HEADLINES: ANZ, 748F, LATAM, Lufthansa, Air Canada/Transat, Emirates

LATAM

The airline has filed for Chapter 11 bankruptcy protection, as it dropped so far into the red it was the only way to restructure the ailrine.

Delta, which is now one of its largest shareholders, is said to have pushed for the process, which enables the airline to stop its creditors demanding payment, re-schedule its debts, its organisation and its staffing, with virtual impunity. While the airline will come out of it generally on top, provided it can stay there, inevitably small suppliers, pensions funds and staff end up loosing out.

A smaller fleet, fewer bases and a greatly slimmed schedule will be the result, with the aim of building back on a better framework. the airline has suffered from legacy background management structures resulting from the TAM Brazil and LAN Chile merger. this is an opportunity to rationalise that system.

The airline has immediately cut 19 leased aircraft from its fleet, all go immediately except for the 787’s which go from June 3rd.


Air New Zealand

ANZ announced that its suspending all operations for its 772 & 773ER fleet for the foreseeable future, placing them in storage until it has the market share and demand to bring them back to service. The 787-9 fleet will operate long haul flights.

ANZ also announced it was suspending all A320neo deliveries until it could justify taking more aircraft.


Lufthansa Group

Lufthansa Group received a €9 billion package of grants and loans from the German Federal Government, in exchange for 20% of its shares and a pair of non-voting boardroom seats as collateral.

The German Stabilisation Fund WSF, will grant €5.7 billion, while €3 billion is to be provided by private banks – although that aspect still remains to be finalised. Lufthansa can terminate the agreement in whole or in part on a quarterly basis with charges running at 4% rising to 9.5% by 2027 if it remains unpaid. It’s very much in the groups interest to repay it quickly.

WSF is taking a €300m stake in the Group – 20% of its shares, which values it at a ridiculously low €1.5 billion, thats how far values have fallen of late, but that will rise again, and fast. The move effectively prevents any hostile takeover attempt, but should it happen, WSF shares will automatically take 25% of the stake – thats a brake to most takeover ideas in itself.

RyanAir screamed blue murder over the bailout which it thinks simply distorts the European market. It does, but the consequences of Lufthansa going under are too severe to contemplate for any German Government.

If Lufthansa pays back all of the bailout by December 2023, then the WSF will sell its shares on the open market.


Air Canada & Transat

The European Commission isn’t letting the merger go through on the nod, it’s asked for an investigation into the impact of consumer choice, monopolies and pricing on routes to and from Canada. AirTransat was a major force in price competition from Europe to Canada and the recent Free Trade Agreement between the EU and the country covers this type of potentially anti-competitive merger.


Emirates

Sir Time Clarke, the airline’s president, stepped into wind back some of the headlines surrounding the airline in the last few weeks. But he actually didn’t say anything that changed any of the perceptions already given. The airline is said to be hoping mad that its presentation details were leaked to the press.

What he said was that the A380 would remain a major part of the fleet. Well we know that. But what he didn’t say was that large numbers wouldn’t be retired.


Boeing & The 748F

Internal struggles over wether or not to discontinue the 748F are said to be due to reach a conclusion. There is expense involved, so my estimation is that it will be terminated.

Triumph made the key external panels and body parts for the aircraft and then left the programme almost a year ago, with enough parts to complete existing orders, the last of which are being delivered this year, and the factories closed. To carry on the programme Boeing would have to build the parts itself, which it doesn’t have the facilities or inclination to do, or buy the plants and staff from Triumph.

The last order was in 2018 for 14 aircraft for UPS, then 4 from Volga-Dnepr. According to reports two customers asked for quotes in recent months for new aircraft and were ignored by Boeing.

Despite being in the twilight phase of its life, the 747-8F offers unique cargo-carrying capabilities. At 138 tons, the 747-8F has significantly greater payload than the next largest civil freighter – the 777F at 102 tons – and also offers the flexibility of nose-loading for outsize cargo. Its end would leave cargo carriers facing a crucial hole in the availability of new-build large capacity freighters.

Boeing expects to finish the remaining order by the end of 2021 with UPS expecting to take the last deliveries in 2022. The Volga-Dnepr order is subject to the status of the company, which, being Russian can change on a dime (or a kopeck) depending on who is in favour with the government and who isn’t. Its also had a hard time financially.

Currently the production rate is just 1 aircraft every two months.