b'14American Journal of Transportation ajot.comAir C ArgoAIR CARgoNEWSNEWSCargo airline cashing in on junk-bond boomTrump backs Congress effort for owner payout to extend aid to US airlinesAtalittle-knowncargoairlinethathandlesThecompanybegansoundingoutpoten- PresidentDonaldTrumpTrump said.shipmentsforUnitedParcelServiceInc.andtial investors for the five-year bonds last week atsaid he supports efforts in Con- U.S.airlineshavewarned Amazon.com Inc., business is booming. a yield in the 8.25% to 8.5% range, some of thegresstoprovideU.S.airlinesabout76,000employeesthat With passenger carriers forced to cut most ofpeople said. In a sign of tepid demand from poten- with more aid to avert massivethey could face furlough on Oct. their freight capacity during the pandemic, seven- tial investors, the range was revised to 8.75% tojob losses, which could start Oct.1,accordingtoestimatesbya year-old Western Global Airlines LLC has picked9%. Western Global also shifted $10 million to a1 when restrictions expire from aCowen Inc. analyst. The number up new orders amid a surge in online shopping. separate revolver, reducing the offerings originalprior round of federal assistance. will be reduced by an unknown Now, its benefiting from another big tailwind:$420 million size. I think its very importantamount as a result of voluntary the credit rally sparked by the Federal ReservesArepresentativeforRoyalBankofCanada,that we keep the airlines going,separation, early retirement and unprecedented backstop. which is leading the bond sale, declined to comment. Trump told reporters at a Whiteextended leave programs already The Estero, Florida-based carrier is borrowingHouse briefing. We dont wantofferedbycarriers.Southwest hundreds of millions of dollars from the junk-bondd emands urGe to lose our airlines, so if theyrehas said enough workers took its market to fund a stock program that will give it aWhile Western Global and other cargo carrierslooking at that, whether theyreoffers that it wont lay off any at sizable tax break, hand the founders a large payoutare enjoying an increase in demand, passenger air- Republican or Democrat, Id beleast through year-end.and potentially keep its workforce union-free. lines have had to borrow billions of dollars and sellcertainly in favor. We cant loseAlmost150,000workers Companies have been issuing debt at a recordstock, diluting existing holders, to shore up theirour transportation system. at the four largest U.S. airlines pace since the Fed announced a series of measurescash reserves as the pandemic wreaks havoc acrossSixteenRepublicansena- alreadyhaveagreedtoleave in March to keep the economy going. While thatthe travel industry. tors called on their partys lead- the companies or take voluntary has provided much-needed liquidity to strugglingAnalysts at S&P Global Ratings said in lateership to add another $25 billiontime off.businesses, the rally has been so broad-based thatJuly that they expect Western Globals revenue toinassistanceforairlinesina it has also allowed less-impacted companies to selljump by more than 90% this year thanks to higherpackagebeingnegotiatedfori ndusTrYs olidariTYdebt to fund payouts to shareholders. demand for cargo shipments and less capacity fromCovid-19 assistance. The cham- The push to extend the pay-Western Global is looking to raise $410 mil- passenger airlines during the pandemic. bersNo.2Democrat,Dickroll-support program began with lion through its first ever junk bond offering as partUPSisWesternGlobalslargestcustomer,Durbin, supports extending pay- acoalitionofflightattendant of a plan to sell a minority stake to employees. Theaccounting for around 24% of revenue in the firstroll support for passenger carri- unions and later grew to include deal will see founder Jim Neff and other existingsix months of the year, the airline said in docu- ers, said a person familiar withlaborgroupsacrosstheindus-shareholders sell as much as 49% of the companymentssharedwithpotentialinvestors. Amazon,the talks. try.AmericanAirlinesCEO to the employee stock ownership plan. which only became a customer this year, and theAbipartisangroupof223DougParkerandUnitedAir-We believe that our employees are the best stra- U.S. Department of Defense, which approved themembersoftheHousebackedlinesHoldingsInc.executives tegic partners and view the ESOP as a win-win forcompany as a contractor in 2016, made up aroundthe extension in a letter to con- also have backed the legislation. both the employees and the company, a represen- 16% and 14% respectively, the documents show. gressional leaders. Southwest Airlines Chief Exec-tative said in response to requests for comment. AsThe airline transports cargo for Amazon fromThesenators,ledbyCoryutiveOfficerGaryKellysaid essential transportation, the airline also experiencedHong Kong to Los Angeles three times a week, andGardnerofColorado,saidinJuly 31 that he was personally substantially higher operating costs in the Covid-19recently agreed an extension of the service throughthe letter that they fear carriersinvolved in seeking help from environment, the company representative said. the year end, according to the documents sharedwill have to fire vast numbers offederal leaders.with investors. The company has 19 aircraft, withworkerswhenrestrictionstiedThe Senate letter, previously T axb enefiTs 14 in service, and has flown to more than 350 air- toexistingpayrollassistancereported on by Reuters, was signed Under the plan, the airline will lend proceedsports in 134 countries, the documents show. expire on Sept. 30. byseveralprominentconserva-from the bond offering to a newly set-up ESOP,Western Global is also benefiting from someA Standard & Poors indextives,suchasTexasRepublican which will use the funds to purchase the stake. TheofthestimulusmeasuresapprovedbytheU.S.of the five biggest U.S. airlinesJohn Cornyn, indicating it enjoys plan will use annual contributions it receives fromGovernment as part of the Cares Act. It received anjumped 4.5% after news of thesomebipartisansupport.Missis-the company to repay the debt over time. $8.2 million loan through the Paycheck Protectionsenators effort the biggest gainsippi Senator Roger Wicker, chair-Western Global expects to realize significantProgram and was granted $34.8 million of addi- in three weeks, led by Americanman of the committee overseeing taxbenefitsfromthearrangementasitwillbetional payroll assistance through a separate pro- Airlines Group Inc. aviation policy, also signed.able to deduct interest on the debt and contribu- gram the U.S. Treasury established for the airlineWe support a clean exten-tions made to the plan, according to people withindustry, according to the documents. r ecoverYs TallinG sion of payroll support for pas-knowledge of the companys presentation to inves- The company owns all of the planes it oper- Airlinesinthepastweeksengeraircarrieremployees tors. The deal is also expected to dissuade workersates and takes care of their maintenance directly.operatedwithabout27%ofincludedintheCARES Actto from unionizing, preserving one of Western Glob- In recent quarters, it has focused on developingthe number of passengers theyavoid furloughs and further sup-als key advantages versus competitors, the peoplestrong relationships with blue-chip customers andcarriedlastyear,accordingtoport those workers, the senators said, asking not to be named when discussing con- on expanding its long-haul capacity, particularly inTransportation Security Admin- saidintheletter,addressedto fidential information. and out of China. istration data. The numbers hadMajorityLeaderMitchMcCo-beenincreasinginMayandnnell,aKentuckyRepublican, June,butstalledlastmonth.andMinorityLeaderChuck Still to come: whats historicallySchumer, a New York Democrat.LATAM Cargo launches Miami - Florianopolisbeen the slowest part of the year. Durbins effort was described Obviously the airline busi- byapersonwhowasntautho-cargo route and becomes the only airlinenessisnotdoingverywell.rized to speak about the details and Youhaveshutdownsalloverasked not to be named. Durbins with direct service from NA to So. Brazil the world and you have airlinesoffice didnt immediately respond that are essentially shut down,to a request for comment.LATAM Cargo has carriedpharmaceuticalandelectronicthroughGuarulhosandVira-out its initial Miami-Florianop- products, among others. copos.Hence,itdependedon olisflight,connectingNorthBeforetheMiami-Flori- complementarygroundtrans- Qatar Airways resumes flights AmericawithSouthernBrazilanopolis route was implemented,portationinordertoreachits forthefirsttime.Thisdirectinternational cargo entered Brazilfinal destination. to Houston and Philadelphiaroutewillinitiallyhaveone weekly frequency and its flightsQatarAirways,theonlyto Los Angeles (LAX) from 12 will be carried out in B767F air- Gulf carrier that never stoppedAugust and double daily to New craft with a 53-ton capacity. flying to the U.S. during the crisisYork (JFK) from 1 September. ThestateofSantaCata- in an effort to take over 160,000This news, which will add rina bases its economy on com- stranded people home, has con- threeweeklyflightstoHous-mercialandindustrialimports,tinued to work closely with theton from 2 September and four used to supply Southern Brazil.U.S.governmentandairportsweeklyflightstoPhiladelphia Hence, this is an important mile- astheairlinerebuildsitsU.S.from 15 September, will see the stoneforLATAMCargo,asitnetwork. The national carrier ofairlinesU.S.operationsgrow is the only airline that providesthe State of Qatar is thrilled totoeightgatewaysincluding a direct and rapid route. Cargobuild on its commitment to theBoston,Chicago,Dallas-Fort fromNorthAmerica,EuropeU.S. market with the resumptionWorthandWashington,D.C., and Asiawillbecombinedinof flights to two additional U.S.strengtheningitspositionas theUnitedStates.Particularly,gateways,Houston(IAH)andthe leading international carrier SantaCatarinademandsauto- Philadelphia(PHL)alongwithoperating services to and from motive,metallurgical,food,TaM employees on the tarmac at Miami International airport expandingfrequenciestodailythe U.S.'