American, in the midst of developing a competitive response to United's planned acquisition of US Airways, faces deep concern this week on Wall Street about the possible ramifications of the deal. Merrill Lynch and Salomon Smith Barney both downgraded their ratings on American in the past two days, worried that the massive boost for United would cause significant market share loss for American. The possible merger "constitutes one too many strategic challenges to American's already full plate," said Salomon's Brian Harris.
Although senior members of the House Transportation Committee and its aviation subcommittee are clamoring for hearings on the planned United-US Airways merger, Committee Chairman Bud Shuster (R-Pa.) said yesterday that he first wants the committee staff to analyze the merger documents and talk to the financial community and the labor unions involved. Then, he told The DAILY, "I'll make the decision whether it is prudent to hold hearings." Asked when hearings would be held, Rep.
Garuda Indonesia is starting a domestic airline to be launched at the end of the year, according to sources close to the carrier. The new carrier will be part of the airline's ambitious plans to consolidate its domestic operations with the aim of having comprehensive coverage of the country. It would be managed by Garuda. Asked to confirm, Garuda President and CEO A. Abdulgani was willing to say only that he was working on a second-tier domestic product that would offer more competitive fares for overseas passengers heading for destinations in Indonesia.
U.S. National Carriers Productivity In Revenues And Expenses Per Employee, Fourth Quarter 1999 U.S. National Carriers Productivity In Revenues And Expenses Per Employee Fourth Quarter 1999 Total Total Operating Operating Revenues Expenses Total (000) (000) Employees
Delta Air Logistics, Delta's cargo division, and Air France Cargo plan to form a joint venture that would provide the opportunity for a joint U.S. export sales organization. The companies said cargo customers would benefit from "a single point of contact" to ship air freight from the U.S. to international destinations, with a single product line. The two carriers code share on passenger flights and are expected to unveil details about their alliance with AeroMexico and Korean Air next month. The cargo joint venture would focus on selling and marketing U.S.
Operators of most U.S.-registered McDonnell Douglas aircraft will have five years to replace insulation blankets covered with metalized Mylar based on a FAA rule slated to appear in the Federal Register today. The order affects 719 aircraft in the U.S., including MD-80s, MD-88s, MD-90s, DC-10s, and MD-11s, the agency said. DC-8s, DC-9s and Boeing 717s are not affected. FAA estimated the total cost of the work at $368.4 million.
Hub seat concentration under a United-US Airways merger would not change dramatically, except for the Washington, D.C., area, where the two sides have offered to change the way they operate and bring in a new carrier. Statistics supplied to The DAILY by BACK Aviation Solutions show that US Airways' share of monthly seats flown from Washington National is 40.7% of the total. Combined with United's 6.7%, it gives the two the dominant role at the slot-constrained airport, where US Airways already is the leading carrier.
After one week's suspension due to maintenance on its only FAA-approved aircraft, Venezuela's Avensa renewed flights from Caracas to Miami on May 20. A second aircraft is being equipped with a hushkit for FAA approval, also on the Miami route. CEO Wilmer Castro announced that Avensa, operating jointly with Aserca, will start to fly again to Madrid, Santiago de Compostela and Tenerife on June 16 and is already accepting computer reservations. Negotiations were revealed with Mexicana and Falcon Air to wet-lease aircraft for additional flights to the U.S.
Pilots at US Airways and United yesterday said they were surprised by the United-US Airways merger announcement and will keep close tabs on the deal as it progresses to ensure pilots are not short-changed. Several industry experts predict some tough negotiations as United and its Air Line Pilots Association unit continue contract talks, especially considering that United did not apprise pilots who also are company shareholders of the merger until the last minute.
A federal judge in Buenos Aires has ordered the release of 15 Aerolineas Argentinas aircraft impounded two weeks ago on the claim of Argentine internal revenue authorities for alleged tax evasion. The judge's ruling is based on the fact they were not owned by the carrier, but leased. They are five Boeing, six McDonnell Douglas and four Airbus jet aircraft of various types.
The Japanese Civil Aviation Bureau awarded type certification to Bombardier's 50-passenger CRJ yesterday. The approval paves the way for Tokyo's The Fair Inc. to begin CRJ operations in mid-2000 over business oriented routes from a base at Sendai, using two CRJs. The Fair has placed firm orders for two CRJs for delivery in 2002. J-Air, a wholly owned subsidiary of Japan Airlines, also ordered two CRJ200 series aircraft for domestic services in southern Japan. J-Air holds options on three additional CRJ aircraft.
Review of the proposed United-US Airways merger will be scrutinized by the Justice Department for compliance with antitrust regulations, a DOT spokesman said yesterday, stressing that DOT will advise Justice on competitive issues. Justice would not comment on the proposed merger, a spokeswoman said, except to note that it "will review it closely." DOT would have to approve the transfer of international route rights. The proposed DC Air scheme would undergo DOT scrutiny as well.
German Transport Minister Reinhard Klimmt has decided to tear up a 1984 agreement with Switzerland that allows aircraft to fly over German territory as they approach Zurich Kloten Airport, located close to the Swiss-German border. "The way Switzerland has been using German air space is no longer acceptable," Klimmt said this week. Protest against noise from increasing traffic to Zurich has been rising steadily in German towns and villages near the border.
Vanguard Airlines yesterday named Jeff Potter its new president and CEO following his resignation from Frontier Airlines, where he was VP-marketing. Vanguard's Rocky Spane will remain with the airline as chairman of the board.
The planned mega-merger between United and US Airways faces tremendous scrutiny from federal regulators, but United President Rono Dutta claims the two carriers have gone "above and beyond to mitigate any concerns." Following their dramatic merger announcement yesterday, airline officials repeated the fact that there is "very little" network overlap, with the exception of the Washington, D.C., area. Because of the lack of overlap, "we are quite confident the Justice Department will approve this case," Dutta said.
U.S. carriers would be required to carry automatic external defibrillators (AEDs) under a proposal announced by President Clinton. AEDs, used in 17 inflight cardiac events during the year ended June 30, 1999, prolonged the lives of four passengers, according to Air Transport Association data collected by FAA, which also proposed the addition of medications to carriers' medical kits, with a three-year compliance period. Crew members would be trained in the use of AEDs, estimated to cost no more than $3,000 each, and the enhanced kits.
Special Report - United/US Airways United and US Airways Share of Domestic Passengers at Top 50 U.S. Airports in 1999 United US AirwaysCombined Dominant US Com- Other United Airways bined Dominant Share Share Share Carrier/Share* 1 Los Angeles 24.4% 3.5% 27.9% Southwest 18.6%
Mesa Air Group yesterday reported fiscal second quarter profits of $5.4 million, up 25.6% year over year. Revenue swelled 17.9% to $114.6 million. "We believe we have put a difficult turnaround period behind us and can now focus our energy on executing our growth strategy," said CEO Jonathan Ornstein.
The Air Line Pilots Association International and the Coalition of Airline Pilots Associations recommend that members not participate in any land-and-hold short operations (LAHSO) at any airports until FAA resolves safety concerns. CAPA, which represents pilots at American, FedEx, UPS, Southwest and Airborne Express, is worried that general aviation pilots may lack the skill and equipment training to perform LAHSO safely, and some non-U.S. pilots also may not have the English language skills needed.
Even though it had to "overcome a difficult environment in the first quarter of 2000," the Austrian Airlines group remains confident about its full-year results. Austrian and its sister companies, Tyrolean Airways and Lauda Air, "have consistently applied cost savings and earnings growth measures in an effort to realize the desired result for the business year 2000," Austrian said yesterday in Vienna. The group is seeking to double its pre-tax profits this year, up from 37.1 million euros in 1999.
American Aircarriers Support subsidiary AAS Aircraft Services won a contract yesterday from Spirit Airlines to provide a heavy C-check and modifications to one of its MD-82s. The deal also covers a 15,000-hour structural inspection, corrosion protection program, modification of flight data recorders and airworthiness directives.
Alaska Air Flight 261's inverted final plunge off the coast of California on Jan. 31 covered more than 7,000 feet in its last 22 seconds, transcripts of air traffic control tapes released yesterday by the FAA show. Though National Transportation Safety Board investigators have not finished their probe of the accident, officials have focused on a dive resulting from a jammed stabilizer as the likely cause of the crash. Damaged and worn jackscrews in the stabilizer assembly have come in for particular attention.
House Transportation Chairman Bud Shuster (R-Pa.) reacted cautiously yesterday to the United-US Airways merger announcement, saying his priority was to "nail down" the antitrust issue and the viability of the US Airways hubs in Pittsburgh and Philadelphia in an expanded United system. Senate Commerce Committee Chairman John McCain (R-Ariz.) said the committee would "pay particular attention" to the impact of the deal on the traveling public.
AeroMexico broadened its code-sharing agreement with Air France to three new European destinations as well as domestic points in Mexico with 14 daily Air France flights. The new cities are Amsterdam, Frankfurt and Zurich. Air France will code share on AeroMexico flights from Atlanta to Monterrey and from Mexico City to Acapulco, Cancun, Guadalajara, Leon, Merida, Monterrey and Puerto Vallarta. The two carriers have been alliance partners since 1995, when they first code shared on twice-daily flights between Mexico City and Paris.
Peru Minister of Transportation Alberto Pandolfi said his country's Civil Aviation Department (DGAC) will meet soon with its U.S. counterpart to discuss complaints that the open-skies agreement between the two countries is not being properly implemented because the U.S. allows access to aircraft wet-leased by Peruvian carriers and disavows dry-leased arrangements. Pandolfi also denied rumors that FAA was demoting Peru from Category 1 to 2.
