unaligned

Low-cost carrier Wizz Air is to open a new base at Gatwick airport and called on regulators to let “proper commercial forces prevail” to allow it to pick up more slots from its rivals as airlines lurch through the effects of the pandemic. The Hungarian carrier will launch four new routes from Gatwick by late October as it defies an industry-wide downturn to expand its operations in the UK. Wizz sees the crisis in air travel as an opportunity to grab market share from less nimble competitors with higher costs who are looking to conserve cash until passenger demand recovers. But the strategy comes at a moment of jeopardy for the European aviation industry, which is struggling to chart a path through a new wave of uncertainty thrown up by rising case numbers across many parts of the region. The airline has previously operated a limited schedule of flights to and from Gatwick, but the creation of a base will allow it to operate aircraft and crew from south London permanently for the first time as it shifts resources that otherwise would have been grounded by the drop-off in air travel.  While Wizz’s current expansion plans at Gatwick are modest Owain Jones, UK managing director at Wizz Air, said the creation of a permanent base would be a bulwark to allow it to increase its capacity at the airport if slots became available.<br/>

Sweden's Debt Office has refused a state credit guarantee for Norwegian Air, it said on Tuesday, renewing liquidity concerns for the struggling airline amid the coronavirus crisis. Norwegian Air was already facing financial difficulties before the pandemic hit and Sweden has stipulated its credit guarantees, under a programme mitigating the impact of COVID-19, can only be granted to airlines assessed to have been financially viable on the last day of 2019. "The Debt Office’s assessment in regard to Norwegian is that as of 31 December 2019 there was a very high risk that Norwegian would not be able to fulfil its financial commitments and that the company was not deemed capable then of managing further indebtedness," it said. "Therefore, the company has not been considered financially viable as of 31 December 2019. Accordingly, Norwegian’s application has been denied." A Norwegian Air spokesman said it was difficult to understand the decision when Sweden had granted a loan guarantee to main rival SAS.<br/>

Bain Capital has agreed to pay A$750m ($543m) should it fail to buy Virgin Australia Holdings, an unusually high break fee that helped win over the collapsed airline’s administrator. The US private equity firm made the pledge “to underpin its commitment to the transaction,” it said. Administrator Deloitte agreed to sell the struggling airline to Bain in June, though the deal’s terms weren’t made public. While Deloitte hasn’t disclosed the potential fee, it told Virgin’s creditors last week that Bain had provided a “substantial financial guarantee to secure transaction certainty.” Coronavirus flareups and second-round lockdowns have made the aviation market in Australia and the rest of the world even bleaker since Bain agreed to buy Virgin. The break fee is designed to lock in the buyout firm even as the airline’s prospects darken. Virgin’s creditors are due to vote on Bain’s takeover on Sept. 4. The potential penalty is a “strong impetus” for the firm to complete the deal “irrespective of operational challenges caused by Covid-19,” Deloitte told creditors, without specifying the sum.<br/>

The industry’s recovery from the coronavirus crisis rests squarely on a vaccine, as a sustained policy of social distancing would be an “economic catastrophe”, says Emirates president Tim Clark. But he is “100% confident” that one will be found. Clark said that “nobody wants” to operate with social distancing and “if we get the vaccine none of this is going to be required. If you don’t get the vaccine, then what you see today is what you see today going forward. Sorry, it’s as brutal as that.” Clark says that social distancing on aircraft is “an economic catastrophe. Airline business models are not built on 50% seat factors for no segment of the business. So that can’t work.” He adds that airports are like “compression pressure cookers” and not designed to function with social distancing, so could not operate longer term without “destroying the whole business”. Clark believes that if the current operating environment is sustained then passengers would only travel if they had to, rather than wanting to. “And that virtually eliminates 90% of your market…’people wanting to travel’ is those segments that drive all our businesses in the world today,” he says. Clark says that a vaccine “must be found” for the industry to recover fully but is “100% confident” that one will be. <br/>

Breeze Airways, the start-up passenger carrier headed by serial aviation entrepreneur David Neeleman, has abandoned its application to acquire the certificate of now-defunct Compass Airlines. The move comes just six weeks after Breeze applied for the certificate with the US DoT. Last week, pilot union Air Line Pilots Association, International (ALPA) filed a document with the DoT requesting that Breeze also take over Compass pilots’ union contracts. It is unclear if this contributed to Breeze withdrawing its application. “Compass Airlines, LLC and Breeze Aviation Group, Inc jointly provide notice to the Department of Transportation and all interested parties that they are withdrawing their joint application for the transfer of certificate authority,” says Breeze in a filing published on 18 August. The one-sentence document does not provide additional information.<br/>

European regulators have backed a Portuguese E133m support package to help Azores carrier SATA Air Acores through the coronavirus crisis, but is to probe an earlier capital increase. In approving the package, the EC today says this aid will allow the company to fulfil its public-service obligations and ensure connectivity of the Azores outermost region. Portugal notified the Commission of its intention to grant urgent support to SATA, with the aim of providing the company with sufficient resources to address its ”urgent and immediate liquidity needs” until the end of January 2021. Because SATA was already facing financial difficulties prior to the pandemic, the airline was not eligible for support under the Commission’s temporary relaxation of its state aide framework under which it has approved various other European government state support moves. Instead, it considered the package under its existing state aid rules. It judged that a public guarantee of up to E133m on a temporary loan strictly relates to urgent liquidity linked to the provision of essential services by SATA and was necessary to allow the company to continue operations. But regulators will open an investigation into earlier public-support measures for the carrier. That relates to a move in 2017 by the Autonomous Region of Azores, which wholly owns SATA, to approve three capital increases to partly address the company’s capital shortfalls.<br/>