US carriers American Airlines and Southwest Airlines have separate updates to their term-loan programmes. Southwest said in a 19 May filing to the US Securities and Exchange Commission (SEC) that it was increasing its senior secured term loan facility with French Bank BNP Paribas by $1 billion. The original size was $500 million, bringing the deal to $1.5 billion. The term loans are backed by Southwest aircraft and other assets, and mature on 11 March 2029. Southwest has the right "at any time to prepay the term loans, in whole or in part, without premium or penalty, upon at least three business days' prior written notice". It may not reborrow prepaid amounts. Separately, Fitch Ratings says it has assigned a 'BB' rating with a recovery rating of 'RR2' to a proposed term loan from American. Proceeds from the term loan, together with "other secured debt issuance", will be used to repay the company's $1.1 billion 2014 term loan, with the remaining funds allocated to general corporate purposes, Fitch says. The rating agency expects the airline's credit profile to remain weak as higher jet-fuel prices strain profitability and delay deleveraging, although Fitch's "stable outlook" for the company reflects the fact that Fitch expects the fuel-price pressure to be temporary. "American's credit profile may improve over time as margins recover from resilient travel demand, stronger loyalty revenues, and premium product expansion," Fitch says.

Lufthansa Technik has secured Airbus as a partner for the planned application of drag-reducing surface film on A330ceos. Last year, LHT disclosed its intent to develop a supplemental type certificate for application of the AeroShark riblet film on the fuselage and engine nacelles of A330-200/300s. Now, the MRO group has entered a technical collaboration with Airbus to apply the technology to the aircraft's wings, vertical and horizontal stabilisers too, it says. Airbus will provide aircraft data and safety assessments, while LHT leads certification activities with the European Union Aviation Safety Agency and serves as the modification's STC holder. The certification programme will assess the surface film's effects on flight dynamics, lightning strike protection, structural loads, maintenance and aircraft systems, LHT notes. It predicts that full application on an A330 will deliver fuel savings of at least 2%. LHT jointly developed the sharkskin-inspired surface film with BASF and previously introduced it on Boeing 777 variants: the -300ER, -200LR and Freighter. Lufthansa Cargo and group siblings Austrian Airlines and Swiss have adopted the surface film on 777s in their fleets. LHT has additionally gained LATAM Airlines, All Nippon Airways and EVA Air as customers for 777 applications. Henning Linnekogel, senior director of OEM partner management at LHT, says the collaboration with Airbus will "pave the way for a completely new application of riblet technology on the A330ceo".

You might assume that yet another shock to airlines – hard on the heels of the Covid crisis from which passenger numbers in Europe have only just recovered – would cause deep concern at Ryanair, the continent's largest carrier by passenger numbers. But that perhaps underestimates the airline's opportunistic nature, and its leadership. As it revealed annual results on 18 May, Ryanair's tone was unmistakably bullish. Will the Iran war knock back 2026/27 profits? It might, a bit, the airline conceded. Will it raise costs? Also yes. But will it also advance the continent's path towards consolidation, hurting weaker players in a process that will leave stronger airlines – namely Ryanair – with a larger slice of the market? Yes again. Ryanair's confidence reflects its position in the European airline landscape. As finance chief Neil Sorahan pointed out several times, the airline was poised to pay down its final €1.2 billion ($1.4 billion) bond and be effectively debt-free. "This financial strength further widens the cost gap between Ryanair and our competitors," the airline asserts, adding that its new Boeing 737 Max 10s will arrive fully owned and unencumbered. "The business is in good shape. The balance sheet is rock solid," Sorahan told investors. Wizz Air, Ryanair's chief rival in eastern and central Europe, remains heavily impacted by the GTF engine issue which is still grounding around a tenth of its fleet. Speaking to investors, O'Leary was uncharacteristically hesitant to list what he saw as Wizz’s faults, or to question its prospects, perhaps heedful of press reports that Wizz had considered legal action over speculation about its financial position. But O'Leary did make clear that he expected Ryanair to emerge from the latest crisis less bruised than any other airline. The actual results that Ryanair had turned in – including a 40% rise in post-tax profit – were barely mentioned by O'Leary, though he did say that the impact of the Middle East war was to "overwrite" a good set of figures. But he was far more interested in looking forwards. Ryanair has, in his words, adopted a highly conservative stance in its official outlook, projecting that fares would be mid-single digits lower year on year in the first quarter, and weaker across the full year. Unit costs could meanwhile rise by mid-single digits, the airline warned. But in his commentary, O'Leary said the performance should be much better than this. The carrier is 80% hedged for the year – against the jet fuel price, which, as Sorahan observes, is "exactly what goes into the tank". The many airlines that are hedged against Brent crude, which has risen much less than kerosene, will be envious. "Lots [of airlines in Europe] are poorly hedged," adds O'Leary. Should the Strait of Hormuz remain closed for the summer – which he does not expect – Ryanair's unit costs would rise around 5%. But "if that happens, there will be just a few airlines left in Europe", he adds. Even without that scenario, rivals have begun pulling back capacity amid strained margins, effectively ceding ground to Ryanair. "We are not cutting capacity," stressed O'Leary. Ryanair will instead be "taking advantage of our fuel hedging position" to grow its market share. The core message was: expect us to grow strongly. The immediate impact of the Iran war may have been to weaken pricing as airlines looked to stimulate demand, but O'Leary expects it to feed through to higher fares once it is resolved and consumer booking trends return to normal. For now, travellers are buying closer in, as they tend to during crises, but demand is still buoyant. April was fine. O'Leary described close-in sales as "strong and stronger". If the trends continue through June, July and August, "then we think pricing moves from being [its pre-crisis expectation of higher] to flattish. We don't think it goes negative," says O'Leary, though he adds: "I could be wrong if there are unexpected developments." Thus far, the airline has shaved around 1% off its prices for peak summer. As demonstrated during the pandemic, Ryanair sees price stimulation as a means of gaining market share under a "load-active/yield passive" strategy, when the need arises. Longer-term, deliveries of 737 Max 10s, which, as O'Leary revealed during the conference call, are scheduled to begin in spring 2027 and be completed by March 2034, will "transform" the airline's economics, burning a fifth less fuel while increasing passenger numbers by a corresponding amount, he foresees. As a result of all this, there is "nothing but upside in our trading outlook, and nothing but upside in our share price", O'Leary asserts. The markets, which had initially marked down the stock on worries about softer pricing, responded by pushing the stock sharply higher. That still leaves it down by around a quarter versus the start of the year, with the wider sector having been hammered by the conflict in the Middle East. Of particular interest to investors is the airline's long-stated €12-14 per-passenger profit target. Although the Iran war makes this more difficult to achieve in the short term, O'Leary believes progress could accelerate if competitors got hit harder. Essentially, he is saying that the crisis will probably hurt Ryanair a little bit but its competitors far, far more. And the Irish carrier – with its bulletproof balance sheet, steady capacity growth and strong hedged position – expects to be the main one to benefit.