Ryanair and Boeing break off Max 10 talks
September 07, 2021
Ryanair and Boeing have ended negotiations over a large follow-on order for 737 Max 10s, the two sides having been unable to reach an agreement on pricing. The low-cost carrier is currently integrating the first of a 210-strong order for Max 8200s into its fleet. It had received 12 of the jets by the first week of September. Another 55 are scheduled to join its fleet by the end of March and over 200 over the next five years, expanding the Ryanair fleet to over 600 aircraft capable of carrying over 200 million guests per year. As it plans an ambitious expansion programme in the years ahead, the airline has been in discussions for 10 months with Boeing for a large follow-on order for Max 10's. "However, last week it became clear that the pricing gap between the partners could not be closed and, accordingly, both sides have agreed to waste no more time on these negotiations," says Ryanair. Group chief executive Michael O'Leary states: "We are disappointed we couldn’t reach agreement with Boeing on a Max 10 order. However, Boeing have a more optimistic outlook on aircraft pricing than we do, and we have a disciplined track record of not paying high prices for aircraft. "We have a more than sufficient order pipeline to allow us to grow strongly over the next five years with a Boeing 737 fleet which will rise to over 600 aircraft and will enable Ryanair to capitalise on the extraordinary growth opportunities that are emerging all over Europe as the Continent recovers from the Covid pandemic." He continues: "We do not share Boeing’s optimistic pricing outlook, although this may explain why in recent weeks other large Boeing customers such as Delta and Jet2 have been placing new orders with Airbus rather than Boeing.” Speaking at a media briefing on 31 August, O'Leary said he would be surprised if a deal for Max 10s with Boeing would be reached this year but that he was "hopeful" of one in 2022. He indicated that Ryanair was looking at a Max 10 order of a similar size to its Max 8200 one, but that the number of aircraft would depend on price. "In an ideal world, if we could agree on pricing, I would certainly like to see Ryanair grow and expand at the rate of about 50 aircraft a year. So over a four- or five-year period, we should be looking at 200-250 aircraft." O'Leary sees Ryanair as being in a relatively strong position versus Boeing, based on the airframer's Max 10 order backlog. "If Boeing's orderbook takes off in the next 12-18 months, it will be less likely to have a Ryanair order… because Boeing recorded remarkably few orders for the aircraft, and they need a couple of large Max 10 orders."
KLM pulls US flights as Netherlands introduces quarantine rule
September 06, 2021
Travellers arriving in the Netherlands from the USA will be required to quarantine for 10 days from 4 September, regardless of their vaccination status. The Dutch government announced the change on 3 September, designating the USA, Israel, Kosovo, Montenegro and North Macedonia as "very high-risk areas" for Covid-19. From 4 September, travellers from these countries will only be allowed to enter the Netherlands if they are fully vaccinated, or if they are exempt from the European Union's entry ban. Even then, all arrivals must comply with a 10-day quarantine requirement. There is an opportunity to shorten the self-isolation period if a negative Covid-19 test is received on day five. KLM has described the Dutch government's decision as "a big step backwards". The Netherlands-based carrier says the new restrictions have "forced" it to remove planned flights from Amsterdam to Orlando, Miami and Las Vegas from its winter schedule until further notice. "Health and fighting Covid-19 are paramount but the measures taken must be effective and proportionate," says KLM. "It looks like other EU member states, such as Italy, France and Belgium, are not putting a triple lock on the door for travellers from the US." The change in the Netherlands follows Bulgaria's decision to ban travellers from the USA from entering the country after 1 September, regardless of vaccination status, unless they meet certain exemption criteria. On 30 August, the EU removed the USA from its list of countries for which restrictions on non-essential travel had been eased, along with Israel, Kosovo, Lebanon, Montenegro and North Macedonia. EU member states are not obliged to follow this recommendation and it remains to be seen whether other countries in the bloc follow the actions taken by the Netherlands and Bulgaria. IATA director general Willie Walsh described the EU's decision to remove the USA from its 'white list' as "disappointing", adding: "As governments rightly urge their populations to be vaccinated, governments need to be confident in the benefits they bring – including the freedom to travel. At a minimum, those who are fully vaccinated should be free to move without restriction." Most EU travellers are still barred from entering the USA.
Philippine Airlines files for Chapter 11 in New York
September 06, 2021
Philippine Airlines has filed for a pre-arranged restructuring under the US Chapter 11 process in the Southern District of New York with the view to "emerge as a leaner and better-capitalised airline". Philippine Airlines (PAL) is the only party included in the Chapter 11 filing, while PAL Holdings, which is listed on the Philippine Stock Exchange (PSE), and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 filing, according to a 6 September PSE filing. The airline will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation Act of 2010. PAL says it has entered into a "series of agreements" with "substantially all" of its lenders, lessors, aircraft and engine suppliers, as well as its majority shareholder to restructure and reorganise its finances. The restructuring plan, which is subject to court approval, provides over $2 billion in permanent balance sheet reductions from existing creditors and allows PAL to consensually contract fleet capacity by 25%, it adds. It also includes $505 million in long-term equity and debt financing from PAL’s majority shareholder and $150 million of additional debt financing from new investors. The debtor-in-possession (DIP) financing is split between a $250 million Tranche A and a $255 million Tranche B. The company will continue to operate flights "in the normal course of business in accordance with safety regulations" and expects to continue to meet its current financial obligations throughout the process to employees, customers, the government, as well as its lessors, lenders, suppliers, and other creditors. “We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world," states Lucio Tan, PAL's chairman and chief executive. "We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term." The Chapter 11 filing is being administered before Shelley Chapman, a federal bankruptcy judge for the Southern District of New York bankruptcy court. PAL's legal advisors are Debevoise & Plimpton, Norton Rose Fulbright US and Angara Abello Concepcion Regala & Cruz. Seabury Securities is its financial advisor and investment banker.