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Welcome to London Air Travel’s Monday Briefing for the week beginning 17 August 2020.
Bondholders Seek To Stop Virgin Australia Sale
Virgin Australia’s bondholders will today seek to stop the sale of the bankrupt airline to Bain Capital.
Hedge fund owners Broad Peak Investment Advisors and Tor Investments have put forward alternative proposals whereby unsecured bondholders who are owed around AU$ 2 billion would exchange their debts for shares in the airline. They also promise to inject new capital and claim to have the support of many other bondholders
The administrators of Virgin Australia Deloitte have said that the deal agreed to sell the airline to Bain Capital in late June is binding and cannot be rescinded.
A hearing is due to take place today at a Federal Court in New South Wales whereby the bondholders will seek to force Deloitte to put their proposal to a creditors vote on 4 September.
Virgin Australia is expected to emerge from the administration process a significantly smaller airline. Whilst it will seek to remain competitive against Qantas in the short-haul business market, long-haul operations will remain suspended for several years. Its budget off-shoot Tigerair will also be shut down.
Update: The Federal Court has rejected the application. (Sydney Morning Herald)
South African Airways
Staying with another airline in trouble before the COVID-19 pandemic, there is doubt as to whether the government in South Africa will be able to secure private sector investment in a new state-backed airline.
According to a report from the South African Broadcasting Corporation, more than 3,000 of South African Airways’ 4,600 strong workforce have applied for voluntary redundancy. This is significantly more than is required. Rand Merchant Bank is reported to be working for the government to secure new private sector investment.
Also in South Africa, creditors are due to vote on a business rescue plan for BA’s franchise partner Comair next Friday, 28 August. This has been delayed many times and may be deferred again.
Iberia Retires The Airbus A340
Iberia has officially retired the Airbus A340 from its scheduled passenger operations.
The last scheduled A340 flight took place on Saturday 1 August when aircraft EC-JLE completed its last long-haul flight from Quito to Madrid.
The quad-engine Airbus A340 family aircraft has been a part of Iberia’s long-haul fleet since 1996 when it first took delivery of the Airbus A340-300. It was joined by the Airbus A340-600 in 2003.
Iberia had originally planned to retire its last Airbus A340 aircraft in 2025. As with the Boeing 747 at BA, this has been accelerated by COVID-19. As at 31 December 2019, Iberia had 16 A340 aircraft in service.
Whilst a smaller number of remaining long-haul aircraft will be grounded and new deliveries deferred, Iberia will continue with a fleet of Airbus A330 and Airbus A350-900 aircraft.
Assuming IAG proceeds with its purchase of Air Europa and depending on how it is ultimately integrated into Iberia, it will be joined by the Boeing 787-8 and 787-9 aircraft.
Also of note this week:
Why Delta’s decision to buy an oil refinery seemed like a good idea in 2012, but not so much now. (New York Times)
JetBlue CEO Robin Hayes says a “day or reckoning” is coming for airlines as state support in the US under the CARES Act is due to end. (Bloomberg)
Qantas puts its unused stocks of in-flight pyjamas and amenity kits on sale online. They sold out within hours. Alas, there are no signs BA will follow suit with White Company bedding and amenity kits. (Qantas)
Late post publication updates:
[Reserved for updates throughout the day]
The Civil Aviation Authority has authorised Pakistan International Airlines to restart services between the UK and Pakistan using aircraft chartered from Hi Fly Ltd. (CAA)
British Airways has confirmed it will start to retire its remaining Boeing 747 aircraft on Tuesday 18 August. Aircraft G-CIVD will depart London Heathrow at 09:00 under flight number BA9170E. BA has not given a timetable for the formal retirement of remaining 747 aircraft.
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