Aviation Daily

Moody's Investors Service has raised the ratings on most airline equipment trust and pass-through certificates to two notches above the airlines' senior unsecured ratings because of the superior legal and economic position of the certificates, which are given special protection under Section 1110 of the U.S. Bankruptcy Code. The action, affecting about $9.5 billion of debt securities, completes a review Moody's began Jan. 19. The Bankruptcy Reform Act of 1994 strengthened protection from lessors under Section 1110.

China Airlines has doubled the number of weekly flights between Taipei and Kuala Lumpur with the addition of a daily nonstop on May 16. Previously, CAL operated seven weekly flights in the market, via Hong Kong.

Boeing has worked out a deal with Air France to resolve differences about the carrier's move early this year to cancel firm orders for three 737- 400s, three 767-300s and four 747-400 freighters. The company will help the airline "remarket" the aircraft, according to Commercial Airplane Group President Ron Woodard.

The worldwide market for long-haul widebody jetliners may be big enough to support all three manufacturers of such aircraft, Boeing Chairman Frank Shrontz said at a news briefing during his company's ceremonial delivery of its first 777. Shrontz told reporters that "it's possible that all three [companies] in this circumstance will survive," even though current market shares are lopsided. The 777 holds about 70% of new orders in its category and Airbus Industrie's A330/A340 has 28%. After cancellations, McDonnell Douglas's MD-11 net sales stand at minus one.

Interactive Flight Technologies said it will supply Alitalia with video-on- demand inflight entertainment networks for first- and business-class passengers. IFT said Alitalia will be the "first and only airline to offer digitized movies to its passengers." IFT said its system is the only one that offers "true video on demand."

Lufthansa Group reduced its pre-tax loss to 53 million Deutschmarks in the first quarter 1995 from DM87 million in the same 1994 quarter. The company said its earnings, boosted by "heft" increases in business volume and currency-related expenditure benefits, came in "well above target." Lufthansa AG, the airline, reported that its first quarter pre-tax loss shrank to DM38 million from DM87 million. Lufthansa Group's passenger volume gained 9.5%, and freight and mail volume jumped 22.5%.

United has taken delivery of the first of 34 Boeing 777 widebody twinjets it intends to use mainly on transatlantic service. The carrier, which has options for 34 more 777s, will begin operating the aircraft June 7 between Washington Dulles and London Heathrow, and will use it initially between Denver and Chicago, Chicago and Washington, and Chicago and Frankfurt. It will take delivery of 10 more 777s this year.

AST Research said it has signed an agreement to supply American with desktop, notebook and server systems for the carrier's customer service base, including the Sabre Travel Information Network.

TWA, which has abandoned its travel agent commission cap, and United, which has not, recently increased the fee they charge passengers for changing or canceling restricted-ticket reservations to $50 from $35, and both are passing a larger portion of the money collected to travel agents. Airlines had received $5 of the $35 cancellation/change fee, but TWA and United are passing along $15 of the higher fee. United, like other carriers, said it imposed the increase to cover the cost of making the change, and because last-minute changes cause "breakage."

Danish carrier Maersk Air has placed firm orders for six 737-500s in a transaction valued at $186 million, and it took options on seven more of the twinjets. Deliveries of the six firm aircraft will being in early 1996 and continue through the year, gradually replacing Fokker 50s on Maersk's domestic and international routes. Maersk is moving toward eventually being an all-Boeing operator. "The fact that we're replacing our 50-seat turboprop fleet with a larger jet might surprise some," said Maersk President Bjarne Hansen.

FAA is preparing to punish two New York air traffic controllers who spoke to the press about the loss of an engine on a United 767 flight during an ETOPS flight. National Air Traffic Controllers Association was negotiating with FAA on the controllers' behalf, but the controllers and the union declined to comment on either the punishment or the negotiations.

Keys Air, which operates to all of the Florida Keys, will add a second Cessna Caravan Amphibian land and seaplane to its fleet this week and expand its network by four points. The company will serve Key West, Fort Myers, Tampa, Key Largo, Marathon, Marco Island, Naples and Boca Raton, the last four of which are new. Key Largo, which has no airport, is served by landing in Key Largo Bay. The carrier said it plans further expansion in the near future.

U.S. airlines will carry about 9.3 million during the May 24-30 Memorial Day holiday period, according to Air Transport Association figures issued yesterday. The busiest day likely will be Thursday, May 25, when 1.52 million passengers are expected to travel, and almost 80% of all airline seats will be filled. This summer, ATA expects its member airlines to carry a record 160 million passengers, with 48.1 million boardings in June, 50.9 million in July and 51.3 million in August.

Denver-based startup Frontier Airlines' April passenger traffic declined to 23.3 million revenue passenger miles from 24.7 million RPMs in March, and its load factor slipped to 43.8% from 44.3%. The number of passengers boarded also fell, to 42,061 from 44,455. Year-over-year comparisons are not available because Frontier has been flying only since July. The airline currently operates from Denver to 10 cities in six surrounding states, using a fleet of five 108-seat Boeing 737s.

U.S. Major and National Carriers Landing Fees Expenses Fourth Quarter 1994 Average Amount Systemwide Spent Per Landing America West $ 7,298,656 $ 156.70 American 57,497,000 264.61 Continental 29,494,000 208.92 Delta 60,127,000 246.62

National Transportation Safety Board yesterday put more aviation issues on its "most wanted" list of safety improvements, including stricter rules for regional airlines. FAA replied with its own list of actions that Administrator David Hinson said responds to all board recommendations. NTSB dropped two aviation safety issues for this year - brake wear limits and performance for transport aircraft, and structural fatigue testing.

The Commerce Department and Commerce Secretary Ronald Brown "have been active advocates of U.S. business overseas, particularly aerospace," Aerospace Industries Association President Don Fuqua said this week. Commenting on efforts in Congress to eliminate the department, Fuqua noted that aerospace exports totaled $37.3 billion in 1994 and said AIA "would certainly approach any change in the status [of Commerce] with great caution." He said AIA would want "clear assurance that the close relationship between our government and industry in promoting U.S.

The lineup for next Wednesday's Senate aviation subcommittee hearings on the U.S.-U.K. bilateral is not set yet, a committee staffer said, but it will include officials from DOT, the State Department, GAO, airlines and interested cities. American, Delta and Continental probably will be represented, said an industry official. United said it has not been invited to testify.

The value of worldwide demand for commercial aerospace equipment will grow at an average annual rate of 8.4% through 1998, when it will reach $148 billion, according to a study from the Cleveland-based Freedonia Group. Analyst Edward Hester cited three factors: increasing air traffic as the economies of industrialized nations recover; continuing strength in Asia/Pacific markets, and replacing older aircraft to comply with noise regulations.

The European Commission approved yesterday the creation of an information technology joint venture between Lufthansa and EDS. In January, Lufthansa spun off three of its divisions, including its information technology operation, into separate but wholly owned companies. At the time, EDS took a 25% stake in one of the new companies, Lufthansa Systems GmbH. The joint venture is controlled by both companies and will provide IT services tailored to the requirements of the airline and travel industries.

Senior airline operations and safety representatives, with FAA officials, are scheduled to meet May 25-26 for a briefing on a new safety program developed by American. Al Prest, senior-VP operations for the Air Transport Association, said yesterday proponents hope the program can be developed into an advisory circular that all carriers could use. But American's airline safety action partnership (ASAP), which combines and extends elements of some previous programs, will not replace the FAA-backed flight operations quality assurance program (FOQA), Prest said.

Delta has been named "Best Airline" for the fourth year in a row by the ROBB REPORT's annual "Best of the Best" readership survey. The magazine, polled its subscribers regarding products, places and services in 35 categories.

Two committees of TWA bondholders are urging the bondholders they unofficially represent to vote for a pre-packaged Chapter 11 filing by the airline as a "cleaner" way to accomplish the carrier's proposed financial restructuring. The committees representing holders of TWA's 8% and 10% notes both support the restructuring plan. But according to one source, a pre-packaged bankruptcy would make it easier for noteholders to switch the collateral that secures their current notes to the new notes they will receive in a restructuring.

CCAIR, a USAir Express carrier, logged 11.5 million revenue passenger miles last month, a 10.3% decrease from the same 1994 period. Capacity rose 6.8% to 25.1 million available seat miles, the load factor dropped 8.8 percentage points to 46% and enplanements declined 8.6% to 68,825.

Tri Star Airlines is seeking additional time to start up service to Grand Canyon National Park. Slated to begin flights May 10, the Las Vegas-based new entrant attributed the postponement to delays in the acquisition of aircraft. Tri Star said it requires a specific type of aircraft for its planned Grand Canyon operations.