sky

Delta raised $9b in the industry’s largest debt sale ever, tapping into investors’ rampant demand for yield while seeking to survive a slowdown that’s causing it to burn through $27m a day. The bonds, secured by Delta’s frequent-flier program, carry high-grade ratings, but some yield as much as 4.75%, according to people with knowledge of the matter. That’s more than double the average 2.31% yield on the lowest-rated unsecured investment-grade bonds, even with a higher duration, according to a Bloomberg Barclays index. The prospective payout was so alluring to investors that they placed three times as many orders as bonds and loans available for sale. That allowed Delta to boost the size of the deal from an original $6.5b -- which the company said already would’ve been enough to rule out the need for additional federal aid. The carrier is taking advantage of a wide-open market for corporate debt that’s seen both record supply and demand spurred by an accommodative Federal Reserve. As of Wednesday morning, investors had placed about $16b of orders for the bonds and around $10b for the loan, said the people. <br/>

Russia plans to tap its rainy day fund to buy into an additional share offering by state-controlled airline Aeroflot, Finance Minister Anton Siluanov said Wednesday. Russia’s biggest airline is preparing to issue up to 1.7b new shares in the secondary share offering (SPO), pencilled in for the next month. The state plans to buy part of the new share issue as it aims to retain at least its existing 51.2% stake in Aeroflot, with the Russian Direct Investment Fund (RDIF) and state-controlled bank VTB also taking part, sources have said. Siluanov, speaking to reporters on Wednesday, said the state would use the National Wealth Fund (NWF) to buy into the SPO.<br/>

The Kenyan lawyers’ lobby faulted the process of the proposed restructuring of the nation’s aviation industry, in which the government seeks to take full control of Kenya Airways. The government’s plan to have units including the airline and the Kenya Airports Authority under a holding entity, could be delayed if lawmakers heed to the advice of the Law Society of Kenya and reject the National Aviation Management Bill. The LSK raised 12 issues including inconsistencies with an earlier private investment proposal, inefficiencies of government enterprises, labor concerns and a potential breach of the competition law. The government had a target to conclude legislation on the plan this month. The draft legislation has “significant legal issues,” LSK President Nelson Havi said in a statement published in the Daily Nation newspaper. “The bill should be withdrawn to enable necessary preceding processes.” Kenya wants to seize control of the carrier it partially owns in a bid to develop Nairobi into an aviation hub to rival that of neighboring Ethiopia, a major transit point for passengers from Africa to Asia, Middle East and European destinations. The government plans to buy out Kenya Airways shareholder Air France-KLM, which owns a 7.76% stake, and a group of lenders who swapped their debt for equity as part of an earlier restructuring.<br/>

Garuda Indonesia is not planning to buy any new aircraft this year as the COVID-19 crisis has strained the company’s finances, the airline’s top executive has said. Garuda president director Irfan Setiaputra said Thursday that much of the company’s fleet was still grounded because of falling passenger numbers during the ongoing health crisis. “What is the world going to say if we have a new aircraft while there are many aircraft parked on the ground? It doesn’t make any sense,” he said, adding that the airline’s fleet was still relatively new. “However, nobody knows how things are going to develop next year.” Garuda Indonesia Group, which includes low-cost carrier Citilink, own 20 aircraft and is leasing 190 aircraft with an average age of 7.8 years, according to the company’s data. Garuda’s average aircraft utilization rate, which determines fleet productivity, fell to around 4 hours and 19 minutes per day in July, down from 8 hours and 14 minutes a year earlier, according to the company’s monthly operational report. To further slash the company’s expenditure, Irfan said, Garuda was renegotiating aircraft leasing contracts with lessors. “When the pandemic hit, we contacted our lessors and renegotiated our leasing schemes, debt restructuration, leasing cost restructuration and [more],” he said, adding that the renegotiation efforts had shown positive progress. “Some of the lessors have verbally agreed [to the renegotiated terms]. We only need to write the legal papers and we can execute it once our payment arrears are paid.” <br/>

Vietnam Airlines plans to operate several one-way flights to Japan later this month with Boeing 787s. The flights will depart Hanoi at 23:45 on 18, 25 and 30 September. Flights from Ho Chi Minh City to Narita will depart at 00:00 on 30 September. Cirium fleets data show the airline has 11 787-9s and four of the larger -10 variant. It did not specify which variant would be used for these flights and has not yet responded to Cirium’s request for comment. The Vietnamese flag carrier says the flights will “serve the increasing needs of passengers wishing to work, study and stay in Japan”. All crew members of the flights will undergo quarantine upon flight completion, the airline says, and the aircraft will be “thoroughly sprayed with disinfectants meeting international health standards”. Tickets for the flights have been on sale since 11 September and start from D10.2 million ($439). The airline says it plans to resume return flights from Japan to Vietnam, pending developments with Covid-19 and approval from the relevant authorities. It is also working on a plan to resume flights to South Korea, China, Taiwan, Laos, and Cambodia in the near future. “The re-institution of regular international flights is a positive signal for Vietnam as well as Vietnam Airlines as the pandemic is showing signs of being under control in many countries,” the airline states.<br/>