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European Aviation completes acquisition of European Cargo aircraft

European Aviation has completed the acquisition of troubled European Cargo's aircraft, including its fleet of A340 cargo aircraft, with plans to restart flights. The company said that it had acquired European Cargo's 16 A340 aircraft, including seven "flight-ready" freighters, a large quantity of Rolls-Royce Trent 553 and 556 spare engines, including several with little time since overhaul. The aircraft acquisition came about after European Cargo fell into administration earlier this year. Also included in the purchase are more than 14,000 line items of spares for the A340 aircraft and Trent engines. News that European Aviation was interested in rescuing the company emerged in August. European Aviation chairman and chief executive Paul Stoddart said: "We are delighted to have concluded our acquisition of all of the assets of [European Cargo] with the joint administrators. "Whilst this is a massive investment from [European Aviation], I feel totally confident that we can keep this excellent fleet of cargo aircraft flying for the foreseeable future." European Cargo began to run into trouble when its largest customer asked for a 30% reduction in service price due to softer volumes. In addition, the wars in Ukraine and in the Middle East resulted in increasing jet fuel prices that negatively impacted the business through reduced profit margin per flight. The airline entered administration in June of this year, with 174 of its 219 staff made redundant. European Aviation, which is owned by ex-Formula One team boss Paul Stoddart, previously owned European Cargo. The company sold 49% of its stake in European Cargo in 2022 and the remaining 51% stake two years later. The airline emerged in April 2020 during the onset of the Covid-19 pandemic, after European Aviation sought to offer the UK government capacity to transport medical equipment from Malaysia. It had been acquiring Airbus four-engined A340-600 passenger jets from carriers such as Virgin Atlantic and initially operated them as temporary freighters. European Cargo subsequently obtained approval to operate the -600s in a permanent cargo configuration, with a 76t payload capability, and has been gradually converting its fleet. The airline had been operating the aircraft between China and Bournemouth and Teesside in the UK, largely carrying e-commerce shipments. No cargo door is added during the conversion process, allowing the aircraft to potentially be turned back into passenger aircraft in the future, but making the cargo loading process more complicated than on a fully converted freighter. European Cargo's most recent financial statement shows it made a full-year net loss of $26m in 2024 -- on revenues of $136m -- a slight improvement on its net loss of $30.6m in 2023.

Want to sell your freight forwarder? Start five years before you want to leave

This succession series began with a simple observation: plenty of European logistics entrepreneurs are getting older, while rather fewer sons and daughters seem interested in taking over the family forwarder. The second column looked at who might buy these businesses. The third ventured into the more delicate territory of what they might actually be worth. A few owners have since asked the logical next question. Fine. I am 63 or 65, the children aren't interested and, after 35 years ...

Mexican aviation alarmed as AFAC faces 73% budget cut

Alarm bells are ringing at Mexican aviation firms and their customers over next year's planned budget allocation to the national aviation agency (AFAC). One fear is that the severe cuts could jeopardise the Category I status of Mexican aviation safety and once again arrest expansion plans of Mexican airlines. The federal government's proposed budget for 2027 allocates MX$175.45m ($10.216m) to AFAC, a whopping 73.3% cut from its funding this year, when it received MX$657.5m. According to observers, this is one of the lowest amounts given to the regulator since its inception. For an agency tasked with supervision of national aviation safety and operation, airlines, aircraft and airports, the amount seems woefully inadequate. According to earlier estimates from AFAC, it needs at least MX$2bn a year. Lawmakers are decidedly frugal in their planned funding for aviation. In the 2027 budget plan SENEAM, the national air traffic control agency, is set to receive around M$926m, a cut of nearly 76% from its current funding. The drastic cuts have drawn criticism from industry groups as well as pilots and academics. Mexico's National Chamber of Air Transport (CANAERO) and IATA, the international airline interest group, issued a joint statement that the planned budget is far short of requirements. They pointed out that in recent years a combination of challenges has significantly increased its costs and operational complexity, pointing to high fuel prices and disputed bilateral regulatory processes, among others. "All of this demands a solid aeronautical authority with technical capacity, operational strength and adequate financial resources for its correct operation," they stressed. According to the Mexican Transport Institute, passenger numbers were up 0.6% year on year in July, while cargo tonnage increased 2% year on year. Arguably the biggest concern is over Mexican aviation's safety rating, and the timing of the budget plan release comes just at a time when this is under scrutiny. The US Federal Aviation Authority (FAA) performed an audit of AFAC in August, and the results are expected to be announced in October. If Mexico were to lose its Category 1 rating as a result of this, it would set the nation's carriers back yet again, curtailing their ability to open new routes to US destinations or increase frequencies on existing sectors. This is what happened in 2021, when the FAA downgraded Mexico's aviation safety rating to Category 2, and it took more than two years before Category 1 was restored. As it is, Mexican airlines are still facing restrictions in the US market which the FAA imposed last year in a dispute over the reduction of slots at Mexico City's Benito Juarez airport and the ban on freighter flights there, which forced all-cargo carriers to shift to Felipe Angeles International Airport. The US authority branded these measures a violation of the Mexico-US aviation agreement, and subsequently revoked 13 route authorisations for Mexican carriers. In addition, it banned them from opening new transborder routes and increasing frequencies on existing routes. The two sides reached an agreement in May on measures intended to resolve the dispute, but Washington has yet to lift the restrictions on Mexican airlines. A failed safety audit would cement these restrictions for some time, frustrating ambitions of Mexican airlines to increase their presence in the cross-border market - not only to capture more US-Mexico traffic but also to attract flows between Latin America and intercontinental markets in Asia and Europe. Airlines contacted by The Loadstar did not comment on the issue. In their joint statement IATA and CANAERO made an appeal to the Ministry of Finance and Public Credit as well as to the Chamber of Deputies to "reconsider this measure with a comprehensive vision, ensuring the necessary resources so that AFAC can fully comply with its responsibilities for the benefit of the national aviation industry". AFAC has responded to industry concerns with a statement assuring stakeholders that additional funding will be made available outside the 2027 budget plan. "The Ministry of Finance and Public Credit will guarantee the necessary resources for AFAC to develop its regulatory, supervisory, and oversight functions, as well as actions aimed at strengthening operational safety in the country," the regulator stated. It gave no details on the mechanism to allocate such additional funding, nor on the likely amount it could receive. Presumably US regulators would be interested in these details, not to mention how the lawmakers arrived at their determination of AFAC funding needs for 2027 in the first place.