British Aerospace will acquire Marconi Electronic Systems for about $12.7 billion from General Electric Co. plc, the two British companies said yesterday. The deal would form a company with $20 billion in annual sales and 130,000 workers around the globe, and would rank No. 3 behind Boeing and Lockheed Martin. It also would put the U.K. aerospace industry in a strong position as the European industry further consolidates.
American, holding a controlling interest in Reno Air, told DOT yesterday that "United's agenda for continued slot dominance at [Chicago] O'Hare" should not "destroy the City of Reno's critically important service link to O'Hare." United wants DOT to reallocate seven slots held by Reno Air to a qualifying new entrant, telling DOT that ownership by American disqualifies Reno Air (DAILY, Jan. 11). "Reno Air was clearly a 'new entrant' at the time of the Reno-O'Hare slot exemptions on 1994 and 1997, and has long provided nonstop service" in the market.
Indonesia will close 54 small airports in remote areas of the country, according to a report in the Indonesian Observer. The country has 158 such airports. The main reason is the country's economic crisis, which has reduced passengers and increased costs in operating the airports.
Delta management has agreed to early contract talks with its Air Line Pilots Association unit. The union last week asked management to begin negotiations in September (DAILY, Jan. 12). Delta suggests they start as soon as negotiations over pilot pay and work rules are settled for the new 777 or on Sept. 8, whichever comes first. Delta's ALPA negotiators plan to begin early openers on the 777 pay and work rules in February. The pilot labor contract becomes amendable in May 2000.
Delta yesterday posted record earnings for the fourth quarter and calendar year 1998, its best year ever in terms of revenue, passenger load factor, passengers carried and cash flow. On top of the records, the company's operating margin finished the year at 12.5%, positioning the carrier well if traffic ebbs this year. The fourth quarter margin was 9.3%. Record fourth quarter net income of $194 million was up 2%, while revenue gained marginally to $3.45 billion. Delta's fuel costs were $58 million lower in the fourth quarter and $280 million lower for 1998.
Colgan Air may continue essential air service at Augusta/Waterville, Bar Harbor and Rockland, Maine, and Rutland, Vt., DOT has tentatively decided. Annual subsidy would be $2,387,225 for the period Jan. 1, 1999-Dec. 31, 2000. EAS for the Maine points requires at least two daily roundtrips to Boston, nonstop service to Augusta/Waterville and one-stop service to Bar Harbor and Rockland. At Rutland, EAS requires at least two roundtrips a day either to Boston or New York with no more than one intermediate stop. (Docket OST 97-2784)
Rep. Louise Slaughter (D-N.Y.) is considering introducing legislation that would restrict Delta's surcharge on tickets not purchased from the airline's web site, a Slaughter spokeswoman said yesterday.Slaughter is not on a subcommittee with aviation jurisdiction but is interested in aviation issues involving mid-size cities like Rochester, which is in her district.
The board of AeroPeru will sell its 52% of the airline to private investors rather than approving a plan to invest an additional $10 million to keep the airline viable, according to Miami-based Aviation Management Services. At a Jan. 14 board meeting, which included members Delta, AeroMexico and CINTRA, the group rejected moves to funnel more money into the airline. Delta signed a code share with AeroPeru in March 1998 (DAILY, March 12, 1998) and spent $50 million to acquire roughly a 35% stake in the carrier and gain a board seat.
SAS December traffic rose 4% to 1.49 billion revenue passenger kilometers, but freight volume was down 5%. For 1998, the airline posted a 35% traffic increase to 21.2 billion RPKs, producing a load factor of 66%. Freight volume was flat at 691 million ton kilometers. SAS carried 21.69 million passengers last year, a gain of 4%.
DOT granted Delta a two-year initial exemption to provide scheduled Atlanta-Istanbul service. The carrier may integrate the exemption with its existing certificate and exemption authority, not to include fifth-freedom intermediate and/or beyond rights. To expand its European service, Delta plans to operate three weekly nonstop roundtrips in the market starting June 1 with MD-11s (DAILY, Jan. 15). (Docket OST-99-4997)
National Transportation Safety Board recommended yesterday that FAA require 727 operators to inspect the main landing gear forward trunnion bearing support fittings. The recommendation follows an emergency landing accident in which a DHL Worldwide Express 727 was damaged substantially.
Delta will begin hourly nonstop Atlanta-Philadelphia service on April 4. It will also add frequencies to its scheduled Atlanta-Austin, Greensboro/High Point/Winston-Salem and Norfolk service.
Lucio Tan, Philippine Airlines (PAL) major shareholder, is determined to keep the flag carrier flying with or without foreign investors. Speaking through PAL VP-Administration and Services Manolo Aquino yesterday in Manila, Tan told The DAILY he is prepared to fork out more than the proposed US$150 million required for the airline to continue operations. Tan is confident the increased funding will enable PAL to stand on its own after negotiations with potential investors Singapore Airlines, Cathay Pacific and Northwest fell through.
Sen. Max Cleland (D-Ga.) has been named to fill the lone Democratic vacancy on the Senate Commerce Committee's aviation subcommittee, congressional sources said. Cleland, who was elected in 1996 to the Senate seat of retiring Sen. Sam Nunn (D-Ga.), fills the aviation subcommittee vacancy created by the retirement last year of Sen. Wendell Ford (D-Ky.). The full Commerce Committee will begin consideration of Chairman John McCain's (R-Ariz.) FAA reauthorization bill today.
United has installed two new 747-400 simulators at its Denver flight center, reaching a total of five 747-400 simulators at the facility. The new simulators from CAE are certified to Level D with Pratt&Whitney, General Electric and Rolls-Royce engines.
Northwest yesterday showed that the 15-day pilots strike in the third quarter scared away travelers throughout the fourth quarter and cost it $300 million in expenses and lost revenue. In the latest setback, the airline lost $181 million for the December quarter and $286 million for the year. The Asia division lost money in 1998, leading the airline to expect flat Asia results this year. Northwest's calamity could not be more visible yesterday next to Delta's record $1.1 billion net profit last year. (See story on Page 101.)
First flight of the prototype Sikorsky S-92A Helibus medium-lift helicopter, powered by two General Electric CT7 engines, was completed last week at the Sikorsky Development Flight Center in West Palm Beach, Fla. The Helibus is expected to serve a range of needs, from passenger, cargo and aeromedical service to search and rescue operations.
DOT Secretary Rodney Slater and FAA Administrator Jane Garvey today will dedicate the first Display System Replacement at the Seattle air route traffic control center. DSRs will replace decades-old equipment with modern computer processing technology at 20 en route centers, including new controller workstations, display computer hardware and software.
U.S. Airports Sources of Airline Generated Operating Revenue Small Hub Airports* Fiscal Year 1997 Dollar Amounts in Thousands Terminal Terminal Apron, Cargo Area Revenue Per Landing and Hangar Rental Passenger Fees Space Rental Akron/Canton 549 2.44 425 263
All Nippon Airways retained its status in 1998 as the largest airline in Asia in terms of passengers carried, and the largest outside the U.S. ANA, which transported more than 40 million passengers last year, carries nearly 50% of Japan's domestic traffic.
Spirit Airlines posted a 106.6% jump in traffic on 132.5% more capacity for December 1998 compared with December 1997, which depressed the load factor 8.7 percentage points to 69.5%. Spirit flew 140.4 million revenue passenger miles and 202 million available seat miles. Passengers carried shot up 81.8% to 149,905. Year-to-date RPMs gained 82.1% and ASMs 86.2%, driving the load factor down 2.2 points. Passengers carried rose 79.1%.
Vanguard said it has leased two Stage 3 737-200 aircraft from GE Capital Aviation. The aircraft will be delivered early this year and will be among the youngest in Vanguard's fleet. The low-fare carrier, which began service in December 1994 from Kansas City, Mo., currently has a fleet of nine 737-200s.
House Transportation and Senate Commerce committees are poised for fast starts on their aviation agenda this year. Transportation already has approved a six-month FAA reauthorization and last week bolstered the staff of the aviation subcommittee for the battle over taking the aviation trust fund off budget, adding three staffers.
