United yesterday revealed plans to file for Chapter 11 bankruptcy protection as early as next month unless several of its union groups and vendors agree to widespread financial concessions. The airline has had little luck winning such concessions this year from labor, however, and the odds that it will win a federal loan guarantee are shrinking. "Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," said CFO Jake Brace.
Eurowings' supervisory board has approved plans to enter the no-frills segment. The body voted unanimously in favor of the strategic shift, which will lead the carrier to initiate no-frills services as early as Oct. 27 (DAILY, Aug. 7). Eurowings CEO Friedrich-Wilhelm Weitholz said in Cologne that the company's new no-frills operation, Germanwings, could carry 2.5-3 million passengers annually as early as 2004 from its Cologne/Bonn Airport base. Eurowings' regional flying program will continue unchanged.
FAA has certified the Rolls-Royce AE3007A1E engine that will power the Embraer ERJ 145XR regional jet. The engine offers a 7% increase in takeoff thrust over current AE 3007A1 models. Rolls said additional thrust provides a 29% increase in range of the 145XR over the 145 model. The ERJ 145 has a range of 1,550 nautical miles, compared with 2,000 nm for the XR. Rolls said other design improvements would reduce emissions and increase time between overhaul.
Middle East Airlines (MEA) has confirmed its purchase of six Airbus A321-200s. The 149-seat aircraft will offer a two-class configuration with 31 seats in first class and 118 in economy. Each aircraft will be powered by two International Aero Engines V2533 engines. Deliveries are scheduled to begin in 2003.
The Aircraft Mechanics Fraternal Association (AMFA) expects to mount a challenge by monthend to win representation of United's mechanics from incumbent International Association of Machinists (IAM). The challenge comes as United is putting increasing pressure on IAM to negotiate a concession package, and IAM says AMFA is taking a predatory approach to the airline's current crisis.
Credit Suisse First Boston upgraded its profitability forecast for SAS following the carrier's surprisingly good performance in the first six months of the year. CSFB now estimates the airline will achieve a pre-tax profit of SEK164 million (US$17.3 million) versus its previous forecast of an SEK 1.25 billion ($132 million) loss. SAS reported a SEK1.18 million profit in the second quarter.
BAE Systems' Victorville, Calif., maintenance, repair and overhaul (MRO) facility has implemented Avexus's Impresa MRO planning and task-management software. "Impresa has enabled BAE Systems to achieve immediate success, as the first two aircraft serviced at the Victorville facility, using the Impresa System, were released ahead of schedule and to the complete satisfaction of the customer," said facility VP and General Manager Joe Vreeman. Victorville is the first commercial site for Impresa.
American's latest round of furloughs will heavily affect former TWA employees. All 550 pilots and about a third of the 2,550 flight attendants whom the airline proposes to furlough are from TWA.
Embraer is closely tracking certification by Brazil's civil aviation authorities of its executive/corporate Legacy jet, a specially designed version of the ERJ-135. Expecting certification in about six weeks, Embraer plans an aggressive program to market the Legacy internationally with emphasis on its state-of-the-art design, low operational cost and reasonable price, reports DAILY affiliate AvNews Latin America & Caribbean.
United recently added a new toll-free number for U.S. domestic reservations that it hopes customers will not forget: 800-United-1. The company recently began using the new number in its radio and print advertising and is changing it on ticket wallets and other places where United publishes toll-free phone numbers for calls within North America.
AirTran Airways is reportedly looking for a regional partner and holding preliminary discussions with Mesa Air Group. AirTran could be interested in using Mesa's turboprops on some of its routes. AirTran currently operates 38 Boeing 117-seat 717-200s and 26 108-seat DC-9-32 Stage 3 aircraft. Mesa's turboprop fleet includes 12 36-seat de Havilland Dash 8-200s and 51 19-seat Beech 1900Ds.
The sale of holding company Cintra and its main assets, AeroMexico and Mexicana, is well advanced, said sources at the National Savings Protection Agency (IPAB), one of Cintra's main shareholders. IPAB issued the statement to dispel rumors in the national congress and in aviation circles that the sale is again being postponed. It added rules on the bidding tender and other details, prepared in consultation with Merrill Lynch Mexico, likely will be made public at the end of this month.
FAA says although it only received three-quarters of the amount it requested as part of the supplemental appropriations process, it would not have to furlough any controllers. The agency said it needed $100 million in extra funding to meet a shortfall in its air traffic services budget, without which it would have to furlough controllers for a few days. However, congressional appropriators granted only $75 million in the final version of the supplemental bill.
United's stock price this week sank to new levels as the airline's management is having little luck convincing the Air Transportation Stabilization Board that United should be granted a loan guarantee. CEO Jack Creighton told employees in an internal message that United met several times with the loan board and from those conversations, "We've gotten the clear feeling that we need more participation from all of our stakeholders in our cost-cutting efforts." The ATSB said the participation must be "broader, deeper and longer."
American yesterday revealed sweeping plans to retire its fleet of 74 Fokker 100s, eliminate 7,000 jobs and reconfigure its hub schedules, but the changes are not expected to return the airline to profitability in the near term. CFO Jeff Campbell told analysts yesterday that the plans will not be a complete fix for profitability problems, but he believes the airline will keep taking steps in the right direction "until we get the right answer."
Namibia's national carrier Air Namibia wants to replace its single Boeing 747-400 Combi with two smaller, long-range jets, an airline official told The DAILY. The aircraft generates most of Air Namibia's revenues but is seen as too expensive to operate. The carrier is looking at two Boeing 767-300s or Airbus A330-200/300s as replacements. The airline already transferred most of its short-haul flying to private carrier Comav but continues to fly two 737-200s.
GE Aircraft Engines (GEAE) started construction of a 161,700-square-foot hangar at Southern California Logistics Airport to accommodate aircraft up to the size of a Boeing 747. GEAE plans to base its 747 test bed at the hangar to test performance and operability of its engines. Completion of the $15 million facility is scheduled in summer 2003.
United Services this week won a cargo-handling contract from SAS at London Heathrow Airport. Under the deal, United employees will perform all aspects of import/export cargo handling at United's Cargo Center at Heathrow Cargo Village, including freight build-up and breakdown. "Wherever we have available capacity around the world, we want to make sure our Star alliance partners are able to benefit from what we offer," said Petersen, director-airport services for United Services. United also handles similar requirements for Iberia at Heathrow.
European airlines are closely watching US Airways' restructuring efforts, as the carrier is still seen as a potential addition to one of the global alliances. Through its recently announced bilateral deal with United, US Airways is seen to be moving closer to Star alliance. Airline sources said, however, that there are currently no talks scheduled and that all future developments depend on US Airways' progress in restructuring. Star is somewhat weak in U.S. East Coast markets, where the only hub is United's Washington Dulles base.
Prices of the 74 Fokker F100s American plans to retire by 2005 (see related story, Page 3) could be attractive to low-cost carriers that are considering fleet expansions. "It's hard to justify paying $25 million for a 75- to 80-seat regional jet against $5 million for an F100," said Mort Beyer of Arlington, Va.-based Morten, Beyer & Agnew. "When you flood the market with airplanes, the prices come down to a minimal level, and it offers an opportunity to carriers like Frontier, Spirit or AirTran."
Despite unfavorable economic conditions, CSA Czech Airlines continued to grow significantly in the first six months of the year. The airline's passenger traffic was up 8.4% and freight carriage 6.7%. An airline spokesman said the "economic result for the first six months was only 13 million crowns (US$400,000) lower than planned" without giving specific numbers.
United Services' Engine Leasing program this week reported a record revenue performance for the first six months of the year. The program brought in revenues exceeding $6 million, nearly double the revenue for the same 2001 period. "We're well-positioned to compete with other companies and manufacturers that lease engines," said Dave Koch, manager-engine leasing, in a message to employees.
