United pledged 352 aircraft, 99 engines and a host of spare parts to investors to refinance emergency loans taken out when the pandemic struck this year, after a similar deal failed to get off the ground in May. The $3b fundraising, led by Goldman Sachs, drew almost twice the investor orders for the seven-year bond than was on offer. The borrowing was finalised on Tuesday with an interest rate of almost 5.9%, according to people familiar with the deal. The borrowing costs are dramatically lower than what United had almost secured in May, when the US airline struggled to find willing lenders even as it offered to pay 10% a year in interest. Investors had balked at the 19-year average age of the planes United had offered as collateral at the time. The new bond includes United aircraft as collateral as well as its spare engines and parts, which were seen as more essential to the business than the old planes it had previously pledged. The planes, parts and engines were packaged together in a so-called enhanced equipment trust certificate. The trust takes possession of the assets until United repays the borrowing, offering lenders stronger protections. Goldman has also provided a liquidity line to cover interest expenses for 18 months if United runs into financial difficulty. Credit rating agencies Moody’s and S&P Global both gave the deal an investment-grade rating — an improvement from the junk label the May borrowing had been awarded. Roger King, an analyst at CreditSights, said United had thrown the “kitchen sink” at investors to secure the $3bn. “This deal was rejected at 10% and now it’s being accepted around 6%. It’s pretty amazing,” King said. “It’s an amazing feat of financial engineering.”<br/>
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Lufthansa warned of a worsening outlook on Tuesday, despite delivering better than expected results, in part due to a modest surge in demand for flights over the summer. The airline’s shares rose 5% to E8.41 in Frankfurt as it recorded losses of almost E1.3b in the three months to the end of September. But the Frankfurt-based carrier said that for the next few months, it would offer only a quarter of the flights compared with the same period last year, due to the resurgence of coronavirus in many countries. The group, which received a E9b bailout from Angela Merkel’s government in June, had previously said it was expecting to offer 50% of its pre-crisis capacity over the winter, allowing it to break even. Aircraft passenger numbers have slumped since the beginning of the year as pandemic curbs have grounded flights around the globe. This year, Lufthansa, which includes brands such as Austrian, Brussels, Swiss and Eurowings airlines, has made an operating loss of more than E4b, compared with E1.7b in profits in the first nine months of 2019. The lower than expected Q3 losses were in part due to holidaymakers making the most of eased lockdowns, according to preliminary estimates released by the company on Tuesday. “Payments of E2b for corona-related flight cancellations were partly offset in the third quarter by cash inflows from the expansion of flight activities in July and August,” the company said. “The group also benefited from strict working capital management and the postponement of tax payments.” Helped by bailouts from Germany and Switzerland, Lufthansa said it had roughly E10b in liquidity, and was “also in a position to withstand further burdens from the coronavirus pandemic”. <br/>
Singapore Airlines will restart 19-hour non-stop flights to New York next month, betting that demand will recover as the coronavirus pandemic eases in its home country. The airline will use its Airbus SE A350 aircraft for the world’s longest flight, with three weekly services starting Nov. 9 from Changi Airport to John F. Kennedy International, according to a statement from the carrier Tuesday. Until March 23, it operated non-stop flights to Newark Liberty International in New Jersey and still offers direct services to Los Angeles. Singapore is looking at ways to open its borders to help the aviation and tourism industries decimated by the outbreak. The city-state has agreed with Hong Kong to allow their residents to fly between the financial hubs as the two cities don’t have a domestic market to fall back on. Singapore has made no such arrangements with the US though. “Despite the challenging times for the airline industry, there are some early signs of optimism about a recovery in air travel,” said Lee Lik Hsin, executive VP commercial. “We will continue to ramp up existing services and reinstate other points as the demand for both passenger and cargo services return.”<br/>