Ratings agency Moody's has downgraded the debt of IAG and its subsidiary British Airways, citing the slow pace of airline recovery in Europe. Both organisations' family corporate ratings were lowered from Ba2 to Ba1, with the outlook remaining negative. Moody's also notes the organisations' "large exposure to long haul, cross-border and corporate travel which is expected to remain weaker than the industry as a whole". Despite a proposed equity rights issue that is credit positive for IAG, "liquidity headroom remains a consideration if wider coronavirus outbreaks and extensive travel restrictions and quarantine measures inhibit meaningful recovery", Moody's says.. The ratings agency expects IAG's increasing debt burden to weigh on a "slow recovery", limiting the airline's ability to recover its balance sheet over the next two to three years. Significant execution risks remain as the company looks to restructure and cut costs, although the agency notes IAG's strong track record in achieving such programmes. IAG has proposed an equity rights issue to raise up to €2.75 billion ($3.21 billion) that will be voted on during an annual shareholder meeting in Madrid today. The equity issuance is supported by an "irrevocable commitment" from Qatar Airways, which owns a 25.1% equity stake in IAG. The company has also received £750 million ($967 million) from American Express for the renewal of IAG's global partnership and an advance sale of air miles. Moody's believes these funds will support IAG's operations for around 500 days if demand does not improve from estimated levels in the third quarter 2020. "There is a high degree of uncertainty in this estimate, however Moody's considers that the company's liquidity is weaker compared than similarly Ba-rated airlines," it states. "Nevertheless, the company has further levers to generate additional liquidity including through its remaining unencumbered aircraft fleet. Moody's also notes that the proposed equity issuance will improve IAG's ability to support British Airways' balance sheet and help the company to restore its leverage metrics." The ratings agency notes that British Airways may be forced to adjust its business model away from the previously lucrative business and corporate travel markets to leisure, and as a result "it may face challenges to return to prior levels of profitability". As well voting on the company's equity raise, shareholders at IAG's annual meeting are expected to approve Luis Gallego as group chief executive replacing Willie Walsh, whose departure was delayed from March in order to maintain continuity through the start of the coronavirus pandemic.

Source: Cirium

Boeing has found an additional 787 manufacturing problem that affects the aircraft’s horizontal stabilisers, following the recent disclosure of two other issues. The issue relates to extra force used when clamping together certain components, which could lead to an aging issue, says the airframer. “A nonconformance was discovered with Boeing Salt Lake’s production of 787 horizontal stabilisers,” it says. “During the build process, certain components were clamped together with greater force than specified by engineering, which could lead to premature aging of this part of the airplane. It is addressing the issue with aircraft still in the production process, and is checking to see if remedial work is required for in-service 787s. “This is not an immediate safety of flight issue as none of the airplanes in service are within a window where they could begin to experience this aging. Safety and quality are Boeing’s highest priorities. We have taken the appropriate steps to address this production issue and ensure that the requirements are clearly defined and understood.” The announcement follows the recent revelation of two separate manufacturing issues. One relates to shims of the incorrect size being installed on some aircraft. The other issue relates to some aircraft having areas of skin that fail to meet skin flatness specifications. While 787s that have just one of these issues can still operate, aircraft with both issues need to be grounded. As such, Boeing’s issued a grounding order related to eight 787 aircraft operated by Singapore Airlines, United Airlines, and Air Canada. All Nippon Airways also advised that one of its 787-10s was grounded at the behest of Boeing. The shim and flatness issues have also prompted the US Federal Aviation Administration to launch a probe into manufacturing issues at the airframer. Fleets data indicates that there are 740, 787s in service and 244 in storage. In addition, there are 526 orders for the widebody.

Source: Cirium

Airbus A220 operators are being instructed to modify drain tubing after an incident in which rainwater dripped into the avionics bay and tripped a circuit breaker during taxi, causing an engine to shut down. Rain had entered the aircraft through the main cabin entry door while it was open, according to Transport Canada. This caused drains to overflow and led to dripping on the forward avionics bay below. “Water ingress into the forward avionics bay could short-circuit the equipment in the area and lead to a loss of air-data sources,” says the regulator. This might result in a reduction in function and an increase in the crew’s workload, it adds. A220 operators are being ordered to modify the aircraft, within 12 months, by removing forward galley slotted drain covers, fitting solid blanking plates, and blocking drain tubing to prevent water travelling from the forward galley into the avionics bay. All A220s are fitted with Pratt & Whitney PW1500G geared turbofan engines.

Source: Cirium