Collapsed UK regional operator Flybe’s administrators have been holding talks with parties interested in acquiring the business, with prospects potentially raised by success in retaining the company’s operating licence and slots. Flybe ceased operations in early March this year and is being overseen by four joint administrators. These administrators state that a sale of the business and certain assets “may be possible” and that “a number of parties” have shown interest in such a transaction – although they point out that a transaction would be “unlikely” to include sale of the company as a legal entity. “We continue to facilitate due diligence,” the administrators add, in a 2 October update. But they are withholding the identities of the parties, and not disclosing the nature of the assets involved, in order “not to prejudice” the negotiations. The administrators’ efforts to sell the company have received a lift after they won a legal tussle to retain the carrier’s operating licence – which is crucial to the airline’s retaining its airport slots. Slots are being considered as part of the business transactions under discussion. Flybe’s license had faced revocation by the UK Civil Aviation Authority and this decision was being appealed. But as the appeal was progressing, the onset of the pandemic led to amendment of European Union air transport legislation, and this changed the threshold test for assessing revocation of the operating license. The administrators successfully argued for a fresh assessment and, on 9 July, the CAA withdrew its revocation decision. In response, the administrators withdrew their appeal, and Flybe was permitted to keep its licence, subject to certain undertakings. Even with the licence retention, Flybe faces legal wrangle over the slots it held at London Heathrow. These slots were taken over by IAG, the parent of British Airways, after Flybe ceased operations, but the administrators are “challenging” this action. Flybe was granted grandfathering rights over the Heathrow slots by the European Commission on 4 August, the administrators state. “In light of the ongoing dispute with IAG, we are unable to comment further on the company’s prospects for realising value from this asset at present,” they add. Uncertainty also surrounds Flybe’s air operator’s certificate, which is subject to a separate revocation proposal and panel hearing from the CAA, on the grounds that the airline could no longer meet the regulatory requirements to hold the AOC. “We have argued that such a hearing should be delayed whilst there is an opportunity to financially reconstruct the company,” the administrators state, adding that no hearing date has been set.

Airbus’s A330 has become the first of the European airframer’s twin-aisle aircraft to reach 1,500 deliveries, a mark only previously achieved by two Boeing widebody models. Delta Air Lines received two A330-900s last month – on 21 and 23 September – which respectively represented the 1,500th and 1,501st A330s to be handed over. Only the Boeing 777, with 1,642 deliveries, and the 747 with 1,557 have previously reached the threshold. Of the first 1,500 A330s a total of 771 have been the A330-300 variant, followed by 643 A330-200s and 48 of the re-engined A330-900s. The remaining 38 are freighters, based on the -200 airframe. Fifty-eight A330s have been delivered to government or executive operators, with nearly 50 submitted for military tanker conversion. Airbus has also separately manufactured three modified A330-700L aircraft, better known as the BelugaXL transports, for its internal logistics arm. The third of these is to be “delivered soon”, says the airframer. Rolls-Royce’s Trent 700 engine has been the dominant powerplant on the earlier A330 variants, while its Trent 7000 is the exclusive engine on the A330neo. Air Inter became the first operator of the A330, in early 1994, and Airbus has taken 26 years to reach the 1,500th delivery.Although the first Boeing 777 was delivered a year after the initial A330, the US jet reached its 1,500th delivery in a shorter time, with the handover of a 777-300ER to United Airlines in mid-2017. Boeing delivered its 1,500th 747, a 747-8 variant, to Lufthansa in 2014 – some 44 years after the first entered service with Pan Am. Airbus says it intends to start delivering the first A330-800s, the latest version of the twinjet and the smaller variant of the A330neo, in “the coming weeks”. It has also newly secured certification for the highest-weight option of its A330-900, which has a maximum take-off weight of 251t, giving the type twice the 4,000nm range of the first 212t A330-300s. The airframer says the landmark delivery illustrates the “enduring qualities” of the twinjet’s original design, combined with subsequent enhancements and modifications to refine the aircraft’s aerodynamic and payload capabilities, fuel efficiency and interior configuration. “It was Airbus’ first long-range aircraft and the first programme to have an integrated final assembly facility with the [assembly line], the paint shop and cabin furnishing in the same place,” it adds. While monthly production has been trimmed to just two aircraft, as a result of the air transport downturn, Airbus still has over 300 A330s in its backlog, having secured orders for 1,818 aircraft.

Source: Cirium

Aviation's recovery from the Covid-19 crisis is more likely to be square-root-shaped than V-shaped, and it could take up to seven years for international airline traffic to regain pre-pandemic levels, according to Cowen analyst Helane Becker.
Addressing delegates at the virtual Airline Economics Growth Frontiers New York conference on 14 October, Becker said she expected it to take between five and seven years for international air traffic to reach 2019 levels. With the exception of China, where domestic traffic "appears to be back" to roughly where it was a year ago, it could take three to five years for domestic air transport markets to recover, Becker warns. "The number of people flying every day is akin to what it was 40 years ago," she says, although she adds that each of the US airlines covered by Cowen "has enough cash and liquidity to get through this winter". If an airline's cash position falls to $6-7 billion, "that's the level" at which it could file for bankruptcy protection, Becker suggests, but "I'm not sure that's the solution". Of the US majors that have reported their third-quarter earnings, Delta Air Lines ended September with $21.6 billion in liquidity while United's cash position stood at $19.4 billion. "We expect airlines to raise capital to repay loans," says Becker, as carriers "shift from survival to winning at recovery". However, "it's not going to be a V-shaped recovery – ours is going to look more like a square root". The Cowen analyst expects "widespread deferrals" globally and a continued shedding of older, less-efficient aircraft. "Airlines are looking at this as an opportunity to eliminate older aircraft. They can do a decade's worth of retirements in a year," she says. In addition to deferrals, lessors could see more requests for "less attractive" deals as airlines around the world try to stay afloat until demand begins to return. "Lots of airlines won't have enough money to get through the winter and we're seeing some airlines shift to power-by-the-hour leases, which are less attractive," says Becker. Aeromexico, for instance, last month won bankruptcy-court approval to enter into by-the-hour agreements with 27 lessors covering 82 aircraft and 14 spare engines. Similarly, the Indonesia's Lion Group – whose airlines include Lion Air, Thai Lion Air, Malindo Air, Wings Air and Batik Air – has approached its lessors to ask them to agree to by-the-hour agreements for a duration of 24 months. Despite the long, slow recovery and possible airline failures along the way, Becker is optimistic for the future, predicting that "passengers will learn to live with whatever changes result from this pandemic", in the same way that people adjusted to the extra layers of airport security that followed the 9/11 terrorist attacks. "We will recover from this; it's just going to take a few years," she says. "I'm hopeful that 2021 is going to be a better year."

Source: Cirium