Airline worries as oil beings to ratchet up

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 13, 2019 15:49

Airline worries as oil beings to ratchet up

With Iran threatening to “close the straits of Hormuz” if it’s shipping is harassed and the US geared-up to both block Iran oil exports and repeat the 1980s escort and cover mission for other vessels, we are in for a turbulent time for oil prices and by association Jet A1 fuel prices. It makes one wonder if fuel hedging is becoming essential once again for all major airlines? Indeed, many had suggested on Friday that the Iranian factor was priced into fuel, in actual fact lack of Iranian supply has been priced into futures but not any further actions that may disrupt the supply of other nations. Yesterday, four tankers were apparently “sabotaged” outside of the UAE port of Fujairah. Nothing is yet known about the attacks save for statements from both the UAE and Saudi Arabia that the four tankers were “subjected to sabotage operations” and that significant damage to the structures of the vessels is confirmed. At least one of the vessels was a Saudi Aramco ship returning empty and scheduled to make a delivery to the USA next. Intertanko has reported that at least two tankers have holes in their sides.

Are we seeing the first use of a new kind of weapon and tactic in what may be considered a warning attack as the US fleet approaches? Or is this attack another suicide attack along the same lines as the attack on the USS Cole outside Aden in 2000? It is worryingly similar.

Brent is up at 70.63 while WTI is up at 62.01 as I write.

Maybe now, in a far less stable world, it is the time for airlines to guarantee stability for better or worse by hedging the bulk of fuel requirements for the immediate term with mid-term options even though oil remains well below the key $80 milestone. Although oil may not fly up to $80 a barrel any time soon, it is likely to fluctuate wildly in the near term.

Meanwhile, Bristow Group has voluntarily filed for Chapter 11 protection in the US. Bristow intends to use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile. Bristow’s other non-US entities, including those holding Bristow’s non-US air operating certificates (AOCs), are not included in the Chapter 11 filings.

Don Miller, President and Chief Executive Officer of Bristow Group, said, “After working diligently with our advisors on a thorough review of strategic financial alternatives, the Board of Directors and management concluded that the best path forward for Bristow and its stakeholders is to seek Chapter 11 protection. This process will allow us to strengthen our balance sheet, achieve a lower and more sustainable debt level and emerge as a stronger company. We have the support of the overwhelming majority of our parent company senior secured noteholders, with whom we have entered into a Restructuring Support Agreement that will help to de-lever our balance sheet, and we are actively working with other important stakeholders as we enter this process.”

A number of senior secured noteholders made a $75 million term loan to the company prior to the Court filing, and provided a commitment for a further $75 million in debtor-in-possession financing that would be available upon Court approval. The financing package provides Bristow with capital that enables the company to fund its global operations and make continued investments in safety and reliability during the Chapter 11 reorganisation proceedings.

 

 

 

victoria@aviationnews-online.com
By victoria@aviationnews-online.com May 13, 2019 15:49