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Airport ground services and air-cargo handler Swissport International AG has reached a deal on a balance-sheet restructuring that will preserve its business under pressure from the COVID-19 pandemic, WSJ Pro Bankruptcy reported. The debt-for-equity swap will lighten the debt side of Swissport’s balance sheet as it contends with the impact of reduced air travel on its revenues. Ownership of the Zurich-based company will pass from China’s HNA Group Co. Ltd. to a group of mostly U.K.- and U.S.-based investment funds once the restructuring is complete. A major provider of cargo handling and ground services such as refueling and aircraft cleaning, Swissport has operations at 300 airports in 47 countries. Its revenues are dependent on air travel and many of its airline customers are cutting costs due to health fears and travel restrictions related to the coronavirus. The lockup agreement with senior secured creditors including SVP Global, Apollo Global Management Inc., and TowerBrook Capital Partners “will enable us to confidently trade through the market recovery,” Chief Executive Eric Born said yesterday. Moody’s Investors Service on Friday downgraded Swissport’s corporate ratings to C from Caa2, with a negative outlook, reflecting the anticipated debt restructuring, but the prolonged stress from pandemic-induced loss of revenue.

Avianca Holdings yesterday said that it had appealed a court order that last week banned Colombia’s government from providing the troubled airline with a $370 million loan to finance part of its bankruptcy restructuring, Reuters reported. The airline, which filed for bankruptcy in May due to the coronavirus pandemic’s effect on travel, said that without the loan, keeping the company afloat would become “untenable.” The loan is part of a $2 billion financing package that is key to the carrier exiting bankruptcy protection. The Colombian government’s slice of the package had been questioned in a Colombian court under the argument that Avianca’s guarantees on the loan were insufficient. Last week, Avianca rival, LATAM Airlines Group also faced a setback in its own bankruptcy process when a U.S. judge turned down a $2.4 billion financing package because it considered it to be too advantageous to the carrier’s major shareholders.

A U.S. bankruptcy judge yesterday rejected a $2.4 billion financing plan for struggling LATAM Airlines LTM.SN on the grounds that a convertible loan included as part of the package would amount to "improper" treatment of other shareholders, Reuters reported. The move is a setback for LATAM, which needs short-term liquidity. But in a lengthy court decision, the judge left the door open for the Chilean carrier to introduce a similar financing plan in the future, this time without the possibility of converting part of the loan into equity. The proposal supported by LATAM was composed of a $1.3 billion loan from asset-management firm Oaktree Capital Management and a $900 million convertible loan from several key LATAM shareholders, including the Cueto family, which controls the airline, and Qatar Airways. LATAM presented the bankruptcy financing proposal in July, which prompted a challenge from other creditors, who even assembled a separate funding plan with investment bank Jefferies Group. The key dispute was over the propriety of the convertible loan. LATAM filed for bankruptcy protection in May, hammered by the world travel crisis generated by the coronavirus pandemic. At the time, it was the world’s largest airline to file for bankruptcy due to COVID-19.

Senate Republicans were confident yesterday that most GOP colleagues would vote to support a narrower coronavirus aid package, a move aimed to highlight party unity as lawmakers grew increasingly pessimistic about any deal with Democrats before the election, the Wall Street Journal reported. The GOP’s $300 billion scaled-back version of their earlier $1 trillion stimulus plan includes jobless aid, liability protections for businesses and school funding, among other measures. But facing Democratic opposition, the “skinny” bill wasn’t expected to clear its first procedural hurdle in the Senate today or spur any immediate breakthrough in stalled negotiations with Democratic leaders and the White House. Senate GOP leaders hadn’t held a vote on their earlier proposal, which divided Republicans. The less-expensive bill, which lawmakers said should bolster vulnerable party senators during the final stretch of fall campaigning, is expected to get support from at least 51 GOP senators. Republicans currently have a 53-47 majority in the Senate, but control is seen as up for grabs in the November election. Democrats have said the earlier GOP plan came up short of the needs raised by the pandemic’s health and economic effects, and the new one even more so. The new bill includes about $650 billion in spending, offset by $350 billion in savings elsewhere for a total cost of around $300 billion, according to GOP aides. The new GOP bill includes $300 in weekly federal unemployment payments through Dec. 27, establishes legal protections for businesses and health-care facilities, provides $29 billion in health-care funding, $105 billion for schools and permits the U.S. Postal Service to not repay a $10 billion loan set up in a previous aid package. It also includes a second round of the popular Paycheck Protection Program for businesses that have demonstrated a revenue loss. The proposed bill aims to resume assistance to small businesses under the PPP, which expired on Aug. 8. Under the plan, businesses with 300 or fewer employees can apply for a second PPP loan if they can demonstrate a reduction of at least 35% in their quarterly revenue from the same quarter in 2019. Such loans will be equal to 2.5 times the company’s average monthly payroll cost, with a maximum loan value of $2 million. As under the previous rule, at least 60 percent of the funds must be used on payroll. Read more. (Subscription required.) 

With the Senate poised to vote today on a slender GOP coronavirus relief bill that’s certain to fail, chances for a bipartisan deal on new economic stimulus look more remote than ever. This impasse has prompted top White House officials to consider a new round of executive actions that they hope could direct funding to certain groups amid fears that the nascent economic recovery could fail to gain momentum, the Washington Post reported. White House officials have discussed efforts to unilaterally provide support for the flagging airline industry while also bolstering unemployment benefits, according to two people aware of the deliberations who spoke on the condition of anonymity to share internal policy discussions. The White House has also discussed moving without Congress to direct more money for school vouchers and changing President Trump’s recent payroll tax changes to make it more effective. Typically, such actions require congressional approval. In August, Trump signed four executive actions meant to provide more unemployment aid, eviction protections, student loan relief and to defer payroll tax payments. The moves have had mixed success and came as political talks faltered on Capitol Hill. Read more.

Aeromexico said yesterday that it has received the initial $100 million payment of debtor-in-possession (DIP) financing as it undergoes chapter 11 bankruptcy proceedings, Reuters reported. The Mexican airline has been approved for DIP financing of up to $1 billion. Aeromexico Chief Executive Andres Conesa said in a statement the disbursement is an “important step” for supporting operations during the company’s restructuring.

Senate Republicans are proposing to beef up a “skinny” coronavirus relief package by more than 100 pages, including an enhanced deduction for charitable giving, $20 billion for farmers and ranchers and money for child care and stockpiling medical supplies, Roll Call reported. A vote on the package, which isn’t expected to advance over Democratic opposition, could come on Thursday, according to Senate Majority Leader Mitch McConnell. The Kentucky Republican said yesterday before introducing the revised bill that it would be “targeted” to the “very most urgent” needs facing Americans dealing with the continued pandemic fallout. "Senators will not be voting on whether this targeted package satisfies every one of their legislative hopes and dreams," McConnell said in floor remarks later on Tuesday. "We vote on whether to make laws, whether to forge a compromise, whether to do a lot of good for the country and keep arguing over the remaining differences later." McConnell also yesterday filed a motion to end debate on the underlying legislative vehicle, a measure which has already become law separately. Using a "shell" that has already passed both chambers enables the Senate to skip a procedural step and vote on cloture Thursday. An official price tag wasn’t available, but the new measure appears to contain more than $500 billion in assistance, which while larger than an earlier draft circulated last month would still be substantially shy of the $1 trillion July rollout that landed with a thud among Senate Republicans. Read more. 

In related news, a fresh U.S. Senate Republican coronavirus spending package introduced yesterday does not include new government assistance for U.S. airlines or airports, a text of the proposal showed, as the sector races to save jobs before October, Reuters reported. More than 35,000 workers at two of the largest U.S. carriers alone — American Airlines and United Airlines — are set to lose their jobs once an initial $25 billion in payroll support from the government expires this month. That has fueled a furious push by unions for a six-month extension of the aid, with flight attendants and other aviation workers planning to march outside the U.S. Capitol today. Last month a group of Senate Republicans backed extending $25 billion in payroll assistance for airlines, an idea Democrats also support. That proposal was excluded from the latest Senate measure, which was reviewed by Reuters and is expected to be voted on Thursday, but it is an opening salvo for talks that are expected to intensify once the U.S. House returns from recess next week. The Senate proposal also excludes $10 billion in assistance for airports that was part of an earlier Senate bill. Read more. 

U.S. passenger airline traffic continues to rebound over historic lows after the coronavirus pandemic, but is still down sharply over 2019 levels, Reuters reported. The U.S. Transportation Department said yesterday that airlines carried 21.4 million passengers in July, up from 16.5 million in June, but still down 73 percent over July 2019 levels. On Friday, the Transportation Security Administration screened 968,673 people at airport checkpoints, the highest daily number since March 16 but still down more than 60 percent over 2019 levels.

Airlines for America, the main lobby for U.S. airlines, does not expect air travel to return to pre-pandemic levels until 2024 and is hoping for a second round of government aid to help the industry, CEO Nicholas Calio said yesterday, Reuters reported. “We’ve probably concluded that no one will be fully confident until” there is a treatment or vaccine for COVID-19, which has put the airline industry in a “dire situation,” Calio told a virtual media briefing.

A U.S. bankruptcy judge yesterday granted recognition of Virgin Atlantic’s rescue plan under chapter 15 of the U.S. Bankruptcy Code, Reuters reported. The airline’s 1.2 billion pound ($1.59 billion) rescue deal is set for completion this week after a London judge gave the go-ahead to the company’s restructuring plan in a court hearing on Wednesday. The deal aims to secure Virgin Atlantic’s survival through the coronavirus crisis. The airline had projected it would run out of cash at the end of September unless the plan was approved. Read more. 

In related news, Virgin Australia Holdings Ltd’s creditors voted today in favor of the purchase of Australia’s second-biggest airline by U.S. private equity group Bain Capital, administrator Deloitte said, paving the way for a strategic overhaul, Reuters reported. The deal will allow the carrier to emerge from voluntary administration, which it had entered in April owing A$7 billion ($5 billion) to creditors after suffering from a sharp plunge in demand due to the coronavirus pandemic. The Bain deal gives unsecured creditors a return of 9 percent to 13 percent of their investment and involves a financial commitment of A$3.5 billion, according to administrator Deloitte, which said Virgin shares should be transferred to the private equity group by Oct. 31. Read more.