Standard&Poor's, citing production problems and cash flow, lowered its ratings on Boeing Co., Boeing Capital Corp. and McDonnell Douglas Corp., but it removed all the ratings from CreditWatch, where they were placed with negative implications on April 9. Ratings of Boeing and McDonnell Douglas were lowered to AA from AA+ and of Boeing Capital to AA- from AA. S&P said the downgrade on Boeing Co. is based on "much lower than expected profitability and cash flow generation stemming from commercial aircraft production difficulties.
Malaysia Airlines is pushing forward with structural reforms even if some of them are not universally popular, Chairman Tan Sri Tajudin Ramli said recently in a meeting with reporters. Ramli rebuked criticism that some reforms were undertaken to help special interests, saying "this exercise is not an attempt to satisfy the business interests of specific groups of shareholders within Malaysia Airlines." Malaysian recorded its highest profit ever in the 1996-97 fiscal year.
Air Canada has sold its wholly owned Galileo Canada subsidiary to Galileo International for a $34.3 million pre-tax net profit. The sale is another step in Galileo's strategy to acquire airline-owned national distribution companies. Galileo Canada is the country's leading computer reservations systems provider.
In the 10 months since Korean Air's 747 accident in Guam, the airline has undertaken several extensive pilot training reforms, none more sweeping than asking code-share partner Delta to audit all flight crew operations and recommend safety improvements. Delta's involvement began May 14 and will continue through July. In a region where admitting mistakes is often never done, Korean Air has sought a culture change among pilots, bringing in foreign-trained senior pilots as captains and telling employees that overseas pilots are better qualified in some areas.
KLM passenger traffic for May increased 5% on 7% more capacity, which forced the load factor down 1.8 percentage points to 75.1%. The Asia/Pacific load factor rose 0.7 points to 74.1%. Traffic on KLM's Far East routes was up 7%. Business-class traffic to Asia grew 6% on 2% more capacity. Business traffic jumped 18% within Europe and to North America, although overall North American traffic remained flat. Traffic on routes to the Middle East and Africa increased 23% and 20%, respectively.
Crossair and EuroAirport, the tri-national airport serving Basel, Mulhouse and Freiburg, have signed a partnership agreement to nail down their joint financial commitment to the airport's future development. Crossair agreed formally to use the airport as its European hub and EuroAirport will develop its passenger terminal so that Crossair can increase its connecting flights. Crossair will lend the airport 100 million French francs (US$16.8 million), repayable over 10 years with interest.
AeroMexico will give its flight attendants an 18.3% salary increase, 140 Mexican pesos (US$15.98) for each fourth aircraft landing they work in a single day and a retirement package under a contract settlement reached late last week. AeroMexico's Unionized Association of Flight Attendants went on strike June 1 over wages and the lack of a retirement plan, but the government took control of the carrier and forced them back to work.
United, US Airways and Delta have applied for a total of 28 weekly frequencies between the U.S. and France for use next year, and the proposals should trigger a proceeding since DOT has only 17 frequencies to allocate. The department already has awarded rights to be exercised this year. United wants seven frequencies per week for a second daily Chicago- Paris flight using a 208-seat 767-300.
Northwest and its Air Line Pilots Association unit will return to the bargaining table, possibly as early as this week, according to a source close to the negotiations. A return to talks delays the chance of a proffer of arbitration that could lead to a 30-day cooling-off period and a strike.
Lufthansa Cargo A.G. is overhauling its sales organization to market the company's transport services better. Following a June 3 decision by its board, LCAG is disbanding its three consolidated geographical sales divisions of Europe-Africa, America and Asia/Pacific. These will be replaced by eight smaller, decentralized managerial units, broken down as follows: Germany, Northern Europe, South Eastern Europe, USA-Canada- Mexico, South America, Austral-Asia-India, Northeast Asia and Africa-Middle East.
Cathay Pacific, adding to this year's bargain-basement fare sales to Asia, is offering roundtrip U.S.-Asia economy-class fares for as little as US$500 plus tax. "No, it's not a typo," Cathay said. The lowest fare covers Los Angeles-Hong Kong roundtrips. Add-on fares beyond Hong Kong to Bangkok and Bali cost an additional $100. Travelers from Fresno, Las Vegas, Monterey, Oakland, Phoenix, Sacramento, San Diego, San Francisco, San Jose or Tucson can reach Hong Kong for $600 plus tax. Hotel deals in Hong Kong start at $45 per night.
Air France is expected to hold an extraordinary board meeting this week to impose a labor cost reduction on pilots, with whom talks broke down on Sunday. The pilots have been on strike since June 1 to protest the "B" scale of lower salaries for newly hired pilots and management's plans to trade equity for pay cuts.
SAS will begin daily nonstop service between Stockholm and Chicago starting in October. In addition, the carrier will alter the schedule of its Chicago-Copenhagen service to have it depart at 10:05 p.m. daily from O'Hare, allowing for better connections on both ends.
The flight crew union of All Nippon Airways has postponed a walkout of Boeing 747-400 international services, set for today, until at least June 19. With the decision, all scheduled flights of the carrier between Japan and France will be operated as planned, as will 12 charter flights for the World Cup soccer match. The strike was postponed because the company made a new proposal to the union about flight duty allowances and the union accepted a portion of it. Details of the proposal were not disclosed.
Singapore Airlines is extending ticketless travel to its flights to Hong Kong, effective immediately. Hong Kong is the carrier's fourth city for which reservations and payment can be made electronically.
Canada's transport ministry is gearing up for bilateral negotiations with Japan and Hong Kong following last week's decision to seek new code-share opportunities to those countries for Canadian Airlines and Air Canada (DAILY, June 3). Talks should begin in "the very near future," according to the transport minister's office.
A key Northwest Arkansas Regional Airport official told DOT its proposed competition policy will discriminate against larger carriers and harm service prospects for smaller communities, sentiments expressed by airport authorities in Chattanooga and Fort Smith, Ark., (DAILY, June 5) Statements backing the policy continue to come from consumers and businesses, while a number of labor filings join those of several smaller airports arguing against it.
FAA Administrator Jane Garvey, saying the agency has "learned many lessons over the past few months," said Friday she is abolishing the Office of Associate Administrator for Administration, effective immediately, and making other changes designed to "sharpen the corporate focus of our financial and human resources offices and respond to congressional direction." Garvey created a new job, assistant administrator for financial services and chief financial officer, and appointed Carl Schellenberg, now in Air Traffic Services, to fill it.
Shannon Aerospace, Ireland's maintenance, repair and overhaul provider, carried out maintenance tasks on 32 aircraft, including 20 D-checks, during the six months that ended March 31. The company is gearing up to perform its first Airbus maintenance work, beginning late in August. It installed an A320 docking station at its facilities last December and has been training key personnel. Preparations are now focused on devising optimal planning and scheduling methods to minimize ground time during overhauls.
Tower Air's scheduled traffic rose 27.4% in May and capacity jumped 37%, compared with year-ago levels, which depressed the load factor 5.1 percentage points. Tower flew 265 million revenue passenger miles and offered 389 million available seat miles, producing a 68.1% load factor. Tower carried 99,000 passengers, a 25.3% increase, and flew 3,339 block hours, a decline of 22.2%, primarily due to decreased flying for Haj - religious pilgrimage - operations, offset by increased flying in scheduled service and charters.
Airlines yesterday voted unanimously to fund a global program to prevent Year 2000 computer issues from hampering air traffic systems, airports and other key transportation sectors. The vote was taken at IATA's 54th Annual General Meeting in Montreal. IATA member carriers are spending $1.6 billion to ensure they are Year 2000-compliant, and the organization wants to ensure other major industry components and suppliers will not disrupt air travel after Dec. 31, 1999.
U.S. and Italian negotiators have agreed to meet July 13-15 in Washington. The two sides will continue to pursue an open-skies accord, to which Italy appears dedicated - but with uncertain timing - sources said.
Delta traffic for May rose 6% on 3.4% more capacity, which boosted the load factor to 75.1% from 73.2%. Domestic traffic increased 3.8% on 0.5% less capacity, while international traffic grew 13.6% on 18.9% higher capacity. The domestic load factor increased 3.1 points to 73.9%. Delta's growth to Europe and Latin America means that international capacity in May comprised 23% of the airline's systemwide capacity, up from 20% a year ago. May 98 May 97 5 Mths 98 5 Mths 97
Frontier will add 100 employees at Denver International Airport on Sept. 1, when it takes over baggage and cargo loading, water provisioning and other functions previously performed by AMR Services. Frontier spokesman Bob Schulman said the move will result in "dramatic cost savings...in the high six figures" for the four-year-old carrier. Frontier has 935 employees, 195 of whom staff DIA's ticket counter, departure gates and maintenance facilities.
