Key factor in the Delta acquisition of Atlantic Southeast - other than the regional's reliability problems - was its orderbook for new CRJs. ASA has a total of 91 orders and options for both 50- and 70-seat CRJs that could be sold by Delta at a good profit if it did not already have plans for their deployment. With former US Airways Express VP John Selvaggio as new president of ASA, look for some of those airplanes to go into the Northeast, where American Eagle has just completed the acquisition of former Delta Connection carrier Business Express.
Qatar Airways has taken delivery of the first of four A320s it leased from Singapore Aircraft Leasing Enterprises. The carrier will receive the other three aircraft this month and next.
Taiwan's Aerospace Industrial Development Corp. (AIDC) reportedly is in talks with other Taiwan companies, including Air Asia, China Airlines, EVA Airways and the government-funded Industrial Technology Research Institute (ITRI), with the aim of forming a joint venture to convert passenger aircraft into cargo airplanes. The project, to be set up under the supervision of Taiwan's Ministry of Economic Affairs and Boeing, will require an investment of at least US$50 million.
Southwest employees will receive more than $120 million in profit sharing, the largest contributions ever for the airline. The amount represents 13.7% of eligible salaries and is based on the 1998 net profit of $433.4 million. The latest contribution brings to $1.05 billion the total Southwest has given employees since 1974. From 1992 to 1997, employees received an average of 9.5% of their paychecks in profit sharing.
Airline and airport groups indicated yesterday they want to work with FAA to tighten airport security. FAA warned 78 of the nation's largest airports March 3 to tighten security during the next six weeks, after which "intensive access control inspection and test by FAA security will begin." Cathal Flynn, FAA associate administrator for civil aviation security, issued the warning after government agents gained "unauthorized access from public areas to air operations" numerous times and then boarded a number of aircraft "unchallenged," Flynn told the airports.
National Transportation Safety Board Chairman Jim Hall said that because of FAA's failure to follow NTSB's 1995 recommendation requiring all transport aircraft to have upgraded flight data recorder (FDR) capability, with expedited capability for the Boeing 737, "we may never have the factual information needed to find out what happpened" on a MetroJet 737 that experienced flight control anomalies Feb. 23. Hall told the House Appropriations transportation subcommittee this week that the safety board in 1995 "urgently recommended" that FAA require the FDR upgrade.
The regional financial crisis has grounded the third airline in Malaysia, domestic carrier Transmile Air (TA). The other two were domestic carriers Asia Pacific Airlines (APA) and Saega Air, which operated flights from East Malaysia to the Southern Philippines and East Indonesia. TA, which was operating two 737-200s on scheduled flights to Kuching, Labuan and Kota Kinabalu, plus chartered services to Bali and Pattaya, has been in the red since it started operations in February 1997.
In the middle of Asia's economic crisis, Korean Air yesterday reported a net profit of 296.6 billion won (US$246 million) for 1998, a sharp turnaround after two straight years of losses. The airline lost KW397 billion ($397.5 million) in 1997. Despite depressed inbound and outbound traffic, Korean Air benefited from lower fuel prices and numerous financial restructuring moves. In early 1998, the carrier undertook a massive restructuring of its fleet, eliminated unprofitable routes and improved its overall financial base.
Cathay Pacific lost HK$542 million (US$70 million) in 1998, as lower yields on regional and transcontinental routes depressed revenue and forced the airline's first deficit since 1963. Revenue dropped 12.9% to HK$26.7 billion ($3.4 billion). "Widespread economic weakness saw reductions in both passenger loads and yields," Cathay said. "1998 will stand out as one of the most difficult years in the history of Cathay Pacific." The airline's average yield was HK45.2 cents per revenue passenger kilometer, down 18.9% year over year.
American Eagle has completed the purchase of Business Express Airlines from Dimeling, Schreiber&Park, a Philadelphia-based investment firm. Financial terms were not disclosed for the acquisition, which was announced Dec. 4, 1998 (DAILY, Dec. 7, 1998). AMR Eagle Holding Corp., the parent company of American Eagle Airlines and Executive Airlines, acquired Business Express "in its entirety," Eagle said, including its fleet of 41 leased Saab 340s and delivery positions for 20 firm orders and 40 options for the 37-seat Embraer ERJ-135 regional jet.
America West and its flight attendants, represented by the Association of Flight Attendants, will resume stalled contract talks March 17 in an effort to avoid a strike. The National Mediation Board last month released the airline and union into a 30 day cooling-off period that ends at 10:01 p.m. March 19, after which flight attendants have said they will launch a CHAOS (Create Havoc Around Our System) campaign. The two sides remain apart on salary, travel expenses and more than $5 million in bonus pay.
Financially troubled AeroPeru has suspended all international flights for at least 60 days and plans to stop domestic service on Sunday. For the next few days, the only flights operating will be from Lima to Cuzco, Arequipa and Iquitos. AeroPeru, the country's oldest carrier, will attempt to restructure $174 million in debt. It has $50 million in assets. The carrier hopes to have agreements soon with foreign investors.
Emirates has taken delivery of its first A330-200, powered by Rolls-Royce Trent 700 engines. This first aircraft will have 34 seats in business and 251 in economy, but most of the other 16 firm orders will have three-class seating for 243 passengers.
Decreasing airline yields, increasing per-seat costs of aircraft and aerospace manufacturers' fixed costs will combine to keep price competition between Boeing and Airbus high "for years to come," Moody's Investors Service said in a global aerospace/defense industry outlook report. The companies also face recurrence of a problem they have contained in recent years - the need to help airlines finance their purchases.
Continental Express, the regional subsidiary of Continental, will increase nonstop Omaha-Houston service July 7, offering one daily flight using a new 50-passenger Embraer ERJ-145. The new service complements Continental's mainline daily nonstop Omaha-Houston service.
Summary of U.S. National Carriers Systemwide Traffic Third Quarter 1998 Revenue Average Revenue Passengers Length of Passenger Enplaned % Travel Miles % (000) Change (Miles) (000) Change AirTran Airlines 1,428 423.78 573 818,369 247.02
Virgin Atlantic boss Richard Branson has asked the Indian and U.K. governments to allow more flights on routes between the two countries. In a letter to Ananth Kumar, India's minister of civil aviation, Branson made a case for additional flights and the benefits they would bring consumers. As the second-largest long-haul scheduled airline in the U.K., Virgin wants to provide air services to countries that have strong business, tourism and family links with the U.K.
Boeing and FlightSafety Boeing Training International were selected by the Air Force to update the training manuals for the VC-25A aircraft, best known as Air Force One. FSB will update about 3,500 pages of training documents for the aircraft, based at Andrews Air Force Base, Md. After the training document is updated, FSB will provide up to seven weeks of special training for each maintainer assigned to the aircraft.
Airline passengers, testifying yesterday before the House aviation subcommittee, related the kind of experiences that inspired H.R.700, the Passenger Bill of Rights. They told of being stranded for hours on aircraft with no food or water and overflowing bathroom facilities, baggage that took up to 12 days to arrive, and, in one case, the sexual molestation of a child traveling on an unattended minors program.
Summary of U.S. Major Carriers Domestic Revenues and Expenses Third Quarter 1998 (In Dollars) Total Operating % Passenger Freight Revenues Change Revenues Revenues Alaska 430,347,000 5.35 376,931,000 17,815,000 America West 481,939,734 5.75 451,274,998 5,377,088
Standard&Poor's has changed its outlook on Midway Airlines to negative from positive after Southwest announced its first service from Midway's home base in Raleigh/Durham. "Southwest's entry into Raleigh/Durham will likely divert some traffic from Midway and reduce its currently high yields, since Southwest is known for its low fares," S&P said. Midway's growth "could be constrained by Southwest's entry into those markets Midway had deemed attractive for future growth," the firm said.
