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Read more at www.aviationnews-online.comKnighthood Capital Partners and Six West enter Maltese leasing industry venture

Knighthood Capital Partners, headed by former Etihad president and CEO James Hogan, and Six West have formed a new partnership with the aim to explore and develop new growth opportunities for the aircraft leasing industry.

The partners will cooperate to offer aircraft lessors and lessees an integrated and comprehensive package of aircraft leasing and financing services from its base in Malta.

These services will allow lessors to deploy aircraft into new regions, making use of their vast resources sitting in long term preservation, adding significant value to their bottom line.

From its offices in Geneva, Abu Dhabi and Malta, Knighthood Capital offers business advisory, capital structuring and investment services to government and private enterprise.

Together its partners, who have decades of experience in the global aviation and aircraft industry, have sourced and financed more than 1,000 aircraft valued in excess of $30 billion.

James Hogan, executive chairman of Knighthood Capital, said: “We believe our partnership with Six West will support the growing aviation hub and exciting developments in aircraft leasing in Malta. Together we can offer a broad strategic proposition that combines deep global experience, expertise and innovation.”

Six West provides a unique and innovative service facilitating the deployment of aircraft on behalf of lessors.

Its two industry-first Air Operators’ Certificates (AOCs) in Malta and the Cayman Islands offer asset security for aircraft lessors during lease placement to destinations that present unacceptable levels of risk within the current lessor–lessee business model.

Asset optimisation also reduces the need for long-term storage, keeping aircraft airworthy and generating additional revenue for lessors.

Oil prices rise as Saudi attack disrupts global supply; airline stocks drop

An attack on a Saudi Arabian oil facility has removed around 5% of global supplies resulting in oil posting its biggest ever intraday jump to more than $71 a barrel, Bloomberg reports.

The attack, which the US has blamed on Iran, marks for oil markets, the single worst sudden disruption ever, says Bloomberg analysts Serene Cheong and Dan Murtaugh. The report continues, that while Saudi Arabia may be able to return some supply within days, the attacks highlight the vulnerability of the world’s most important exporter. They also add further political risk to prices, raising the spectre of more destabilisation in the Middle East and the threat of US retaliation against Iran.

Asian stocks have reacted to the strikes during trading hours Monday. China’s three biggest airline operators all dropped sharply in Hong Kong. China Eastern Airlines fell more than 4%, while China Southern Airlines and Air China each fell at least 2.5%.

Meanwhile, The flagship airline of Hong Kong, Cathay Pacific, fell 3.9% – the airline has already been struggling with fallout from months of pro-democracy protests in the city.

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Aircraft
Model MSN YoM TFHs/TFCs Engines CC OL/A/S AD
ATR 72-500 986 2012 9981-7947 PW127M 70Y OL IMM
ATR 72-500 978 2012 10139-7945 PW127M 70Y OL IMM
ATR 72-500 974 2011 11680-9571 PW127M 68Y OL IMM
ATR 72-500 955 2011 12075-9968 PW127M 68Y OL IMM
E190IGW 19000424 2011 16680-12106 CF34-10E5 6C/92Y OL IMM
E190IGW 19000312 2009 20960-14390 CF34-10E5 6C/92Y OL IMM
E190IGW 19000321 2009 20396-14115 CF34-10E5 6C/92Y OL 190430
E190IGW 19000412 2011 17027-12170 CF34-10E5 6C/92Y OL 200331

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Airline News

Air Malta welcomes third A320neo to its fleet

Air Malta is set to welcome a third brand new Airbus A320neo to its fleet.

The aircraft has been registered on the Maltese aircraft register as 9H-NEC and was flown directly from the Airbus’ facility in Hamburg.

The aircraft entered immediately into service last Thursday with flight KM 328/9 to Frankfurt.

Air Malta chairman Charles Mangion said: “This aircraft is a welcome addition and another important step forward to continue reducing ourfleet’s average age and improve aspects of customer experience, environmental commitment and airline reliability and efficiency. Itshows commitment to Air Malta’s growth strategy and a big investment in the airline.”

Minister for Tourism Konrad Mizzi added: “Air Malta is undergoing a transformation process which includes the shift to brand-new state-of- the-art Airbus Neo aircraft, growing a route network that now includes over 40 destinations and improving its inflight services in both economy and business class.

“The Maltese Government is committed to support the growth strategy adopted by Air Malta and the investment in the airline in the months and years to come.”

Last year Air Malta embarked on a five-year fleet replacement project that will see the airline operate a brand-new Airbus A320neo fleet by the year 2022.

The next batch of aircraft are expected to join the airline’s fleet next year.

Pegasus Air welcomes first of 43 A321neos as part of expansion strategy

Turkey’s Pegasus Air has taken delivery of its first Airbus A321neo, with 42 more of the aircraft set to follow.

The delivery has been a long time coming for Pegasus Air who first ordered the aircraft back in 2012 as part of a 100-aircraft deal, which included 57 A320neo’s and 18 A321neo’s on firm order plus 25 options.

On December 21, 2017, the airline converted the 25 options into firm orders for the A321neo.

The arrival of the first three A321neo’s was originally scheduled for 2018, with 11 to follow in 2019, none in 2020, five in 2021, seven in 2022, and 10 in both subsequent years.

The plan was shelved as Pegasus itself wished to defer deliveries, while Airbus has been struggling to meet its A321neo-rate.

At first, engine issues with both the Pratt & Whitney GTF and CFM LEAP were to blame but the complexities of the ACF-cabin and other production issues have caused delays that Airbus is still trying to get to grips with.

Commenting on the delays, Pegasus president and CEO Mehmet Nane, said: “Delays are normal because there is a huge demand for the A321neo’s. The cost per seat is the best in the world at the moment. There is a delay of five to seven months, but we will begin to receive them now”.

A second aircraft is due for delivery before the end of the year.

The A321neo is part of Pegasus fleet transition-plan, one of the biggest in the airline industry.

The airline has 12 Airbus A320ceos on operational lease. The A320neo-fleet has grown to 31 with 27 on financial lease and four on operational lease, with 26 still yet to come.

Aegean Airlines reveals H1 2019 financial results

Aegean Airlines has revealed a consolidated revenue of €519 million (approximately ) in its first-half 2019 financial results, 14% higher compared to 2018.

Its net losses narrowed to €13 million, an improvement from €13.8 million in 2018.

Strong performance during the second quarter, drove the improvement on first–half results, the airline has said.

Total traffic in the first half of the year reached 6.5 million passengers, 9% higher than the figure posted in 2018. Passengers carried on domestic flights increased by 4% to 2.8 million. International network traffic which accounts for 76% of consolidated revenue, increased by 12% to 3.7 million. passengers. Load factor improved to 82.2% from 81.7%.

Dimitris Gerogiannis, CEO of Aegean, commented: “We have followed our path of consistent growth by investing additional capacity in our international network. Our effort to extend the tourism season by flying more, earlier than usual, in the months of April-May and increase the utilisation of our fleet contributed to positive results, despite the overall incoming tourism slowdown. Gradually extending the tourism season remains critical for both Greek tourism and Aegean.

“The evolution of the third quarter, which materially determines our annual result based on our current load factors and revenues remains positive, despite the marginal increase in total air traffic arrivals in our country.

“We continue to work at full speed for the induction of our new Airbus A320 neo aircraft in our fleet in 2020.”

Back in March, Aegean successfully issued a seven-year €200 million. common bond loan, with a 3.6% coupon rate.

Cargo News

Cargo specialists ABC and CLA offering live digital platform bookings

AirBridgeCargo (ABC) and CargoLogicAir (CLA) are now offering live bookings for its digital platform, which is said to open up numerous opportunities for its existing and potential customers.

ABC and CLA capacities are available online for cargo, covering general and premium services, originating from Frankfurt, Munich and Leipzig in Germany, as well as Amsterdam in the Netherlands with further plans for expansion of online points.

Andrey Andreev, vice president, Europe for AirBridgeCargo Airlines, said: “Being part of digital booking platforms becomes essential for air cargo players if they want to embrace new sales channels and expand their customer base building strategic relations on different levels with customers and understanding their needs, as well as following market trends.

“We have analysed various options in the market and went for cargo.one for a number of reasons. Besides being driven by a young and professional team, cargo.one’s ambitious platform guarantees a simple, clean and intuitive experience for its users providing better choices on time-condition for airfreight and facilitating transactions. We can reach our existing customers and new ones with ease following our top marketing key approach.

“The simplicity of cargo.one makes it a truly seamless experience, fully transparent for our customers from search to booking in under a minute.”

The companies aim to expand the offering to include the full breadth and depth of their network. That means go-live beyond European launch markets in Germany and the Netherlands and expanding the scope of their products and services.

AirBridgeCargo, CargoLogicAir and cargo.one first announced about its partnership during air cargo Europe in June and have so far been working on building data & analytics capabilities and integrating them with the companies’ commercial and operational processes to deliver a better product.

CLG granted air operator certificate to commence commercial operations

Cargologic Germany GmbH (CLG) has been granted an Air Operator Certificate (AOC) from the German civil aviation authority (LBA) and is now ready to commence commercial operations.

The airline will initially focus on providing short-term capacity to customers across Europe and in time, aims to expand its offering to include provision of express air cargo solutions to leading integrators and e-commerce providers as well.

CLG currently operates a fleet of 2x B737-400SF aircraft, a type well-suited to the European express air cargo market.

The airline has generated considerable commercial interest in recent months following the granting of its non-commercial permit to fly in June 2019 and CLG is committed to plans that will increase its fleet to 10x B737 aircraft by 2022.

Technology News

Air Nostrum enlists Ideagen’s Coruson software for real-time reporting of safety and risks

Spain’s Air Nostrum is to work with UK-based global software firm Ideagen in a project that will enhance safety, quality and risk management across the organisation.

The Valencia-based company, which caters for 74,000 flights and 4.3 million passengers per year, is the latest aviation organisation to implement Ideagen’s Coruson software.

Coruson is a cloud software application that will provide Air Nostrum with complete control, visibility and real-time reporting of every detail and aspect of safety and operational risk.

It is currently used by some of the largest aviation organisations in the world such as British Airways, Air Asia and Ryanair.

The software will be adopted by Air Nostrum as well as its Air Operator Certificate (AOC) and MRO companies such as Medops, Hibernian, PLYSA, TAC, Flyest, Paranair and ANTA with more than 1000 users.

Fermin Tirado, chief maintenance officer at Air Nostrum, said: “This is an innovative software project with Ideagen which will help to transform and ultimately enhance our quality, safety and risk management operations.”

Mario Franco, director IT, Air Nostrum, added: “Both Air Nostrum and Ideagen are ambitious leaders in their respective fields and we are looking forward to seeing the impact that Ideagen’s expertise and software product in the form of Coruson has on our business.

“We are very pleased to be working alongside Ideagen and its Coruson software in this project.”

Air Nostrum currently operates as a franchise of Iberia, which is under the International Airlines Group (IAG) umbrella, and employs more than 1,450 employees.

People News

Airbus appoints Andrew Forbes as head of MENA region

Airbus has appointed Andrew Forbes as its new head of the Middle East and North-Africa region of Secure Land Communications.

Forbes replaced Selim Bouri who has moved on to another position within Airbus.

In the role, Forbes will build on Airbus’s previous strong performances in delivering the latest Tetra technology in those regions, targeting new markets, and developing mission critical-solutions tailored to customers’ needs.

Commenting on his new role, Forbes said: “We strongly intend to intensify efforts made in the fields of public safety networks, defense, transportation, energy and other critical industries such as the mining sector, in order to bring forward innovative and customised solutions that surpass competitors.

“In the Middle East region in particular, we can build on our excellent existing customer relations.

“Our customers, particularly in the Middle East, are forerunners in mission-critical technology solutions. They are expecting their systems to follow the same megatrends that the civilian ones are following while maintaining the most important features such as security, reliability, resiliency, and of course, voice.

“Our aim is to bring forward hybrid possibilities, seamless connectivity, data-driven services, and applications with extremely high security standards while maintaining flawless voice services.”

With a Master of Science (MSc) in Information Technology Service Management from Northampton University, and a Diploma in Company Direction, Forbes has 36 years of experience in the implementation, operation, and management of geographically dispersed Information and Communication Technology (ICT) systems and is an experienced communications and structured cable design engineer.

Forbes is based in Riyadh, Saudi Arabia and oversees more than 95 employees in the offices located in the United Arab Emirates and the Kingdom of Saudi Arabia.

Finnair set to appoint new chief digital officer and executive board member

Finnair is set to appoint Tomi Pienimäki as its new chief digital officer and executive board member, effective 1 October.

Pienimäki, who currently serves as a member of the board in Aallon Group, will replace Katri Harra-Salonen in the role .

Previously, Pienimäki served as the CEO of Vincit and Jolla, and as the chief information officer of Itella and Hackmann.

Commenting on the changes, Topi Manner, Finnair’s CEO, said: “With Katri Harra-Salonen at the helm, Finnair has made a great digital leap, and is today among the most desired employers among technology professionals in Finland.

“All of us at Finnair want to warmly thank Katri for this, and we wish her the best of success also in the future.

“I also welcome Tomi Pienimäki to the Finnair team. Tomi’s strong competencies in leading digital organisations and in developing new businesses complement our team well, as we seek to further develop innovative solutions for both improving the customer experience and to support the work of our own personnel.”

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Airline News 
LATAM Group activates the humanitarian relief plane to aid following Hurricane Dorian

LATAM Group has provided 35 tons of humanitarian aid, including medicines, medical instruments, sanitary and edible items, to the Bahamas on a humanitarian relief plane, in the aftermath of Hurricane Dorian.

The B767-300BCF cargo plane was chartered to the capital of Nassau providing a full payload to transport the entire 35 tons of aid collected by the UPS Foundation, the company’s ally in this initiative.

Once in the field all the goods collected for the benefit of those affected were distributed among hospitals and foundations on different islands.

Thanks to the collaborative work between different teams and actors in the cargo transport industry, the Humanitarian Relief Plane initiative came to life, and had a positive impact on the affected areas.

The plane was activated in earlier circumstances for Chile’s forest fires, flooding in Peru, Hurricane Maria aftermath in Puerto Rico, and the earthquake in Ecuador, among other cases.

Cargo News 

Amazon set to open regional air hub in Texas

Amazon has said its regional air hub at the Fort Worth Alliance Airport will open in October.

The regional air hub is the first build-to-suit airport project of its kind in the Amazon Air network and was designed to support Amazon Air’s larger scale regional needs, including sortation capability and infrastructure to handle multiple flights daily.

Amazon expects this facility to create 300 new full-time jobs over time as operations reach full capacity.

Sarah Rhoads, vice president of Amazon Global Air, commented: “We are excited to start flying to and from our new facility at the Fort Worth Alliance Airport very soon – this facility will allow us to offer even more selection and faster delivery to our customers.

“This is our latest investment in Texas and we look forward to hiring top talent from the local community.”

The new Regional Air Hub will include daily flights and allow Amazon to further serve its customer base in the Dallas-Fort Worth Metroplex.

Since 2010, Amazon has created more than 22,000 full-time jobs in Texas and invested more than $10 billion in the state, from building customer fulfillment facilities, cloud infrastructure, and a 253-megawatt wind farm, to compensation to its teams.

Regulatory News

J.P. Morgan releases its valuation for worldwide airlines

J.P. Morgan has released its valuation for airlines across the world, highlighting some of the major airlines in each region.

In the Latin America region the report says that after several years of a challenging demand environment and great focus on growth, airlines have been adopting a more rational strategy toward capacity management and pricing.

In Brazil, the exit of Avianca Brasil has led Azul, GOL and LATAM to accelerate capacity expansion into the second-half of 2019, a fact that has brought some concerns to the investor community, the report says.

J.P. Morgan says that it does not see a scenario of excess capacity that could eventually lead to lower yields or unit revenue. Overall J.P. Morgan has said that it maintains a positive view for the airline industry in the region and reiterate Azul and Copa as our top picks.

Meanwhile, in North America, 2019 to date has marked the first year in four where margins (both operating and pretax) have expanded, and have done so at a rate superior to the S&P 500 (ex-financials). The report says that the industry has benefited from considerable pricing power as 2019 capacity plans tightened in response to higher fuel in the prior year, resulting in stronger earnings, while fuel has again trended down from the recent peak in April.

The grounding of the 737 Max has contributed to further capacity growth discipline this year which has been beneficial to the industry as a whole, with the exception of Southwest.

J.P. Morgan remains of the view that the Max will return in early 2020 which may result in sizable relative capacity growth (particularly in the second half). However, as Max-operated flights are already loaded and selling, the report expects the impact on shares from additional capacity and any potential year-on-year RASM declines to be more muted than some of our competitors.

Delta Airlines remains J.P. Morgan’s top pick and it continues to view it as the industry benchmark, generating the highest margins of its legacy peers as a result of structural benefits that will be difficult for others to recreate.

Over in Europe, there has been a better capacity discipline (helped by Max delays and bankruptcies) and less ATC disruption this summer, UK demand has been impacted by Brexit and Western European demand by a slowing economy. A fare war in Germany and Austria has added further pressure to yields for Ryanair, Easyjet and Lufthansa. Eastern Europe has performed relatively better given a more favourable macro picture and hence J.P. Morgan reports that its remain overweight structural winner to be Wizz Air.

In Japan, J.P. Morgan has been cautious on the air transportation sector for some time because of poor visibility on downside risk for the passenger load factor and yield from full-year 2019 onward due to an increase in industrywide supply. The firm says it is still not bullish on the air transportation sector, even though shares have underperformed in relative terms, because of the recently emerging risk of a slowdown in demand.

Against this backdrop, J.P. Morgan expects Japan Airlines (JAL) to experience relative outperformance in the sector due to the company’s emphasis on shareholder returns.

India is one of the fastest-growing aviation markets with 20% traffic growth over the past five years, according to Deepika Mundra. Full-year 2020 saw industry consolidation, with the bankruptcy of Jet Airways taking out 15% of domestic capacity and nearly 1/3rd of the international capacity of domestic carriers. Industry consolidation has led to yield improvement. Indigo is the largest domestic player with 48% market share and is expected to grow ASKs at 30% CAGR over the medium term.

The “supply-side reform” implemented by the Civil Aviation Administration of China (CAAC) since October 2017 is still ongoing, restricting slot capacity growth at 22 major airports in China, in a bid to improve flight punctuality. Chinese airlines’ fleet growth are also controlled by the CAAC, thereby providing capacity discipline. On the demand side, international outbound travel growth remains robust but domestic travel growth has seen a slight slowdown, likely due to the effects of China’s GDP growth slowdown.

However, demand growth still exceeds supply growth at key airports, leading to higher airfares on key routes as the CAAC abolished price ceilings on many top domestic routes in 2018. Given the slot constraints at Tier 1 airports, though, airlines are forced to grow more in lower-tier markets, resulting in lower average pax yields. James Teo’s top pick in China is Spring Airlines, the privately-owned leading Chinese low-cost carrier (LCC), which has high exposure to Japan/Korea routes that are extremely popular this year and is well-positioned to penetrate lower-tier markets effectively given their lower cost base. Air China and China Eastern Airlines, given their better quality domestic route networks and lower exposure to CNY depreciation and trade war.

LCC penetration rate is the highest in the Southeast Asia region at over 50%, hence competition is generally stiff, particularly in the low-cost segment, with AirAsia complaining of irrational pricing by competitors in Malaysia, although Cebu Air saw strong 6% RASK improvement in 2Q19 on the back of both average fare per pax and ancillary revenue growth.

Singapore Airlines reported strong 2.4% RASK improvement for its parent airline company on the back of strong premium cabin demand in its latest results for the April-June 2019 quarter, but its LCC arm, Scoot, reported an operating loss for the period due to a 2.1% RASK decline citing increased competition from Chinese airlines and higher costs on account of engine issues with its B787s. J.P. Morgan’s top pick in this space is Singapore Airlines, as the firm thinks its cost concerns should alleviate in the second quarter of 2019 as the B737 Max and B787 technical problems get resolved, with compensation from OEMs likely to follow after that, providing a possible catalyst.

Russian air industry presents structural growth opportunities, Russia’s geographical position makes it an attractive transit point for flights between Europe and Asia, which underscores the potential for transit market development. Aeroflot cemented its leading position in the domestic market and has been the main beneficiary of sector consolidation over the last five years and its c40% market share makes it a quasi-monopoly.

Turkish Airlines provides an exciting growth story, in J.P. Morgan’s view, with planned capacity expansion outpacing global capacity build up by two times over 2018-2023. It aims to fill the network route gaps in fast-growing Emerging Asia while Turkish air market continues to offer secular structural growth story.

The company has been facing cost challenges this year which we expect to be resolved next year through better yields and growth. Despite these structural cost headwinds, the company still maintains its sub-bar cost base which makes J.P. Morgan confident that it will be able to retain its superior EBITDAR margins next year.

People News 

BGCI introduces managing partner for aviation industry financial solutions division

BGC Insurance Group (BGCI) has announced that Kostya Zolotusky will be joining as managing partner of its recently announced Aviation Industry Financial Solutions Division.

Based in Seattle, Zolotusky starts with immediate effect reporting to Bruce Fine, president of this division.

Zolotusky brings 34 years of aviation experience to the role having spent his impressive career at Boeing. Zolotusky joined Boeing in 1985 as an avionics engineer before going on to hold a number of leadership roles in commercial aircraft engineering, sales and financing.

Commenting on the decision, Fine, said: “At the heart of our venture is our commitment to offering customers the broadest and most efficient set of tailored solutions. Kostya brings the vital skillset and experience needed to ensure our continued growth in the sector. His time at Boeing equipped him with extensive knowledge of aircraft finance markets, having developed and led new aircraft finance solutions and businesses.

“Our team is continuing to expand and Kostya’s appointment is indicative of the leading market talent we are attracting. I am therefore delighted to welcome Kostya and look forward to working with him closely as we grow our new offering.”

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Airline NewsVirgin Australia buys back 35% stake in frequent flyer programme

Virgin Australia has entered into an agreement to buy back the 35% of its Velocity loyalty programme for A$700 million ($481 million) which it does not currently own from private equity firm Affinity Equity Partners.

Velocity is Australia’s second-largest airline loyalty program, behind rival Qantas Airways, which has 9.8 million members as of June 30.

The deal, which values the stake at more than twice the A$335 million price paid by Affinity in 2014, remains subject to funding and regulatory approval.

Velocity was revealed to be a profitable unit for Virgin, reporting earnings before interest and tax of A$122 million for the year to 30 June, with a revenue rise 39% to A$411 million.