Air Canada took a series of steps Monday that will reduce its debt by C$355m and cut its annual interest payments by $60m. Under the airline’s $1.25b refinancing plan, it will sell $200m worth of senior notes at 4.75%, due in 2023. It also secured commitments for a US$800m term loan and a US$300m revolving credit facility. Air Canada will use the proceeds of the debt sale, together with the term loan and $444m of cash to pay off all its outstanding senior secured notes as well as an outstanding US$300m term loan. Together, these transactions will reduce the company’s average cost of debt by 150 basis points to 4.49%. It will also increase the airline’s unencumbered assets by $650m to approximately $2b. Air Canada’s goal is to cut its unit costs by 21% by the end of 2018 compared to 2012 levels. <br/>
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Lufthansa Technik has started installing the latest Ka-band satellite technology as standard equipment on Lufthansa Group's entire Airbus A320 aircraft family fleet– approximately 300 aircraft -- bringing broadband communication to the airline’s short- and medium-haul flights, the company said Sept 26. The fleet will be fitted with the necessary antennae and routers in parallel in up to 10 production lines by spring 2018 at various LHT locations. LHT engineers have optimised the system installation procedure and minimised the required intervention in the aircraft structure. This allows the fastest possible integration even in large fleets - generally in 4 days per layover, LHT said. LHT holds Supplemental Type Certificates to install the system on Airbus A320s and A340s. <br/>
Lufthansa pulled a E500m (US$562m) debt sale Monday, in an unusual move that signals limits to the European Central Bank asset-buying program that has turbocharged Europe’s bond market. Lufthansa said it wouldn’t proceed with the bond placement because of unattractive pricing. A spokeswoman said the airline would “re-engage in the capital market at a later date.” The retreat is the first major misstep for a European blue chip company raising debt since the ECB announced in March that it would buy corporate bonds. That buying has helped push down yields across Europe, allowing companies to raise funds at ultralow rates and unleashing a flurry of debt issuance. A portfolio manager at Henderson Global Investors, said Lufthansa’s move showed investors still have price discipline despite the ECB’s huge buying spree. <br/>
Avianca Brasil is seeking to sell an ownership stake of as much as 20% for more than US$150m, said a person with direct knowledge of the matter. The carrier hired UBS Group to advise on the potential transaction and the sale process has started, said the person. A deal would give the winning bidder access to Avianca Brasil’s new fleet of 41 Airbus aircraft focused on serving business travellers. The airline was the only domestic carrier to increase revenue for each seat flown a kilometre this year, with the key industry gauge gaining almost 21% in the year through July. Avianca Brasil has 11% of the Brazilian market. The airline and Colombia’s Avianca Holdings are seeking separate international partners while maintaining a long-term goal of merging, Jose Efromovich said Sept 21. <br/>