Investors in London Stock Exchange-listed funds enjoyed solid returns for years but as the global airline industry is pummeled by coronavirus, some of those investors are looking for the exits

So-called specialty aircraft-leasing funds have generated steady income for investors, but many are now bailing as dividend payments are suspended.

LONDON—The coronavirus pandemic has upended the airline industry, halting travel and grounding planes. Now, the sector’s pain is spreading to a little-known corner of the market where investors have enjoyed heady returns for years.

So-called specialty aircraft-leasing funds have generated income for investors hungry for yield. These funds buy jets from the likes of Boeing Co. BA 5.36% and Airbus SE and lease them to global air carriers such as Thai Airways International THAI 14.67% PCL and Emirates Airline.

In recent weeks, many of those investors have fled or incurred big paper losses as some London Stock Exchange -listed funds suspended dividend payments and held discussions with lenders to renegotiate payment schedules.

Two of the five LSE-listed aircraft funds have suspended dividend payments and share prices are down between 42% and 74% since mid-February.

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Airbus slashes production rates, including for A320, a rival to MAX

The crisis that has embroiled the world’s airlines is now hitting the industry’s biggest aircraft makers, Boeing Co. BA 5.25% and Airbus EADSY -2.37% SE, and further challenging Boeing’s efforts to return its 737 MAX to service.

Airbus said it was slashing production by about a third after booking just 21 net orders for jets in March and delivering 36 jets to customers, amid a flood of requests by customers to defer and cancel orders.

Underscoring the challenge for Boeing’s 737 MAX, Airbus said it was cutting its production of the MAX’s chief rival—the A320—to 40 a month, down from about 60 precrisis. Chief Executive Guillaume Faury said the company was working on “operational and financial mitigation measures to face reality” amid the coronavirus pandemic, including slashing spending and cutting costs at its plants.

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Ruling could hamper antitrust enforcers in future cases

A Delaware federal judge rejected the Justice Department’s challenge of a deal in which travel-booking service Sabre SABR +11.88% Corp. is seeking to acquire an industry upstart, a stinging ruling that could hamper antitrust enforcers in future cases.

U.S. District Judge Leonard Stark, in a decision made public Wednesday, ruled the department failed to prove that Sabre’s planned purchase of Farelogix Inc. would unlawfully suppress competition.

Texas-based Sabre is the lead booking service for travel agents. The Justice Department said Miami-based Farelogix has newer, better flight-booking technology that is providing important competition and bringing benefits to airlines and consumers. Many industry participants supported the merger, but others including American Airlines Group Inc. and United Airlines Holdings Inc. didn’t.

Sabre argued that it and Farelogix offer complementary products, and combining them would drive faster innovation that serves airlines and travelers.

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Some airlines, cruise ships and other travel companies have been slow delivering money back for trips canceled by the coronavirus pandemic

The Transportation Department says airlines have to offer refunds for flights they cancel, and they are canceling thousands of trips for lack of passengers. That's clearly seen at the south checkpoint at Denver International Airport on April 1. 

The feds have warned airlines that they must offer travelers a refund when the airline cancels a flight.

Some airlines are doing what they should. But a sampling of reader responses to last week’s column shows people still running into drawn-out fights for refunds and rebookings with airlines. Travelers are still finding headaches when dealing with online booking agencies, cruise lines and others, too. While travel plans vanished overnight because of the coronavirus pandemic, a lot of travel issues remain up in the air.

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