Air Canada plans to suspend all flights to the USA between 26 April and 22 May following an agreement between Ottowa and Washington, DC, to extend border restrictions already in place to slow the spread of coronavirus. The Canadian flag carrier disclosed the move on 21 April, adding that it is completing flights this week to repatriate people to their respective countries. The Montreal-based carrier reduced its transborder network to 11 US destinations from three Canadian hubs to facilitate these flights and to ship essential cargo. Air Canada's network after 22 May will depend on any travel restrictions between the two nations. Air Canada has also limited its domestic network from 62 airports to 40 through April. It has already reduced its overall capacity by 90% compared with April 2019. The company will announce its first quarter results on 4 May.

Source: Cirium

Ratings agencies have revised their views on Virgin Australia, expecting creditors to take a haircut on their debt after the airline entered voluntary administration. Virgin Australia, which has around A$5 billion ($3 billion) of net debt, appointed administrators on 21 April to try and restructure its finances so that it may emerge from the Covid-19 crisis. In response, S&P Global Ratings lowered its issuer credit rating on Virgin Australia from "CCC" to "CC" with a negative outlook. The related issuer ratings on the airline’s unsecured debt were lowered to from "CCC-" to "C". “We expect the proposed debt restructuring and recapitalisation process to constitute a default under our criteria because we expect that unsecured debt providers will be forced to accept less value for amounts owing under the terms of the existing secured debt facilities,” the ratings agency said in a report dated 21 April. It said the negative outlook on the company reflects its expectation that if the debt restructuring process is completed as anticipated, it will likely lower the issuer credit rating to "selective default" and the issue rating on the group’s unsecured debt to "default". On a positive note, it added: “However, we expect that a debt restructuring should facilitate a recapitalisation of the company, which should enable Virgin to emerge from the restructuring and continue as Australia’s second-largest domestic airline.” Virgin Australia and its administrator said on 21 April that they are hopeful the airline will emerge from the administration process in better shape, and Deloitte’s Vaughan Strawbridge stated that over 10 parties are interested in being a part of the restructuring. Moody’s, which had downgraded Virgin Australia’s corporate family rating from "B3" to "Caa1" on 17 April, said in a 21 April report that its ratings remain under review for further downgrade, pending the outcome of the voluntary administration process. The agency said in its latest report that Virgin Australia entering voluntary administration was in line with its base case assumption that any future steps taken to ensure the airline’s ongoing viability will result in economic loss to creditors and in particular to unsecured creditors. "The key issue for existing creditors will be the haircut they are requested to take in a restructure, relative to the risk of putting the company into liquidation with uncertain recovery prospects," it writes. In the 17 April report, Moody’s estimated that Virgin Australia had A$900 million of unrestricted cash but minimal availability under its credit facilities. Meanwhile, Fitch had downgraded the airline from "B-" to "CCC-" on 17 April due to the increasing uncertainty over whether the airline will be able to secure additional financing. The agency issued a further downgrade to "D" on 21 April, stating: "VAH's restructuring would need to result in the airline's profitability and cash generation improving in order to secure financing from a third party and enable the airline to continue as a going concern." It adds: "We believe that, in this case, the airline will focus on bringing back profitable routes and realigning its cost structure to its revenue base while in administration."

Source: Cirium

Scandinavian budget carrier Norwegian has confirmed that four subsidiaries which employ more than 4,000 pilots and cabin crew members in Denmark and Sweden have filed for bankruptcy. Norwegian's crew members in Scandinavia are employed by various subsidiaries of the company. Norway-based employees' salaries are covered by the country's government while they are furloughed, but the same is not true for crewmembers based in Denmark and Sweden, says the airline. As a result, it had "no choice but to apply for bankruptcy" for three subsidiaries in Denmark and one in Sweden. The move will affect 1,571 of Norwegian's pilots and 3,134 of its cabin crew. Some 700 pilots and 1,300 cabin crew based in Norway, France and Italy are unaffected, notes the airline. "We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark," states Norwegian's chief executive Jacob Schram. He adds: "It is heartbreaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy, and I'm truly sorry for the consequences this will have for our colleagues. We are working around the clock to get through this crisis and to return as a stronger Norwegian, with the goal of bringing as many colleagues back in the air as possible." Norwegian says the bankruptcy process for the four subsidiaries is being managed by the courts in their respective countries. The airline has also cancelled crew-provision agreements with subsidiaries employing crew based in the UK, Spain, Finland and the USA, prompting analysts to wonder whether it is retrenching to Norway. Credit Suisse writes that the airline's moves are "suggesting to us it may close its Gatwick/Spanish bases". Bernstein analyst Daniel Roeska described Norwegian on 14 April as being "at the end of the line" after it proposed converting debt to equity in order to qualify for state aid. He wrote that Oslo had an interest in keeping the airline alive to facilitate connectivity for its corporate sector, but asked whether the airline would "admit that the long-haul, low-cost experiment has failed and retreat back to its Nordic core".

Source: Cirium