallinn like Munich, Kiev, Oslo, Stockholm, Vilnius, Brussels, Nice, Vienna, Berlin, Hamburg, Amsterdam, Split, Rijeka, Trondheim, Odessa and others,” added Penu.
Nordica offers the largest number of direct flights from Tallinn to different European destinations. On all flights between Tallinn and St Petersburg passengers can enjoy On all flights between Tallinn and St Petersburg passengers can enjoy free coffee, tea, water and newspapers, Miles&More bonus points and free luggage with all tickets.
Scheduled flights between St. Petersburg and Tallinn have not been performed since the fall of 2015. Before that the route was served by Estonian Air that ceased operations in November 2015.
Leasing News NAC delivers one ATR 72-500 to České aerolinie on lease
Nordic Aviation Capital (NAC) has delivered one ATR 72-500, MSN 789, to České aerolinie a.s. on lease.
Finance News Finnair issues €200 million bond
Finnair has issued a senior unsecured €200 million bond, due 29 March 2022, with a fixed annual interest at the rate of 2.250 percent and an issue price of 99.925 percent. The bond is callable before its final maturity.
“Finnair’s prudent execution of its accelerated growth strategy and continued improvement in financial performance are reflected in pricing of the long-term funding. With this transaction, Finnair utilised the favourable market conditions and was able to lengthen the average maturity in its debt portfolio with competitive terms,” says Finnair’s CFO Pekka Vähähyyppä.
Application will be made for listing of the Bond on Nasdaq Helsinki. The proceeds from the Bond offering will be used to refinance some of Finnair’s existing indebtedness, including the partial redemption of the bond maturing in 2018, and for general corporate purposes.
Danske Bank and Nordea Bank act as lead managers for the issue of the bond.
TrueNoord funds four E190s on lease to TUI (Jetairfly) and AeroMexico
TrueNoord, the regional aircraft lessor, has closed the first tranche of a term financing facility with DVB bank and PK AirFinance of Luxembourg for four of the six Embraer E190 aircraft that it purchased from BOC Aviation in January with leases attached. These four aircraft are operated by AeroMexico and TUI (Jetairfly) Belgium.
This new portfolio of six globally operated E190 aircraft marks a significant investment for the company and heralds the start of a highly targeted on-going development and growth strategy for the TrueNoord fleet under lease, following initial investment from private equity firm Bregal Freshstream. Milbank acted for TrueNoord as lessor’s counsel while Clifford Chance represented DVB Bank and PK AirFinance.
TrueNoord’s CCO, Garry Topp, said: “DVB has a deep understanding of the aviation market as a whole and provides asset financing for specific types of aircraft including regional jets. They offer a range of products and services that cover the entire lifecycle of aircraft and engines and following our acquisition of these desirable, predominantly 2013 and 2014 assets, we found their focus on structured asset lending to be perfectly in line with our business strategy.
“PK AirFinance arranges asset financing for a wide range of organisations within the aviation sector, including lessors. Their international experience has been of invaluable assistance as we embrace operators like AeroMexico and TUI (Jetairfly) Belgium into our portfolio of airline customers.”
Completed financing will soon be announced for the remaining two aircraft from the BOC Aviation purchase as TrueNoord accelerates its acquisitions in the regional aviation sector. Topp continues: “As we look ahead to the ERA Regional Airline conference in Copenhagen next week we see a regional sector that is brimming with opportunities worldwide. The creation of a globally diversified fleet of regional aircraft is TrueNoord’s primary focus and we will be expanding our assets further as we move through 2017. Securing finance with like-minded banks and financial institutions helps us to close transactions effectively and minimise execution risk for the sellers of these assets. This sustains operational certainty for our airline customers and contributes effectively to the profitability of their businesses.”
Maintenance News Lufthansa Technik’s international growth continues in 2016
Lufthansa Technik continued its track record for international growth in 2016 and produced a good result with significantly more investment. The increase in revenue with non-group companies overcompensated the decline in internal orders.
Sales revenue climbed by €45 million from €5.099 billion to €5.144 billion. The company achieved earnings before interest and tax (adjusted EBIT) of €411.3 million (previous year: €454.4 million).
“In 2016, we have cemented our position as the leading provider in our industry,” said the Chairman of the Executive Board of Lufthansa Technik AG, Dr. Johannes Bussmann, at the announcement of the annual result in Hamburg. “At the same time, we were able to make important preparations for future growth.”
“Lufthansa Technik is commercially very stable. In particular outside the Lufthansa Group, Lufthansa Technik has continued its course of growth, and it has done so in a highly profitable way,” says Constanze Hufenbecher, Chief Financial Officer of Lufthansa Technik. “In view of the competition and price pressure, this is a very pleasing result.”
Business with customers outside the Lufthansa Group grew disproportionately. External revenue from outside the Group grew by eight percent to €3.5 billion. Revenue from group companies fell significantly, declining 11.7 percent to €1.6 billion, because of the finalization of the modification program for the Lufthansa long-haul fleet.
Revenue grew disproportionately in the growth regions of Asia and the USA. The substantial growth in revenue in the American market that was seen in 2015 continued unabated in 2016, with growth of 14 percent and revenue of around €900 million. In Asia, Lufthansa Technik achieved even higher growth of 23 percent. With revenue now at around €600 million, this market is rapidly gaining in importance for Lufthansa Technik.
“This development demonstrates that our internationalization strategy is working,” says Constanze Hufenbecher. “This encourages us to continue along the path we have chosen.”
In 2016, Lufthansa Technik acquired 42 new customers (previous year: 27) and concluded 456 new contracts (previous year: 375), with a revenue volume for 2016 and subsequent years totalling €5.7 billion (previous year: €3.1bn).
Important contracts were concluded for new aircraft models such as the Airbus A350. “In 2016, following on from Finnair, we concluded long-term contracts for component supply with China Airlines and Ethiopian Airlines. This makes us the leading provider for this forward-looking model,” emphasized Dr. Johannes Bussmann.
Lufthansa Technik also won more contracts in the low-cost segment.
Together with easyJet, the company is operating a maintenance hangar at London Gatwick, supporting the 55 aircraft stationed there. Beyond this, Lufthansa Technik Malta will carry out some 100 aircraft overhauls for easyJet over the coming five years. The close partnership with WizzAir was expanded in 2016. The A320neo and A321neo aircraft, new to the fleet, will also be supported by Lufthansa Technik.
Internationalization with new organization Lufthansa Technik will push ahead with the expansion of its international presence and the regionalization of its activities in 2017. After the successful implementation of regional sales structures, the next major step along the pathway of internationalization will take place in April. Aircraft Overhaul in Manila will be positioned to serve the entire region. Component Services will acquire a second mainstay in addition to Hamburg, with an Asian base in Hong Kong. The leadership of Landing Gear business unit will be moved from Hamburg to London.
With the massive expansion of its global logistics network, Lufthansa Technik has taken further decisive steps along the road to internationalization of the group. New warehouses in London, Hong Kong, the USA, Düsseldorf, and Munich along with the launch of two companies, Lufthansa Technik Component Services Asia Pacific and Lufthansa Technik Middle East, improve the global supply of components.
“This is a major step as we transform this globally active Hamburg company into an international corporation with strong roots in Hamburg,” says Bussmann.
Lufthansa Technik secured long-term access to servicing essential future engine models in 2016, with new cooperative agreements.
Hamburg will be the center for the new LEAP motor, making it the home of overhaul for one of the most important engines in the civil aviation industry. With the XEOS joint venture, the company has successfully entered the overhaul market for the big new GE engines.
A strategic partnership with Pratt & Whitney has brought Lufthansa Technik into the service network for the geared turbofan. At the end of February, an agreement was signed with MTU Aero Engines for the planned development of a joint engine workshop. N3 Engine Overhaul Services, the joint venture with Rolls Royce in Arnstadt, now also supports the Airbus A350 engines.
Lufthansa Technik invested more than €216 million in development to secure its own future, some 40 percent more than in 2015. Major areas of focus were innovation and product development, new technologies, mastering new materials, the automation of repair processes, and digitalization. The company established its new “Digital Fleet Solutions” division in Hamburg. Last year also saw expenditure of around 200 million euros to expand the material pool.
“The changing MRO market presents opportunities that we want to exploit early with new business models so that we can play a decisive role in shaping the industry,” emphasized Bussmann.
Technology News Flight of the future – new Research Chair developing aerodynamic skin inspired by nature
A new five-year research project to develop tiny hair-like sensors for use on the surface of aircraft is set to improve the control and sustainability of future aviation.
Professor Christoph Bruecker will hold the Research Chair in Nature-Inspired Sensing and Flow Control for Sustainable Transport at City, University of London, from 1 March 2017. Supported by the Royal Academy of Engineering and BAE Systems, the research aims to develop an aerodynamic ‘skin’ that can be evaluated for use on future aircraft.
The research will bring together hundreds of tiny transparent ‘micro-pillars’ with optical fibres on an aerodynamic surface, providing a way to measure airflow around the surface with much more detail and precision than the relatively few sensors currently found on aircraft. By using an elastic material for the hair-like micro-pillars, the sensors can also flex in response to the airflow, allowing them to be used not just as passive sensors but for flight control, adapting to changing external conditions and providing finer control of an aircraft.
Using optical fibre technology also means that, unlike current sensors, the micro-pillars would not generate electromagnetic waves, allowing them to keep control even in harsh environments.
Applications for the smart skin technology could extend beyond aircraft. As the micro-pillars can adapt to changing conditions they not only change the aerodynamic properties of a surface – for example, by reducing drag – but also its acoustic signature, so they could be used on wind turbine blades and other propeller systems. Such detailed flow measurement and control could also be useful inside pipelines or on marine hydrofoils.
Professor Bruecker commented: “The aim is not to copy nature, but to be inspired by it. By understanding the physical principles underlying natural flight, such as the structure of feathers and hairs, we can learn to improve our own systems. The detailed information provided by hair-like structures gives a much better understanding of a local flow situation, which the structures can then modify to improve aerodynamic control.”
“I’m grateful for the support of the Royal Academy of Engineering and BAE Systems, whose collaboration means that the skin can be tested for real future concepts in aviation and marine transport.”
Maureen McCue, Head of Research and Technology at BAE Systems’ military aircraft business added: “We believe that bio-inspired research will continue to provide important technological benefits for military and civil aircraft. Professor Bruecker and his team are world experts in this field and we are delighted to continue our support of their work at City, University of London.”
Professor Sir James McDonald FREng FRSE, Chair of the Royal Academy of Engineering Research Committee, said: “Inspired by nature, Professor Bruecker’s research will engineer solutions to sensing and control in a whole new way, which could significantly improve the fuel efficiency and sustainability of aircraft – a major benefit to both the industry and to society. This exciting work should impact positively on sectors including aerospace, energy and bulk fluid transfer. The Royal Academy of Engineering is proud to support Professor Bruecker’s work as a new Research Chair.”
The future of airline distribution, says Skyscanner
In a new white paper, Skyscanner has set out its vision for the future of airline distribution and the changing role of metasearch.
The paper, authored by the metasearch engine’s CEO and Co-Founder Gareth Williams, sets out Skyscanner’s intention to transition towards becoming a marketplace in which travellers can shop for a array of air fares with a seamless process from start to finish across any device.
Williams argues that the evolving technology landscape, with the increasing consumer preference for mobile, and evolving click-tap platforms such as chat bots, has blurred the lines between what can be considered a ‘direct’ air ticket purchase. In this evolving environment, the former line between direct and third party intermediaries has blurred while the need for a frictionless shopping experience and for rich and dynamic airline products to stand out has increased.
Skyscanner hopes to lead the field when it comes to distributing carriers’ products by creating an airline marketplace offering carrier ‘store-fronts’ which are virtually indistinguishable from airlines’ own booking sites. This marketplace would give greater branding control to suppliers while allowing them to tap into Skyscanner’s wide audience of travellers across a range of devices – from apps through to chat bots. Many airlines still have limited mobile booking options on their own sites, while the vast majority of carriers have yet to embrace newer emerging technologies such as bots.
Williams states, “Our vision for the future is collaborating with airlines in delivering our version of the supplier managed marketplace to travellers worldwide. We want to bring airline products on our site as close to the direct experience as possible, with carriers controlling their products and brand while benefitting from our traffic, and audience, across a range of devices.
“This means offering a form of airline store-front. For travellers, the experience on Skyscanner is then virtually indistinguishable from the experience on airline.com – yet has the advantage of being available on desktop, app or any device. Airlines must have the opportunity to stand out in the next generation of distribution, particularly as travellers increasingly expect to be able to transact on smaller screen sizes with shorter purchasing journeys which offer a seamless booking process.”
Regulatory News Turkey demands it be removed from the US airline electronic ban
The Turkish Government has demanded the U.S. administration remove Istanbul Ataturk International Airport from airline electronic ban list.
Ahmet Arslan, Turkish Ministry of Transportation, Maritime Affairs and Communications, plans to send a similar demand to the UK.
UK Government prepares for Brexit negotiations
The UK Government will trigger Article 50 on March 29 setting off the series of negotiations that will dictate the terms for the UK’s exit from the European Union. The House of Lords has released a new Brexit report, Brexit: trade in non-financial services, focuses on trade in non-financial services, including air services, which concludes that a comprehensive Free Trade Agreement (FTA) with the EU is needed. For air services, which is not covered by World Trade Organization rules or other free trade agreements, a deal is essential for services to continue unimpeded. Dr Barry Humphreys CBE, founder of BKH Aviation, recommended to the committee that the UK should pursue a deal that is as close to the status quo as possible, which means assessing the possible models suggested by IATA to see how close they come to the current environment. These models include: membership of the European Common Aviation Area (ECAA); a comprehensive bilateral air services agreement between the UK and the EU; or reliance, in the absence of any other agreement, upon pre-existing bilateral aviation agreements. The report goes into detail on the pros and cons of each of those three options.
The Committee concludes that, in negotiating a UK-EU FTA, the UK Government should pursue a deal where UK airlines should be able to fly to any point within the EU and provide intra-EU services, either through full voting membership of the European Common Aviation Area (ECAA), or by means of a comprehensive UK-EU air services agreement. This will allow UK airlines to continue to offer the routes they fly today.
Meanwhile, the European aviation industry has issued a joint declaration to all 27 EU Member States calling on them to preserve, reform and strengthen the EU, specifically to ensure the continuation of the Single Aviation Market. The declaration is a bid to remind the EU of the benefits of the Single Aviation Market since its creation in the 1990s, which removed regulatory and market barriers and created a fully integrated market for aviation, based on common rules across the EU and beyond. “This has been instrumental in increasingly connectivity and prosperity – as it provided greater access to markets and lowered prices for air travel and air freight services,” reads the declaration. “In view of the important role and value that the Single Aviation Market plays in the economic development and social cohesion of the EU, stakeholders from across the entire spectrum of aviation today make this united declaration, with one exclusive purpose – to stand up for the European Union.”
“As businesses and together with our employees, we cannot afford to lose the freedom, legal certainty, connectivity and prosperity enabled by the Single Aviation Market. We are mindful that these essential benefits are intrinsically linked to the wider political endeavours and dynamics of the EU. This is why we are calling on Member States to preserve, reform and strengthen the EU.”
The nine associations behind this initiative represent the aerospace industry, airlines, airports, business aviation, helicopter operators, air navigation service providers and trade unions.
Cargo News Astral Aerial Solutions Wins 2017 IATA Air Cargo Innovation Award
The International Air Transport Association (IATA) announced that Kenya based Astral Aerial Solutions is the recipient of the IATA Air Cargo Innovation Award for 2017, for the company’s Unmanned Aircraft System (UAS) Traffic Management (UTM) Concept for Africa.
Astral Aerial’s project seeks to lay the foundation for safe, secure and effective UAS operations and integration into existing airspace to ultimately allow the expansion of air cargo in Africa.
“The IATA Air Cargo Innovation Awards showcase the innovation going on across the air cargo industry. Among many worthy candidates I congratulate Astral Aerial Solutions for an outstanding achievement and hope the $20,000 first prize will help in its development. It is great to see a developing nation company helping to drive the innovation that is needed throughout the global air cargo industry,” said Glyn Hughes, IATA’s Global Head of Cargo.
“We are delighted to be recognized for our innovative UTM Concept for Africa project. Drone technology has strong potential to boost the continent’s air connectivity and deliver goods and services to remote regions and more critical lifesaving products to those in need,” said Sanjeev Gadhia, CEO Astral Aviation.
“We hope to be able to develop a pathway that will encourage regulators, operators and manufacturers to come together and pave the way forward for safe and efficient UAS use in the continent,” said Geoffrey Kinyua the project’s manager.
Airline News Virgin America brand to be retired
Alaska Airlines has announced that the combined company will adopt Alaska’s name and logo, retiring the Virgin America name likely sometime in 2019. However, the combined airline will adopt many of the brand elements from Virgin America, including enhanced in-flight entertainment, mood lighting and music.
“Our goal from the very beginning of this merger was to become the go-to airline for people on the West Coast, with low fares, convenient flights, a premium product and genuine, caring service,” said Brad Tilden, CEO of Alaska Air Group. “Three months in, we’ve dramatically grown our presence in California and are united behind a new purpose: Creating an airline people love.”
Alaska has been actively growing the airlines’ newly combined networks since closing the merger in December. Earlier this month, the airline announced 21 new markets with 25 new daily departures out of San Francisco, San Diego, Los Angeles and San Jose, California – marking the largest addition of routes in the company’s history.
“We spent the last 10 months conducting extensive research and listening carefully to what fliers on the West Coast want most,” said Sangita Woerner, Alaska Airlines’ vice president of marketing. “While the Virgin America name is beloved to many, we concluded that to be successful on the West Coast we had to do so under one name – for consistency and efficiency, and to allow us to continue to deliver low fares.”
In addition to low fares, network growth and award-winning service, Alaska will debut an entirely redesigned cabin with new seats and amenities, and has already started to retrofit select Boeing aircraft with expressive blue mood lighting. Modern, stylish uniforms by fashion designer Luly Yang will roll out in mid-2019 for flight attendants, customer service agents, pilots, mechanics and ground crew.
Alaska’s entire fleet of Boeing 737 passenger aircraft will be equipped with high-speed satellite Wi-Fi beginning in fall 2018, with the remainder of the Airbus fleet to follow. Both fleets are expected to be fully satellite-equipped by the end of 2019.
Premium seating will be expanded across the Airbus fleet beginning in the fourth quarter of 2018. The number of First Class seats will increase by 50 percent (going from eight seats in the Airbus First Class cabin to 12) and are customized for enhanced comfort, featuring 41 inches of pitch, improved seatback storage pockets, cup holders, footrests and personal power outlets throughout the cabin. The redesigned Airbus cabins will also feature 18 new Premium Class seats with 35 inches of pitch and complimentary beer, wine and cocktails.
In 2018, Alaska Mileage Plan will become the sole loyalty program for both airlines.
In January, Alaska launched a temporary promotion offering its entire catalog of more than 200 movies and TV shows for free. Starting now, free entertainment on guests’ own devices will be a permanent feature on its Boeing fleet and the same free library of movies and TV shows will expand to Airbus aircraft via Red entertainment system in August 2017. Guests on Airbus aircraft will continue to enjoy access to early release movies for purchase.
By June 2017, Alaska First Class passengers will be able to pre-select meals before they fly, and by early 2018, Alaska’s Main Cabin passengers will be able to pre-pay for their meals before they fly. Food pre-ordering will be extended to Airbus flights sometime in the future.
By early 2019, guests will be able to relax in refreshed and expanded airport lounges in Seattle, Portland and Los Angeles, as well as new lounges in San Francisco and at New York’s John F. Kennedy International Airport.
Southwest Airlines reports February traffic
Southwest Airlines flew 8.7 billion revenue passenger miles (RPMs) in February 2017, an increase of 1.1 percent from the 8.6 billion RPMs flown in February 2016. Available seat miles (ASMs) increased 1.2 percent to 11.0 billion in February 2017, compared with February 2016 ASMs of 10.9 billion. The February 2017 load factor was 79.0 percent, which was flat compared with February 2016. Based on these results and current trends, the Company now estimates its first quarter 2017 operating revenue per ASM (RASM) will decline in the two to three percent range, as compared with first quarter 2016. A better-than-expected February trip completion rate and the loss of traffic from the heavy rainfall in California are contributing factors to this revised RASM outlook. In addition, there was unexpected softness in close-in demand in the second half of February that has since rebounded in March. Bookings and unit revenue trends beyond first quarter 2017 remain encouraging.
Maintenance News STS Component Solutions enters new strategic partnership with FW Marsh
STS Component Solutions (STSCS), a division of STS Aviation Group, has entered into a new partnership with FW Marsh Energy Services for Aeroderivative Field Service Solutions.
FW Marsh is a globally recognized provider of Field Service in the Aeroderivative market with a broad portfolio of capabilities as an OEM approved, ISO 9001/2008 certified, provider of repair services, inspections, training and technical services.
STS is now able to offer innovative, reliable, and cost effective solutions to its Aeroderivative customers by utilizing FW Marsh’s knowledge, technical expertise, and established global field service infrastructure.
This new alliance will greatly benefit STSCS’ customer base by helping to reduce costs and streamline aeroderivative maintenance, repair services and parts requirements.
STSCS views this new partnership as a greater expansion of its Aeroderivative support capabilities that were initially launched in 2014, further enhancing our ability to provide comprehensive support to our customers within this market.
Tom Covella, Group President of STSCS, states that “This Field Service Solutions Partnership with FW Marsh is the next step in expanding our presence and capabilities within the Aeroderivative market. Collectively we will be able to provide innovative and comprehensive technical solutions. FW Marsh is a global leader in the aeroderivative market and the partnership will enable both organizations to collaborate and contribute their core capabilities to provide a broader range of services available to all operations and maintenance organizations within the Aeroderivative market.”
Mark Armstrong, General Manager of FW Marsh says: “We are thrilled to partner FW Marsh’s engineering experience, technical operations, and maintenance and repair services with STS’s industry leading component solutions and infrastructure, therefore building on each company’s established strengths. Incrementally expanding our market reach, scope, and service offerings to provide flexible, strategic solutions for engine owners and operators, this collaboration is yet another advancement in FW Marsh’s continued growth.”
Airline News Garuda Indonesia Group books net income of US$9.35 million for 2016
National airline PT Garuda Indonesia (Persero) and its subsidiaries maintained positive performance throughout 2016 with a net profit of US$9.36m, or the equivalent of IDR 124.5bn (exchange rate IDR 13.300 per US$), while carrying a total of 35 million passengers on both Garuda Indonesia and Citilink Indonesia.
“As we know, the trend in growth for the world aviation industry, especially for the Asia-Pacific region, has been under pressure for the last five years, especially as a result of the global economic slowdown that has affected the purchasing power of people, but the Garuda Indonesia Group can still maintain its positive performance,” explained President Director of Garuda Indonesia, M. Arif Wibowo.
Referring to the performance review of the Asia Pacific aviation industry released by the passenger yield of the Asia Pacific aviation industry in the past five years has experienced a significant downward trend, from USC 9.6/km in 2012 to USC 6.2/km in 2016. However, the passenger traffic recorded showed an increasing trend from 511.6 Mil passengers in 2012 to 632.8 Mil passengers in 2016.
“The study indicates that despite showing an increase in passenger traffic in the aviation industry in the Asia Pacific region, there has actually been a decreased yield because most carriers have been participating in the expansion of their business development strategy,” he said.
“Through its long-term business strategy, “Sky Beyond”, the Garuda Indonesia Group was able to maintain profitability with various policies, ranging from the company’s efficiency program, proportional consolidation of production capacity, to strengthening the service line and the company’s operations. In addition, the company also continued to grow expansively to maintain positive margins and recorded a total consolidated revenue of US$3.86bn,” added Arif.
Entering the competitive aviation industry in 2017, Garuda Indonesia will strengthen a number of commercial sectors and commerce by accelerating the development of service-based IT by optimizing customer loyalty programs to strengthen the device platform of e-commerce, so that the company can deliver a seamless service to all passengers.
Throughout 2016, the frequency of Garuda Indonesia flights also rose 9.89% to 274.969 from a total of 249.974 flights in 2015. The increase in flight frequency is in line with the company’s efforts to expand its network in both the domestic and international market.
“2016 was a year of investment for the company, considering that we maximized the utilization of wide body aircraft for the expansion of international routes in the middle to long haul sector. In the future, we project that cycle fleet restructuring will next be carried out in 2019,” said Arif.
Following the development of the cargo business, Garuda Indonesia managed to increase total cargo to 415.824 tons, an increase of 18.22% from 2015, when the total reached 351.724 tons. The overall amount of revenue in the cargo market in 2016 was recorded at US$219.15m, an increase of 16.65% compared to the US$187.87m booked in 2015.
“The growth in Garuda Indonesia’s cargo markets was carried out by optimizing cargo space, which included maximizing the commodities that have high yields – including building synergies with other sectors of the logistics industry in maximizing the reach and service of Garuda air cargo products until reaching aspects of the door to door services. In the future, we will also increase the capacity of the cargo business through the existing routes of international flights we serve,” said Arif.
Related to the situation of the aviation industry in the Asia-Pacific region which is experiencing intense competition and has affected both domestic and international flights, the position of Garuda Indonesia at this time recorded a market share of 41.71% in the domestic market and 26.93% for the market share of international markets.
Meanwhile, the Garuda Indonesia Group also managed to record an increase in scores of other income consisting of components of ancillary revenue, income sector strategic business unit (SBU), to other subsidiaries with the achievements of the sector amounted to US$392, an increase of 13.7% compared to the 2015 total of US$344.6m.
Regarding operational performance in terms of On Time Performance (OTP) in 2016, Garuda reached 89.51%, up from 88% the previous year, which was achieved despite the challenging flight operations due to infrastructure development such as the domestic services migration to the new Terminal 3 at Soekarno-Hatta to weather factors, or force majeure. Meanwhile, the average occupancy rate throughout 2016 was 73.1% for Garuda Indonesia and 76.8% for Citilink.
During 2016, the Garuda Indonesia Group also focused on additional flight capacity as part of the revitalization program development by bringing 17 aircraft fleet, which consisted of four ATR 72-600 aircraft, four A330-300s, one B777-300ER aircraft and eight A330 -200. Thus, by the end of 2016, the Garuda Indonesia Group operates 196 aircraft with an average aircraft age of 4.6 years.
Leasing News CALC delivers two A320s to AirAsia Group
China Aircraft Leasing Group (CALC has completed the deliveries of one Airbus A320 each to AirAsia Berhad and Thai AirAsia.
Mike POON, Chief Executive Officer of CALC, said, “CALC is very pleased to partner with AirAsia Group to support their business development. Since our foray into Southeast Asia market in 2015, we have made continued efforts to seek partnerships with key players in the region. We are very honored to start our business relationship with AirAsia Group. The delivery marks yet another step the Group has taken in the Southeast Asia market, where demand for air travel is growing. As a pioneer in the aviation industry, CALC is devoted to providing full value-chain aircraft solutions to airlines around the globe to facilitate their business growth. We look forward to deepening our strategic partnership with AirAsia Group in the coming years.”
CALC had delivered a total of 18 aircraft in 2016. With the addition of these two aircraft, newly delivered as part of its order book with Airbus, CALC’s fleet size now totals 83 aircraft, and the Group is in the process of proactively implementing an expansion plan to increase the size of its fleet to 173 by 2022. Its customer base currently totals 17 airlines, with the Group’s footprint now extending across Europe, Southeast Asia, Japan and the US.
Finance News Bocom Leasing’s US notes final ratings
The notes issued under Bank of Communications Financial Leasing medium-term note (MTN) programme have been assigned a final rating of ‘A’ from Fitch, A2 by Moody’s and A- by S&P.
The notes, issued by Azure Nova International Finance, are: US$700million of 3% notes due on 21 March 2020, sold at a price of 99.792% with an initial yield of 3.07%; US$1.05 billion of 3.5% notes due on 21 March 2022 were sold at a price of 99.478% with an initial yield of 3.62%; and US$250million of 4.25% notes, due on 21 March 2027, sold at a price of 99.485% with an initial yield of 4.32%.
Bookrunners are ANZ, Bank of Communications, CICC, Haitong International securities, HSBC, JP Morgan and Standard Chartered Bank.
The MTN programme is unconditionally and irrevocably guaranteed by Bocom Leasing. The notes will be listed on the Hong Kong Stock Exchange and the proceeds will be used for general corporate purposes.
People News Aviation expert Jack Koh joins Stephenson Harwood
Law firm Stephenson Harwood has strengthened its aviation finance practice with the arrival of aviation specialist Jack Koh. Jack joins the firm’s Singapore office as a consultant.
Jack brings more than 20 years of experience in senior management positions in the airline and maintenance, repair and overhaul (MRO) industries. He provides guidance to clients on commercial and technical aspects of the acquisition and leasing of aircraft, aircraft asset residual value strategy, long-term fleet management solutions and management of aircraft lease return conditions.
“Jack is a very well-known name in the industry. He is renowned for his extensive knowledge of the aviation and MRO industries,” said Singapore-based asset finance partner Saugata Mukherjee. “His exemplary negotiation skills and track record of achievements in aircraft purchase contracts, aircraft sales, industry JVs and business investment due diligence enhances the firm’s position as a recognised leader in the aviation sector.”
ST Engineering announces Board and Board Committee Changes
Singapore Technologies Engineering (ST Engineering) has announced that Koh Beng Seng and Davinder Singh will be retiring as independent non-executive Directors of the Company at the 20th Annual General Meeting (AGM) to be held on 21 April 2017. Their retirement accords with good corporate governance and is in support of the Board’s plans for renewal and rejuvenation. Koh will also be stepping down as Chairman of the Audit Committee (AC) upon his retirement.
Quek See Tiat, an existing member of the AC, will be appointed Chairman of the AC to succeed Koh, subject to him being re-elected at the 20th AGM of the Company to be held on 21 April 2017.
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