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*20/09/2019*
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Thomas Cook needs extra £200 million to avoid administration

An extra £200 million in funding is needed otherwise Thomas Cook could fall into administration.

The airline has been told by banks, including RBS and Lloyds, that new contingency funds are to be raised in order to continue running during the winter months.

The troubled carrier was hoping to seal a further rescue deal by China’s Fosun this week, however, this looks in doubt now that the banks have asked to find the extra cash.

In August, Fosun Tourism Group, the largest stakeholder of Thomas Cook Group, contributed £450 million to the group, acquiring 75% of the tour-operator business and 25% of the airlines unit.

A statement from Thomas Cook said: “Discussions to agree final terms on the recapitalisation and reorganisation of the company are continuing between the company and a range of stakeholders, including its largest shareholder, Fosun Tourism Group and its affiliates, the company’s core lending banks and a majority of the Company’s 2022 and 2023 senior noteholders.

“These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced £900 million injection of new capital.

“The recapitalisation is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery.

“The Company will provide further updates in due course.”

The firm employs 22,000 staff, 9,000 of those in the UK. It serves 19 million customers a year in 16 different countries.

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Airline News

Ryanair facing revolt as boss O’Leary set to net €99m pay

Investors in Ryanair have registered a major protest vote after it was revealed that long-serving chief executive Michael O’Leary was granted a bonus that could be worth as much as €99m.

Under the deal, O’Leary stands to make €99m from stock options if he doubles Ryanair’s profit or share price.

The airline revealed that just 50.5%, voted in favour of the company’s remuneration report.

Earlier this year, O’Leary signed a new contract to stay on as chief executive until 2024. O’Leary recently stepped aside as the CEO of the group’s main airline with Eddie Wilson succeeding in the role.

Investors also voted in large numbers to dispute the re-election of longtime chairman David Bonderman, despite an ongoing management overhaul that will see him step down next summer.

This revolt is the latest in a long line of difficulties that the airline has faced recently as the airline is facing more strike action from pilots and is cutting jobs.

A statement from the airline said: “Ryanair is, and will continue, to consult with its shareholders and we will report back to them over the coming year on how the board will adapt its decision-making to reflect their advice and input on all these topics.”

Wizz Air expands services and introduces new aircraft

Wizz Air has announced further expansion of its Romanian operations, by introducing one new aircraft to its fleet.

The new Airbus A321 aircraft will join the fleet in June 2020, which will grow the local Bucharest fleet to a total of 12 aircraft.

From June 2020, Wizz Air also announced a new route from Bucharest to Lyon, France as well as increase weekly frequencies on services to Milan and Turin in Italy and Tel Aviv in Israel.

Finance News 

CataCap to acquire AerFin Holdings Ltd in partnership with management

Private equity firm CataCap has agreed to acquire UK-based AerFin Holdings from CarVal Investors.

AerFin provides cost-saving aftermarket support solutions to the aviation industry. Led by an experienced team of aviation experts, the company offers completely bespoke services ranging from whole aircraft and engine sale or lease, through to tailored flight-hour component support solutions based upon used serviceable material.

CataCap will become the majority shareholder in the group, which is expected to generate revenues of approximately DKK 780 million and an operating profit of approximately DKK 115 million in the current financial year.

Together with Founder & CEO Bob James and the management team, CataCap will strengthen the business and make it ready for further international expansion.

AerFin founder and CEO Bob James, who will retain a significant equity interest in the business on completion supported by the existing leadership team, said: :I am delighted to announce the partnership and investment from CataCap who I firmly believe will be the catalyst for continued sustainable growth and business development through their strategic alignment of interests bringing a true collaborative approach to our employees and our strategic partners.”

The closing of the transaction is subject to customary closing conditions and is expected to occur in October.

CataCap has been assisted by Baker & Mckenzie, Deloitte and Oliver Wyman, as its legal, financial and commercial advisor, respectively.

The shareholders of Aerfin were advised on the sale of the business by EY Corporate Finance and A&L Goodbody.

Fitch rates GTLK Europe’s upcoming guaranteed notes BB+

Fitch Ratings has assigned Ireland-based GTLK Europe Capital DAC’s upcoming issue of US dollar-denominated guaranteed notes an expected ‘BB+ rating.

The final rating is contingent upon the receipt of final documents conforming to information already received.

The funding will be used for GTLK Europe Capital DAC to finance a special purpose entity of GTLK Europe DAC, an Irish subsidiary of Russia-based PJSC State Transport Leasing Company (STLC, BB+/Stable).

GTLK Europe DAC has been established as an operating entity utilising the favourable tax and regulatory regimes of Ireland for the leasing of aircraft and ships.

The notes will represent direct, unsubordinated and unsecured obligations of GTLK Europe Capital and will benefit from unconditional and irrevocable, joint and several guarantees from both of STLC and GTLK Europe.

The proceeds will be used mainly for general corporate purposes including refinancing current outstanding US dollar-denominated borrowings.

The facility agreement includes financial covenants relating to STLC (e.g. maintenance of positive net interest income, including operating lease income, and an equity-to-asset ratio of above 10%).

The terms of the issue also provide noteholders with a put option in case of the Russian sovereign (BBB/Stable) ceasing to control more than 75% of STLC’s and/or GTLK Europe’s equity.

Both companies are currently ultimately controlled by the Russian government, which is represented by the Ministry of Transport.

Maintenance News

Rolls-Royce says repair of Trent 1000 engines will take longer than expected

Rolls-Royce has warned that problems with its Trent 1000 engines will take longer than expected to repair.

This warning means that a reduction in the number of grounded aircraft will be slower than anticipated and that delays would continue until the second quarter of 2020.

This news air a setback for Rolls-Royce, but one the group has anticipated would take place, following its financial results report in August.

The group reported that premature blade deterioration continued to cause Boeing 787 operators “significant disruption”. It was also said that in-service costs are set to increase by a total of £100 million across the next three years.

A statement from Rolls-Royce said: “We deeply regret the additional disruption that this will cause our customers and we continue to work closely with them to minimise the impact on their operations,” the company said in a statement on Friday. It said its guidance for the cash costs of the in-service issues in 2019 and 2020 remained as previously announced in August.

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Airline News
Qatar Airways announces codeshare agreement with China Southern Airlines

Qatar Airways has introduced a new codeshare cooperation with China Southern Airlines starting from January 2020.

This agreement will enable China Southern Airlines’ passengers to book travel on Qatar Airways’ flights between Guangzhou and Doha and Beijing and Doha allowing one stop connections to more than 80 destinations in the Middle East, Europe and Africa.

Qatar Airways first began flying to China in 2003 with a service from Doha to Shanghai. Qatar Airways currently operates 45 weekly flights to seven Greater China gateways: Shanghai, Beijing, Guangzhou, Hangzhou, Chongqing, Chengdu and Hong Kong.

Qatar Airways acquired 5% of China Southern Airlines in December 2018.

Gulf Air and Etihad Airways extend codeshare agreement

Gulf Air and Etihad Airways have added four airports in the United States of America to the list of cities served by its existing codeshare agreement.

The agreement, commencing 23 September, will see Gulf Air place its GF code on Etihad flights from Abu Dhabi to and from Chicago O’Hare, Los Angeles, New York JFK and Washington.

In addition to the points in the USA, Gulf Air will place its GF code on Etihad flights from Abu Dhabi to and from Bahrain, Brisbane, Jakarta, Lagos, Melbourne and Sydney for a total of nine cities under the codeshare agreement.

The agreement will see Etihad place its EY code on Gulf Air flights from Bahrain to and from Abu Dhabi, Baghdad, Casablanca, Dhaka, Faisalabad, Larnaca, Multan, Najaf, Peshawar, Sialkot and Tbilisi.

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Space News

Mitsubishi Aircraft Corporation to open Spacejet centre in Montreal, Canada

Mitsubishi Aircraft Corporation is set to open a Spaceject centre in Montreal, Canada.

During its first year, Mitsubishi Aircraft Corporation intends to create around 100 jobs focused on certification and entry into service of the Mitsubishi SpaceJet products.

The company plans to increase that number in the following years. The office will be located in the Boisbriand area.

Hisakazu Mizutani, president, Mitsubishi Aircraft Corporation, commented: “As a Japanese company with a global market, we are building a strong global presence in order to position the Mitsubishi SpaceJet family for success.

“We have great respect for the achievements and capabilities in Quebec and are excited to be here.”

This move follows the company opening its US headquarters in Renton, Washington, earlier this year.

Jean-David Scott, vice president, SpaceJet Montreal Center, added: “This is an exciting moment for the company.

“I am proud to be a part of the team that is focused on the future of regional aviation and bringing opportunities to the region.”

People News 

International law firm Robert Wray entersagreement with Mexico’s SAI Derecho & Economía

The partners at Robert Wray and SAI Derecho & Economía have announced that the firms have established a strategic alliance.

SAI’s preeminent practice in the areas of corporate law, competition, administrative litigation, international trade, investment banking and economic consulting will now be enhanced by RW’s over 15 years of experience in structured finance transactions, export credit agency financings and aviation finance.

This strategic alliance will be led by Mariano Gomezperalta as the JV partner and the head of SAI’s Corporate Law Group.

Commenting on the announcement, Gomezperalta said: “By marrying Robert Wray’s sophisticated cross-border and aviation practice with SAI’s inter-disciplinary approach to corporate law, we can offer our clients expanded capabilities in Mexico and the US.”

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Airline News

Malaysia Airlines opens new routes to Solo and Pekanbaru, Indonesia

Malaysia Airlines has announced the opening of its new routes to Solo and Pekanbaru, Indonesia, serviced by B737-800 aircraft.

Malaysia Airlines will be flying twice weekly to the two Indonesian cities, which are the 5th and 6th Indonesian destination for the airline.

AirAsia launches new direct route from Chiang Rai to Hangzhou

AirAsia has added a new direct route from its Chiang Rai hub, launching four times weekly services between Chiang Rai and Hangzhou.

AirAsia Thailand CEO Santisuk Klongchaiya said, “Our international network from Chiang Rai continues to go from strength to strength. Chiang Rai has become a well-known Thai destination for Chinese visitors thanks to its fantastic tourism and cultural offerings and a unique way of life. We hope to be able to attract more Chinese tourists to Chiang Rai, as well as allow Chiang Rai locals to visit Hangzhou, China.”