Keeping Aircraft in the Air

Larry FenelonPartner, Leman Solicitors

There is, of course, a lot of negative news around aviation at the moment which is hardly surprising. Covid is on the rise again, in Europe at least. Lufthansa now forecasts it will only be operating at around 20-30% capacity for the remainder of this year (2020). That is quite a statistic.

However, we are seeing some brightness amongst the storm clouds. The successful restructure and re-financing of Virgin Atlantic is a positive, albeit tempered by the huge job losses needed to get there. At least it lives to fight another day.

There seems to be better news from the New York bankruptcy courts this week in respect of LATAM Airlines, the largest airline failure to date in the current crisis. Its latest rescue package proposal appears to have been accepted after the rejection earlier this month of a scheme that essentially pushed certain creditors into subscribing for shares in the company. That element has now been dropped and the reported $2.2bn re-financing of the airline can now begin.

Perhaps this is as good as it gets for now. Despite painful restructuring processes, creditors and financiers are (for now at least) still willing to invest in aviation and stick with the industry to see it to better times ahead. Let’s hope that continues and the difficult winter season can be navigated to a brighter 2021.