Securities and Exchange Commission first quarter filings reveal that as of March 31 many carriers still are far away from solving their Year 2000 (Y2K) problems and are spending $4 million to $160 million each on Y2K compliance. America West does not know what it will cost to bring its computer systems into compliance and is identifying the systems that will be affected. It is developing a plan to resolve the problem on a timely basis and will put in "a considerable amount of internal resources" and hire outside personnel to help.
Mesa Air Group lost $9.3 million in the quarter ending March 31, compared with a loss of $989,000 a year earlier. Total revenue dropped to $119.6 million from $125.4 million, while expenses grew 8.5% to $131.1 million from $120.8 million. Included in the expenses was a $4 million loss provision for discontinuing Mesa's Fort Worth regional jet operation. But Mesa also gained $8.1 million from selling America West stock.
FAA requested reprogramming authority to meet "urgent requirements" but DOT Inspector General Kenneth Mead, in a report to Rep. Frank Wolf (R-Va.), said his investigators "found major variances in amounts proposed for reduction by budget line item to actual amounts reprogrammed." Wolf is chairman of the House Appropriations subcommittee on transportation.
United is upgrading its fleet with industry-standard High Efficiency Particulate Air (HEPA) filters in its air conditioning systems over the next six months at a cost of about $425,000. HEPA standard filters remove 99.97% of all air particles 0.3 microns in size, but the filters going into United's fleet manufactured by Pall Corp. in New York can remove viruses, which measure 0.1 microns or smaller. United Senior VP-Fleet Operations Andrew Studdert said air quality consistently ranks among the top consumer concerns in United's marketing research.
Midwest Express is believed to be the next Fairchild Dornier 328JET customer for its wholly owned subsidiary Skyway Airlines. Sources tell The DAILY that the 32-seater has the inside track over the ERJ-135. The fight between the two manufacturers now is over American Eagle and Comair, with US Airways not expected to enter the fray until possibly next fall. American Eagle is expected to select the ERJ-135 because of its 90% commonality with the carrier's new fleet of ERJ-145s, although it did split the 50- and 70-seat orders between Embraer and Bombardier.
Express Airlines I, the wholly owned subsidiary of Northwest, reported a 28.4% drop in traffic to 28.7 million revenue passenger miles and a 29.6% decline in capacity to 48.2 million available seat miles for April compared with the same year-ago month, boosting the load factor one percentage point to 59.5%. The declines are due to fellow Airlink Mesaba Airlines' takeover of Express's flying at the Twin Cities hub.
United is introducing daily nonstop service from San Jose Airport to Washington Dulles on Sept. 9, when it also will launch Shuttle by United service to San Jose. Shuttle will provide nonstop access to Los Angeles with eight daily flights. The nine new flights will nearly double United's service at San Jose. In a message to employees, United management said the new service will facilitate connections to Europe and Latin America.
The latest of the new regional jets rolled out of a factory in Brazil Tuesday as Embraer reported a $19.9 million first quarter profit for the period ended March 31. It was the third consecutive quarterly profit for the company, which consistently lost money since its privatization in 1995 and before. The profit came on revenues for the period of $229.6 million. In the September 1997 quarter, the company made $9.4 million on $199.7 million in revenues and in the December quarter it was $12.8 million on $292.2 million in revenues.
Air Afrique, the troubled African carrier, intends to privatize 19% of its capital within the next two years, said Director General Harry Tirvengadum this week in Paris, where he met with bankers. At the same time, his staff in Abidjan said they plan a strike today to protest the scrapping of certain perks, such as short-term loans for special occasions.
Appleton, Wis., United Express affiliate Air Wisconsin flew 52.2 million revenue passenger miles last month, a 13.3% increase from April 1997. Capacity rose 11.6% to 83.7 million available seat miles, allowing the load factor to climb one percentage point to 62.4%.
Midway Airlines posted a 15.9% rise in traffic and 10.5% in capacity for April over the same month last year, which lifted the load factor 3.3 percentage points to 69.5%. Midway posted 93.5 million revenue passenger miles and 134.6 million available seat miles. Passenger enplanements went up 19%.
Hawaiian Airlines reported a 2.1% drop in traffic and a 1.4% decline in capacity for April 1998 over April last year, depressing the load factor 0.5 percentage points. It reported 368.5 million revenue passenger miles and 461.4 million available seat miles, creating a 79.9% load factor. Passenger enplanements fell 0.5% to 439,553.
United Parcel Service posted net income of $351.6 million on revenues of $5.9 billion for the first quarter. This compares to net income of $227.7 million on revenues of $5.7 billion for the same period last year. International results rebounded from last year's pretax loss of $31 million to pretax income of $34.5 million. Revenues climbed 15.8% to $820.6 million. UPS attributed the gain to cost-containment efforts and favorable fuel prices.
Former Civil Aeronautics Board Chairman John Robson calls DOT's proposed competition guidelines an "unwise and unworkable attempt at government intervention in the free market" in a May 11 letter to House Transportation aviation subcommittee Chairman John Duncan (R-Tenn.). The letter outlines Robson's differences with his successor, Alfred Kahn, who supports action to curb the predatory practices by majors that Kahn and others believe have proceeded unchecked. Robson testified with Kahn at a recent aviation subcommittee hearing on the issue.
Lufthansa Cargo AG (LCAG) recovered from the red in 1996 to a pre-tax profit of nearly 200 million Deutschmarks (US$120 million) last year. Strong exports from Germany together with a tight grip on expenditures helped turn its operating results around, the company said. LCAG's sales revenues from its core business rose from DM3.38 billion ($2.03 billion) in 1996 to DM3.9 billion ($2.3 billion) last year. Pre-tax profit reversed course from a DM59.8 million (35.9 million) loss in 1996 to a DM194 million (116.4 million) profit in 1997.
Air Tindi and Westjet Airlines, both Canadian carriers, received initial foreign air carrier permits under an order issued by DOT. Air Tindi may provide charter combination service between the U.S. and Canada. Westjet may provide scheduled and charter combination service between the U.S. and Canada, and between points in Canada and San Juan, Puerto Rico, and beyond. (Dockets OST-96-1855, 97-2495)
Export-Import Bank said yesterday it ceased issuing new financing approvals for U.S. exports to India following sanctions imposed by President Clinton after India's detonation of nuclear explosive devices earlier this week. The sanctions threatened Boeing's bid for $2 billion in widebody aircraft orders from Air-India. Boeing has been competing for nearly two years with Airbus to supply Air-India with 23 medium-capacity, long-range aircraft. The European Union has not imposed sanctions on India, which leaves Airbus alone in the competition.
DOT issued an order tentatively reselecting Trans States Airlines d/b/a Trans World Express to provide Essential Air Service at Cape Girardeau and Fort Leonard Wood, Mo., for two years, beginning May 1. Trans States will operate nonstop Cape Girardeau-St. Louis roundtrips - three each weekday and four on weekends - at an annual subsidy rate of $278,560 and three nonstop Fort Leonard Wood-St. Louis roundtrips six days a week at $337,124, using 19-seat Jetstream aircraft. The carrier has been providing this same level of service at slightly higher annual subsidy rates.
CCAIR made more money in its most recent quarter than in all of fiscal 1997. The Charlotte-based carrier Thursday reported net income of $548,825 for the quarter ended March 31, compared with $520,260 for the year ended June 30. Credited with the turnaround was the fleet-rationalization program engineered by Mesa Air Group Chief Executive Jonathan Ornstein and his Barlow Partners group, which owns about 9% of CCAIR's outstanding stock. Talk persists that the two US Airways carriers operating in the East could merge (see story below).
Government "re-regulation" of the airlines will result in restricted services and higher air fares, according to full-page Air Transport Association advertisements in yesterday's Washington Post and Washington Times. The ads attack the "We-Know-Best" crowd at DOT who came up with newly proposed competition guidelines, ATA said. The ads, which will run through next week in the Wall Street Journal and in other publications, are "aimed at drawing attention" to the competition guidelines, ATA said.
American will hold a massive party next week for Chairman Robert Crandall, who will retire Sunday. President Don Carty takes the helm just as the carrier later this month takes delivery of a Boeing 767, its first new aircraft in nearly two years and the first of 100 new Boeing twinjets.
Commandante Rolim Adolfo Amaro, president of Brazil's TAM airlines and a major operator of Cessna Caravans in passenger service, is urging Cessna to stretch the 13-passenger single-engine turboprop (limited to nine in the U.S.) to 17 seats and boost the Pratt&Whitney PT6A-114A by 1,000 horsepower. According to a Cessna spokeswoman, however, "It is not something we are aware of." Others, including former FAA Administrator Langhorne Bond, support larger single-engine-turboprop operations and the new FAA single-engine IFR rule.
