LATAM Brasil to retire A350s, Norwegian aims for new capital raise

In this week’s On Watch report, Ishka provides updates on airlines from Ishka’s airline restructuring list.

LATAM Brasil to retire 11 A350s

LATAM Brasil announced on 8^th April 2021 it will retire all of its 11 A350-900s with immediate effect as it transitions to an all-Boeing widebody fleet.

"We announce that at that moment, seven A350 aircraft will no longer be part of LATAM Brasil's fleet, and next week, another four. As a result, as of this month, the LATAM Group's widebody fleet will be comprised of Boeing 767, 777, and 787 Dreamliner”, said Jerome Cadier, CEO of LATAM Airlines in a letter to staff, leaked via social media.

According to Ch-aviation fleet database, the carrier owns three of the A350s still stored in Brasil and one stored at Victorville airport. The remaining aircraft are owned by AerCap (six) and BOC Aviation (one).

Norwegian to raise additional funds

Norwegian Air International plans to raise up to 6 billion kroner ($712 million) in fresh capital, up from a planned 4.5 billion ($534 million), to bolster its resources before emerging from bankruptcy protection in May, according to a recent filing. Previously, in a stock exchange filing on 12^th April, Norwegian announced it won approval from creditors in Norway, and the Oslo County Court approved the plan, clearing the way for the carrier to raise new capital.

“We want to take a conservative approach at a time when the pandemic and travel restrictions continue to create unpredictability in the travel sector”, said Jacob Schram, Norwegian's CEO.

The stock's issue price will be set to a maximum of 6.99 kroner ($0.83) per share. Depending on the amount of new capital raised, the new investors in equity and/or the new capital perpetual bonds will receive approximately 70.0% - 75.7% of the post-restructuring share capital with the shares held by existing shareholders diluted to approximately 4.6% - 3.7%.

Blue Air to receive 10 new 737-800s from ALC

Air Lease Corporation (ALC) announced on 30^th March 2021 the delivery of one new B737-8 MAX aircraft on long-term lease to Romania’s Blue Air. Blue Air, currently under a debt restructuring, received €62 million ($74 million) in state-aid loan guarantee from the European Commission in August 2020. The carrier was granted bankruptcy protection on 6^th July 2020 which allowed the airline to continue to operate for 18 months without having to pay creditors or refund passengers.

The newly delivered 737-8, featuring CFM LEAP-1B25 engines, is the first of 10 new B737-8s confirmed to be delivered to the carrier from ALC. The nine new 737-8s aircraft that follow are scheduled to be delivered from April 2021 through 2022. In addition to the new B737-8s, Blue Air currently has six B737-800s and one B737-700 on long-term lease with ALC.

"Once all of the ALC 737-8s are delivered, Blue Air will have the largest fleet of new 737-8s in Eastern Europe", explained Steven Házy, ALC’s executive chairman.

Blue Air says it will issue new bonds in October when it plans to exit pre-insolvency procedures, and to list its shares on the London Stock Exchange (LSE) within two to three years, Blue Air's CEO Oana Petrescu told Agerpres on 4^th April.

Other updates

- Aircraft lessor Fly Modern Ark made an offer of R1 ($0.07) on 7^th April 2021 to buy SA Express, Moneyweb reported on 13^th April. This is Fly Modern Ark's second offer to purchase the carrier since 2020.

- Avianca Holdings reported its financial results on 29^th March 2021 for Q4 and FY ended 31^st December 2020. The carrier reported total revenues of $1.71 billion for the year, a drop of 63% YoY. Net Loss in 2020 was $1.1 billion, compared to a net loss of $893 million in 2019.

- On 12^th April 2021, in a stock exchange filing, Thailand’s Central Bankruptcy Court granted Nok Air a second one-month extension to submit its debt rehabilitation plan. The deadline to submit a rehabilitation plan is now on 15^th May 2021. It is the last extension permitted by law.

- Sundair reportedly exited the restructuring process after five months of reorganisation, Airliners.de reported on 8^th April. According to a statement from the carrier, the creditors approved the restructuring plan at a meeting on 7^th April 2021.

- On 8^th April 2021, Malaysia Airlines and Airbus signed an extension of their Flight Hour Services Components (FHS-C) contract for the carrier’s A330 and A350 fleets, AsianAviation reported on the same day.

- On 8^th April 2021, HNA Group and Airbus signed a cooperation framework agreement to further strengthen in-depth cooperation in operational debt, fleet introduction, aircraft maintenance, and flight training, Sina reported on the same day.

Click here to download the complete tables with the latest updates.

Source: CAPA Fleets

Note to the reader: The chart includes only airlines undergoing formal restructuring. All airlines included in our restructuring watch list have at least one aircraft in their fleet.

Source: CAPA Fleets

Note to the reader: The Net Aircraft change calculations will now exclude airlines that have emerged from court-led restructuring processes (Ravn Air, Braathens Regional Airlines, Miami Air International, Virgin Australia, CityJet, Comair, Virgin Atlantic Airways).

Click here to download the complete tables with the latest updates.

The Ishka View

Norwegian Air Shuttle is beginning to see a light at the end of the tunnel. After receiving the restructuring scheme’s approval by Ireland’s High Court at the end of last month, the carrier announced on 12^th April it won the approval from creditors in Norway, and the Oslo County Court endorsed the plan. Norwegian announced on 14^th April it has increased its planned capital raise.

Meanwhile LATAM Brasil’s decision to retire all 11 of its A350-900s is set to further dampen lease rates for the new-technology widebody in the secondary market. Remarketers have indicated that at least one airline start-up has been offered nearly new A350s.

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