Moody's Investors Service yesterday placed Japan Airlines' credit rating under review for a possible downgrade, a further indication that the airline's prospects are worsening. Moody's action, affecting 570 billion yen ($4.45 billion) in debt, came a day after JAL's announcement (DAILY, March 18) that it will undertake a massive restructuring and write off $763.8 million in losses. The writeoff is in addition to $453 million in deficits from earlier this decade and comes after Standard&Poor's put JAL on credit watch March 13.
The Sabena Group's operating income rose 16% from 61.8 billion Belgian francs (US$1.73 billion) in 1996 to BEF72 billion ($2.05 billion) last year. Reporting final figures for the year yesterday, the group said pre- tax earnings totaled BEF616 million ($17.2 million), up from a BEF3.48 billion ($97 million) deficit in 1996. Sabena's total consolidated operating profit in 1997 was a modest BEF9 million ($252,000), versus its BEF4.28 billion ($120 million) loss in 1996. Sabena management attributed the improvement to higher load factors and strict cost control.
United will begin installing boarding pass readers in 50 stations over the next year. Travelers insert boarding passes into the reader, which transmits their seat assignment to the customer service representative at the podium. This will help the representative perform flight reconciliation and expedite bag matches, reducing departure delays. The readers are expected to curtail ticket and frequent flyer fraud and denied boardings, United said.
Air Canada has decided to keep 25 DC-9s and update them to Stage 3 noise rule standards. The carrier planned earlier to retain 15 of the aircraft but increased the number because of traffic growth since the U.S.-Canada open transborder agreement.
The United States Travel Agent Registry (USTAR) board plans numerous enhancements to its Genesis computer reservations system, ticketing and settlement platform. Genesis is USTAR's $50 million not-for-profit CRS designed to reduce distribution costs more than 50% (DAILY, Nov. 19).
Continental will acquire 15 next-generation Boeing 737-900s for May 2001 and July 2002, Chairman and Chief Executive Gordon Bethune said yesterday at a Wings Club luncheon in New York. Purchase of the new fuel-efficient aircraft, which Bethune said was accelerated by favorable delivery positions and fierce competition, makes Continental the largest carrier to add the aircraft to its fleet. The Houston-based carrier also agreed to take 25 more 737-900 options that could be exercised between 2001 and 2004.
Illinois DOT's final environmental assessment (EA) for the proposed South Suburban Airport in Peotone responds to FAA criticism of the state's traffic forecast for the Chicago area by contending that FAA's own terminal area forecast (TAF) is too low. The EA, submitted to FAA this week, concludes that the proposed airport is financially feasible, would not affect Chicago O'Hare or Chicago Midway or their airspace, and would have a minimal environmental impact.
A Formosa Airlines Saab 340 carrying eight passengers and five crew was missing two minutes after takeoff from Taiwan's northern city of Hsinchu yesterday and was believed to have crashed into the sea, wire services reported. The incident was the fifth involving Formosa Airlines in five years, Reuters said.
Ireland, a recent addition to European Union nations trying to preserve duty-free sales within the EU (DAILY, Feb. 11), asked the European Commission to study the impact of ending such sales and won support from eight nations Tuesday at the EU transport ministers meeting in Brussels. Finance ministers decided in 1993 to abolish duty-free sales inside the EU in July 1999, concluding that they are inconsistent with the EU single market.
Iberia, still pursuing approval of its code-share agreement with American, has asked DOT for an exemption to operate code-share service from Madrid to Washington Reagan Airport via New York Kennedy, and to other U.S. markets. Its permit authorizes service to one of the three Washington-area airports, but Washington Dulles is precluded by the Spanish government's selection of Spanair to serve the airport. Iberia, which applied with American for approval of the code share last year (DAILY, Oct.
British Airways, previewing London-Dallas/Fort Worth 777 service that begins today, noted that 15% of its shareholders reside in the U.S. BA Chairman Bob Ayling is one of several chief executives who will testify today at a Senate Judiciary antitrust subcommittee hearing on U.S.-U.K. aviation and the American/BA alliance.
Uzbekistan Airways asked DOT for an exemption to exercise rights available to it under the U.S.-Uzbekistan open-skies agreement (DAILY, Feb. 20), which took effect Feb. 27. It asked for the exemption for two years or until 90 days after its foreign carrier permit is granted. Separately, the carrier amended its permit application, asking to incorporate open-skies rights.
Delta will begin daily nonstop Portland, Ore.-Osaka service Oct. 28 and Portland-Fukuoka flights Oct. 29 under tentative approval granted by DOT (DAILY, March 17). DOT also gave preliminary approval for Delta to expand its present Los Angeles-Tokyo flights from six-times-weekly to daily service. Both Japan services will be operated using MD-11 aircraft. The carrier announced Boston-Portland flights starting Aug. 1, connecting with current service to Japan, using 757 aircraft. Las Vegas-Portland flights will begin April 5.
Partners in the Passages frequent flyer program are increasing the number of kilometers passengers earn on flights or reducing the number needed for free trips in response to the Asian economic downturn. Passages, whose members earn kilometers for first- and business-class travel but not in economy, is owned by Cathay Pacific, Malaysia Airlines and Singapore Airlines, and its partners include All Nippon Airways, British Airways, American Express, Hertz, Inter-Continental, Mandarin Oriental and Shangri- La.
United will hushkit all 75 Boeing 727s in its fleet, but Chairman Gerald Greenwald told employees recently that in the future the 727s will not be as economical to operate. Instead of using them on long flights, United will put them on shorter segments, such as from Chicago to nearby business markets and from Denver to the Midwest.
DOT's decision granting tentative approval for U.S.-Japan rights rejects American's attempt to subject Northwest-Continental code-share proposals to the same scrutiny applied to the American-TACA code share, as well as Continental and Continental-Micronesia arguments that granting all requests for service proposed for 1998 might compromise their own plans for later service launches. The awards leave 12 weekly frequencies for later allocation.
All Nippon Airways capacity forecasts indicate that it is ahead of its 1996 plan to increase the international share of its revenue from 25% to 35% in five years and 40% after 10 years. The airline says its international network will increase from 31.7% of its total available seat kilometers during the fiscal year that ends this month to 46.6% in 2002. The new estimate applies to capacity, however, and revenue is likely to be a few points behind whatever traffic increase ANA can achieve. Much of the capacity growth will take place from Osaka Kansai Airport.
Boeing engineers in Mesa, Ariz, and Philadelphia are studying the feasibility of several concepts that integrate "smart" materials into helicopter rotor blades under a program sponsored by the Defense Advanced Research Projects Agency. Smart materials change shape when stimulated with thermal, electrical or magnetic energy and return to their original shape when the stimulus is removed. Roger Hunthausen, manager of technology development for Boeing in Mesa, says smart materials could improve rotor aerodynamics and reduce vibration and noise.
Northwest and Continental charged Delta and TWA with mischaracterizing their relationship and distorting the record of U.S.-Japan issues as the two partnerships seeks same-country code-share authority to Japan. DOT has tentatively decided to split the available 28 weekly frequencies equally between the two carrier teams, an approach Northwest regards as "balkanizing" the rights. In filings, Northwest countered Delta-TWA's recounting of the history of U.S.-Japan talks, which according to the latter carriers was colored by Northwest's attempt to "derail" the agreement.
Bangkok has became an international center for discounted air tickets as a result of the reduced value of Thailand's currency, the baht. Air fares are calculated in NUC - neutral units of construction, made up of a basket of currencies. The exchange rate, fixed by IATA, lags behind changes in the market. Even with a direct conversion of full fares, tickets in Bangkok would cost overseas buyers about half the price in June 1997 because of the lower value of the baht.
UPS's Independent Pilots Association has ratified 1,570-324 a contract that will raise the average pilot's annual salary from $102,000 to $123,000 immediately. It calls for a 27% pay increase over seven years, including a 23% increase retroactive to Dec. 30, 1995. It doubles pensions, effective immediately, and improves scheduling rules to protect pilots who fly at night and sleep during the day.
Mesa Airlines and America West are trying to reach a code-share agreement to replace the pact America West will terminate April 2. Mesa currently flies for America West out of Phoenix to 17 points in Iowa, Colorado, Arizona, New Mexico and California. America West spokeswoman Patty Nowack said Mesa defaulted on the current agreement by failing to reach the stipulated completion factor of 97%. Mesa believes that it has fixed the problem, and that no operations will be disrupted while it negotiates the new agreement.
