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Latam Airlines Nears Chapter 11 Deal With Creditors Amid Rival’s Merger Push

The Chilean airline is close to a restructuring deal to remain a stand-alone company after bankruptcy, as rival Azul tries to build creditor support for a tie-up

Latam Airlines Group SA is close to launching a chapter 11 exit strategy backed by some unsecured creditors as it vies to fend off a competitor’s efforts to build support for a proposed business combination, people familiar with the matter said.

The Chilean airline is nearing a restructuring deal with large unsecured creditors and certain shareholders that revolves around an equity sale to recapitalize the business and ease an exit from bankruptcy, according to the people familiar with the matter.

Latam’s plan, if approved, would also fend off merger overtures from Brazilian peer Azul Linhas Aéreas Brasileiras SA, which has been pushing to combine the two companies. Azul isn’t giving up and has been seeking buy-in from Latam bondholders for an alternative restructuring premised on a tie-up, people familiar with the matter said.

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Private Flying Takes Off, Boosting Demand for Business Jets

Some well-heeled, would-be private-jet fliers are being turned away as industry booms

A boom in private flying is helping revive business-jet sales, but it is also challenging charter operators who are scrambling to meet the holiday-travel rush.

After a multiyear slump, flying by private jet is soaring again. The number of flights in the U.S. over the Thanksgiving travel period is forecast to be up as much as 10% from 2019, according to WingX. Private-jet flights were up 60% in the first half of November compared with a year earlier, the data tracker said.

The boom comes after a long, fallow period since the global financial crisis. The more than 495,000 private-jet flights in the first 10 months of the year is up 9% from the same period in 2019, and just ahead of the previous high in 2007, according to the Federal Aviation Administration.

Demand has risen during the Covid-19 pandemic thanks in part to fliers’ desire to avoid crowded commercial planes and airports, as well as cuts in airline service to smaller communities. The increased availability of on-demand private-jet services also has helped.

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Airbus Says It Can’t Meet Current Demand for Single-Aisle Jets

European planemaker’s sales efforts hindered by production capacity constraints for its popular A320 over the next three years

Airbus SE said it can’t ramp up production of its popular single-aisle jet fast enough to meet demand and forecasts delivery constraints for another three years as airlines clamor for new planes again.

Airbus Chief Financial Officer Dominik Asam, in an interview ahead of the Dubai air show that started Sunday, said airlines are asking for delivery of new aircraft after most of them stopped ordering new jets and tried in many cases to defer or cancel orders during the Covid-19 pandemic. Airbus is pushing sales—what the industry calls sales “campaigns”—but is constrained on what it can promise, Mr. Asam said.

“There is a really vibrant activity on campaigns, especially on the single aisle,” he said. “One real challenge we face is the lack of near-term delivery slots.”

After slashing production amid the pandemic last year, Airbus earlier this year told suppliers to start ramping back up, optimistic that demand would snap back. But aerospace suppliers—just like other manufacturers around the world—have struggled with supply-line disruptions and soaring costs. Mr. Asam said they can’t make parts and components fast enough to allow Airbus to deliver all the jets it thinks it can sell. Each aircraft has about 500,000 parts and components. Airbus receives some 1.7 million parts a day across its factories, he said.

Airbus said earlier this month that it faced delivery shortfalls as it struggles with on-time delivery of components and quality lapses. The restart in production of Boeing Co. ’s 737 MAX after its recertification is also adding pressure to the aerospace supply chain.

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Could Boeing and Airbus Make Too Many Jets?

The aircraft giants’ demand forecasts for the next two decades see little damage from the pandemic, underlining the risk that they overproduce.  Amid widespread shortages, one thing in overabundance may be planes.

On Saturday, on the eve of this week’s Dubai Air Show, Airbus  unveiled its latest projections for global aircraft demand. The European plane maker expects the commercial aircraft market—which it shares with its American rival Boeing BA -1.97% —to require 39,020 new planes from 2021 to 2040. This is only 0.5% smaller than the 20-year figure it predicted in 2019, even though many airlines fear Covid-19 will have a permanent impact on business travel. By contrast, Airbus believes jet deliveries will return to their pre-Covid trend with a two-year lag, thanks in part to more freighter sales.

The outlook was more conservative than some analysts expected, but it was hardly conservative. Last month, Boeing similarly trimmed its 20-year delivery forecast by 1%. This seems modest, especially since the U.S. plane maker’s projections are always higher, coming in this time at 43,610 aircraft.

Boeing and Airbus both trust that replacement of older jets will offset lower fleet growth following the pandemic. Replacement demand makes up 46% and 40% of their estimated future deliveries, respectively, compared with 44% and 36% in their 2019 outlooks. This makes sense, as carriers will want younger planes to cut carbon emissions and entice premium passengers back. This battle arguably began in June, when United Airlines announced its largest aircraft order ever.

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