MIAMI – Airbus has revealed it could lose more than US$5bn worth of aircraft orders if AirAsia X’s (D7) restructuring plan fails. It has also said easyJet (U2) will defer its deliveries over five years.
Through the debt restructuring scheme, the D7 defended its scheme from allegations made by key lessor BOC Aviation Limited (BOCA) that stated the airline favored Airbus and lacked a debt-to-equity swap offer for creditors. In December, Asia-Pacific Head of Region Anand Emmanuel Stanley mentioned a strong possibility Airbus would “suffer substantial losses and prejudice” from the end of purchase agreements.
Regarding the Airbus aircraft, Stanley said D7 had ordered seven built A330neo aircraft. As future deliveries go, the airline has 71 aircraft on order that might impact Airbus’s profitability if these are canceled. In total, D7’s debt with Airbus amounts to US$12bn, including pre-delivery payments for a committed purchase of 118 aircraft.
On its part, BOCA has said D7’s debt calculations should not include future debts, which are primarily owed to Airbus. Only Airbus alone holds about 75% of the total debt value needed to approve the restructuring. As response, D7 Senior Legal Counsel Shereen Ee Swee Ying denied that the calculations were unfair. Additionally, the carrier is also considering termination compensation for BOCA until the end of its lease period.
So far, BOCA proposed a debt-to-equity conversion for D7 that, according to Ee, would run counter to restructuring the airline as a way to raise fresh funds. While the airline failed to get more state support in November, it did secure shareholders’ vote last week for its rescue plan. If the process to maintain the business afloat fails, D7 is considering facing liquidation, leaving creditors and shareholders empty-handed.
As U2 is facing some restrictions in finances, it has agreed with Airbus to defer the aircraft deliveries. Thus, 22 aircraft will be deferred from 2022-2024 to 2027-2028. Additionally, 15 delivery dates during 2022 and 2024 will be moved to more closely match forecast seasonal requirements.
As an alternative, the low-cost carrier could have decided to not take up seven aircraft scheduled for delivery between 2022 and 2026 until the end of this year. Instead, it agreed with the manufacturer to reallocate the aircraft to which this option applies. On those mentioned seven aircraft, the delivery will occur between 2025 and 2026 with an amended option deadline for December 2021.
easyJet will not take deliveries in 2021 but will receive eight aircraft in 2022, seven in 2023 and 18 in 2024. The carrier has also retained options to increase its deliveries in 2023 to 30 aircraft.
Back to airline’s balance sheet, U2 has asked shareholders for cash and has sold several aircraft to boost its finances to survive throughout and beyond the pandemic. With the aircraft deferments, U2 expects to quickly flex its fleet size in response to customer demand during these uncertain times, said its CEO Johan Lundgren.
Featured photo: easyJet Airbus A320-214 reg. HB-JXF at Naples International Airport (NAP). Photo: Marco Macca – @aviator_ita