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A Number Of Airline Aircraft Acquisition Deals Announced

Published on Aug 5 2021 9:12 AM in General Industry tagged: Jet2 / Condor / Gol / Norse Atlantic Airways / Bombardier

A Number Of Airline Aircraft Acquisition Deals Announced

A number of airline aircraft acquisition deals have been announced.

Jet2 Eyes Switch To Airbus In New Plane Talks

British airline and holiday group Jet2 is in advanced talks to buy dozens of narrowbody passenger jets, with Europe's Airbus seen as the front-runner in a potential blow to Jet2's current supplier Boeing, industry sources have said.

If confirmed, the unusual decision by a leisure carrier to switch suppliers could involve the purchase of around 50 Airbus jets, worth some $5 billion before widespread airline industry discounts of at least 50%, one of the sources told Reuters.

"As a successful airline and tour operator we are constantly in discussion with different aircraft manufacturers; this is part of our normal course of business," a Jet2 spokesperson said.

Airbus and Boeing both declined comment.

Speaking on condition of anonymity, the sources cautioned a deal would depend on the outcome of talks that are ongoing amid fierce planemaker competition in the wake of the coronavirus travel slump, but said Airbus was seen as current front-runner.

One of the sources however said it was too early to speculate on a deal with the European manufacturer.

Jet2's potential order comes after a difficult 16 months for the UK travel industry.

Pandemic travel restrictions have lasted longer in Britain than the rest of Europe and while demand has started to recover, fears over last-minute rule changes mean bookings this summer will be muted compared with expectations earlier in the year.

Jet2 raised £422 million through a share issue in February which it said was to help it ride out the COVID-19 pandemic.

A year of booking surges followed by waves of holiday cancellations as restrictions change has, however, helped boost the popularity of package holidays, as customers see the benefit of an operator reorganising their trip for them.

Pioneered in Britain in the 1950s, package holidays saw millions of Britons transported to Spain and other Mediterranean sunspots with all-in deals involving flights and hotels, but lost ground to low-cost airlines with the arrival of the Internet.

Leeds-based Jet2 has roots in a freight carrier that flew flowers to UK markets from the Channel Islands. Former British aerobatics champion Philip Meeson bought the firm and transformed it into an airline flying passengers from 2003.

Its fleet decisions have captured attention because it remains one of the few medium-haul airlines yet to make a choice between the latest generation of narrowbody jets, the 150-seat A320neo or larger A321neo, and the Boeing 737 MAX.

It has so far purchased 34 Boeing 737-800 aircraft which it snapped up at a time when analysts said bargains were available towards the end of that model's production cycle from 2015. Included leased jets, it says it operates some 90 aircraft.

Amid a near-dearth of post-crisis activity outside the United States, Boeing is fighting hard to shore up demand for its 737 MAX following a safety grounding and could yet try to head off a deal between Jet2 and Airbus, the sources said.

The scale of potential industry discounts emerged this week when Corriere della Sera reported leaked details of proposals to supply jets to Italian airline ITA, where Airbus and Boeing are competing hard for business.

The Italian newspaper outlined detailed offers from Airbus including $49 million for A320neos. The most recent published list price for the jet was $111 million in 2018, implying a discount of 56%. Sources say negotiated prices vary and depend on the size of the order, timing and aircraft configuration.

Both Boeing and Airbus regularly accuse each other of slashing prices to win deals.

Airbus nonetheless argues that prices for the larger A321neo model, which is in high demand and until recently faced muted competition from Boeing, have held up well during the crisis.

German Airline Condor To Acquire Airbus A330neo Jets

German leisure airline Condor is acquiring 16 Airbus A330neo jets to replace a wide-bodied fleet of Boeing 767 aircraft, accounting for almost half of a backlog of planes whose debt-strapped buyers were unable to take delivery.

"The first aircraft is expected in autumn 2022, whilst the replacement of the entire long-haul fleet is scheduled to be completed by mid-2024," Condor said on its website.

Airbus CEO Guillaume Faury told reporters seven of the jets would be supplied directly by the planemaker, with the rest to be provided by leasing companies.

The deal was a day after EU regulators approved €525.3 million in German aid for Condor that will help it restructure after an earlier decision was annulled by a European court.

Condor has a mixed fleet of planes from Airbus and Boeing, but relies solely on its ageing 767s for long-haul needs.

The A330neo is an upgraded version of the A330 passenger plane with recent Rolls-Royce engines. Its closest competitor in typical airline competitions is seen as the 787-10 variant of the newer Boeing 787 Dreamliner family.

The Condor deal provides homes for A330neo jets earmarked for airlines whose finances have worsened during the pandemic.

That means they are likely to have been sold at a steeper than usual discounts, industry sources said, mirroring recent moves by Boeing to find homes for some unsold 737 MAX jets.

Three of the seven so-called "white tail" jets, or unsold A330neos left without the livery of a purchasing airline, were originally allocated to Indonesia's Garuda and four to AirAsia X of Malaysia.

Airbus declined comment on terms of the deal.

Budget Carrier Norse Atlantic Adds Six Dreamliner Aircraft

Norway's Norse Atlantic <NORSE-ME.OL>, a recently formed long-haul airline that plans to challenge established players on routes between Europe and the United States, has said that it has agreed to lease six aircraft from BOC Aviation.

The leasing agreement expands the budget carrier's fleet to 15 widebody jets, all Boeing 787 Dreamliners, as Norse seeks to fill the void left by Norwegian Air's exit from transatlantic routes.

The global airlines industry has experienced heavy losses during the coronavirus pandemic, leaving a glut of airplanes available for those launching new carriers.

Norse has said that it could offer its first flights by the end of 2021, depending on how the pandemic and travel restrictions develop.

"We very much look forward to welcoming customers on both sides of the Atlantic on board these state-of-the-art aircraft as soon as demand for transatlantic travel resumes," Norse founder and CEO Bjoern Tore Larsen said in a statement.

The leasing contract with BOC is for around 16 years for each of the six aircraft, Norse said. It comes on top of nine jets leased from Ireland's AerCap for between eight and 12 years each.

"The lease is at attractive rates and payment terms, allowing the company a flexible implementation during start-up of its operation," Norse said of the BOC deal.

The airline plans to fly from US destinations such as New York, Los Angeles and Miami to European cities including London, Paris and Oslo. It has said that it will seek to expand its business based on demand and profitability, and could eventually also include destinations in Asia.

Norwegian Air, which came close to collapse when the coronavirus pandemic broke out in 2020, underwent a financial restructuring earlier this year, emerging as a European-only airline.

Brazil's Gol To Buy 28 Boeing 737 MAX In Fleet Renewal

Brazil's Gol Linhas Aéreas Inteligentes has signed an agreement to buy 28 Boeing 737 MAX-8 aircraft that will replace 23 of its 737-800 NGs through the end of 2022, the airline has said in a securities filing.

Gol said the new planes will reduce unit costs by 8% next year and are expected to generate about $200 million in cash equity gains.

"We've concluded our multi-year planning and, combined with the return of the company's sustainable growth rate via the take-in of the minority interest in our loyalty program, we will now have more cash flow available for investment in aircraft acquisitions," said Gol chief financial officer Richard Lark.

Gol is Boeing's main South American customer and one of the largest customers for the 737 aircraft in the world, the airline said.

"Gol has done a remarkable job of managing the impacts from the COVID-19 pandemic and is well-positioned to return to its growth trajectory," said Ricardo Cavero, Boeing vice president of sales for Latin America and the Caribbean.

Bombardier Lifts Forecast For Business Jet Deliveries As Demand Rebounds

Meanwhile, Bombardier Inc has raised its full-year estimates for revenue and aircraft deliveries, helped by higher business jet traffic and demand for planes after the pandemic sapped orders last year.

The plane maker also said it would use less free cash in 2021 than previously expected, after beating analysts' estimates for quarterly revenues on higher deliveries and demand for aftermarket services.

According to FlightAware data, business jet flights were up 23% in the week-beginning July 21 over 2019 levels in the United States, the world's largest market for corporate aviation.

Rivals Textron and General Dynamics Corp's Gulfstream Aerospace are raising production to meet higher demand.

Free cash flow usage for 2021, a metric closely watched by investors, is now expected to be better than $300 million, compared with $500 million. Bombardier is forecasting 120 business jet deliveries in 2021, up from 110.

Full-year revenue is expected to exceed $5.8 billion, up from more than $5.6 billion.

Business jet revenue for the three months ending June 30 jumped 50% to $1.5 billion, compared with the $1.3 billion that analysts were expecting, according to Refinitiv.

But Montreal-based Bombardier posted an adjusted net loss of $137 million, or 6 cents per share, for the second quarter, compared with a loss of $248 million, or 11 cents, a year earlier.

Bombardier also disclosed that the Royal Canadian Mounted Police would join a global investigation into suspected bribery related to decade-old sales of company jets to Garuda Indonesia .

Bombardier, the latest aerospace group to face scrutiny over past deals, has previously said the Department of Justice and Britain's Serious Fraud Office are investigating the acquisition and lease of its CRJ1000 aircraft to the airline between 2011 and 2012.

Bombardier is cooperating "with all inquiring authorities," a spokesperson said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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