Moody's Investors Services upgraded the long- and short-term debt ratings of McDonnell Douglas Corp. and those of McDonnell Douglas Finance Corp. because of the company's strengthened financial condition and an improved operating and cash flow outlook. Other factors affecting the decision include the company's continuing effort to cut costs and Moody's view that resolution of the A-12 military aircraft program dispute between McDonnell Douglas and the U.S. Navy will not have a material cash flow impact.
International Lease Finance Corp. placed two new Airbus A330-300s Friday with Malaysia Airlines. The 316-seat aircraft, scheduled for delivery in January and September 1996, will be powered by Pratt&Whitney PW4168 engines. The airline plans to operate the aircraft on Asian routes out of Kuala Lumpur. The initial lease terms will be for two years each, and Malaysia will have five consecutive one-year extension options.
The White House yesterday announced completion of Saudi Arabian Airlines' fleet replacement order of 61 McDonnell Douglas and Boeing aircraft, dating from early 1994. The Clinton administration said the deal is worth about $6 billion, but industry and banking sources still estimated it at more than $7 billion. Sources said Boeing will get about $5.3 billion for 23 777-200 widebody twins, powered by General Electric GE90 turbofans, and five 747-400s with GE CF6s.
Boeing's third quarter profits, reported yesterday, beat Wall Street's consensus estimate by 22% thanks to lower taxes and R&D spending, but Chairman Frank Shrontz warned that the Machinists' union strike will cut deeply into fourth quarter jetliner deliveries and take a bite out of profits. The company's stock fell in morning trading before recovering somewhat later in the day.
Northwest has finished restructuring a $731.4 million financing arrangement related to property it owns in Japan, the airline said yesterday. The effect is to reduce the company's long-term debt by about $731 million and smooth out the repayment schedule from a single balloon payment originally due in February 2000 to annual installments due in 2005, 2006 and 2007. Northwest said it has obtained an option to defer semi-annual cash payments for up to three years, and the interest rate on the debt has been reduced to 3% from 4%.
KLM has secured a five-year, $700 million standby revolving credit facility the Dutch carrier said will enable it to react better to financial market developments. KLM targeted a facility worth about $500 million but increased the total by $200 million because international response was so substantial. Citibank, ABN AMRO Bank and Union Bank of Switzerland led the syndicate that arranged the loan, and a total of 32 banks in The Netherlands and throughout Europe, North America and the Asia/Pacific region participated.
DHL International is expanding its operations in Moscow to accommodate its 100% growth rate in the former Soviet Union, the international air express carrier said yesterday. The expansion includes a gateway facility at Moscow Sheremetyevo Airport, a new DHL-dedicated flight out of Moscow, an increase of shipment value limitations and a new country headquarters office. DHL said the expansion project is part of a $10 million investment.
Western Pacific will begin serving Washington Dulles Airport Dec. 15 with daily nonstop service from its base in Colorado Springs, offering fares as low as $109 one way. Metropolitan Washington Airports Authority General Manager James Wilding said the low-fare carrier's arrival "continues a growing service trend at Dulles, and we're continuing to make progress on our terminal expansion construction program to ensure that we will be able to attract and accommodate more service for the region."
Qantas will upgrade its Sydney-Jakarta service Sunday to daily from its five flights per week because of increased demand in the market, the airline said yesterday. It also plans to introduce three weekly Perth- Jakarta flights. In the first half of 1995, travel between Australia and Indonesia rose 39% over the same period last year, according to Geoff Dixon, Qantas group executive general manager (commercial). Qantas plans to add a fourth weekly Sydney-Seoul flight on Nov. 14.
DOT has invited U.S. carriers interested in operating all-cargo service to Hong Kong, with local traffic rights, to apply by Nov. 7. Under the newly signed U.S.-Hong Kong memorandum of understanding, U.S. cargo carriers may operate eight weekly frequencies between Hong Kong and two points to be chosen from among the Philippines, Thailand and Korea. No more than five frequencies may be operated to any one point.
Polar Air Cargo has launched scheduled service to South America with the introduction of flights linking Chicago, New York and Miami with Buenos Aires and Santiago. The move "is in direct response to the growing demand from freight forwarders and agents in the U.S. and around the world to expand our current services," said Edwin Wallace, chief executive of Polar Air. "This is only the first step in the development of our scheduled services in the region," he said.
Lufthansa Cargo will add three weekly transatlantic freighter flights to its winter schedule, effective Saturday. The carrier is boosting frequencies from Atlanta, Miami and New York to Frankfurt through March 29, increasing its freighter service to 35 flights a week - 28 of them using Boeing 747 freighters - from nine U.S. cities. The additions will increase to four the number of weekly 747 freighter flights from Atlanta and Miami.
United scored well above the rest of the major airlines for serving healthful food, according to a report on airline and airport food by the Physicians Committee for Responsible Medicine (PCRM). Delta declined to provide information for the evaluation. United offers a vegetarian steak and pasta with 3% fat, ravioli with 9% fat and a mixed grain dish with 16% fat, all with no cholesterol. The other airlines served a minimum of 28% fat in any one dish. Northwest was ranked worst, serving Bombay curry with 39% fat and penne pasta with gouda cheese with 60% fat.
Delta yesterday posted September quarter net earnings of $201 million, or $2.57 per share, and an operating profit of $386 million, the best September quarter in the airline's history. In the same quarter last year, Delta had net earnings, boosted by a $114 million gain from an accounting change, of $186 million, or $2.42 per share, and an operating profit of $154 million. The results for the quarter, the first of Delta's July 1- June 30 fiscal year, were in line with Wall Street expectations.
British air charter broker Air London International has signed a charter service partnership deal with Rosenbluth International. Air London arranges charters with a variety of aircraft, from business jets to 747s. Rosenbluth President Hal Rosenbluth said, "Since time and opportunity are the business tools of the '90s, air charter is a solution to help our clients capitalize on opportunities that, due to time or location restraints, may have otherwise been missed." Separately, Rosenbluth has acquired Travel Elite, a British specialist corporate travel agency.
Association of Flight Attendants President Patricia Friend has been elected one of 51 vice presidents of the AFL-CIO and will serve a two-year term on its Executive Council. The federation has revamped and expanded the council, whose members include Randy Babbitt of the Air Line Pilots Association, Ron Carey and Carroll Haynes of the Teamsters, Sonny Hall of the Transport Workers Union and George Kourpias of the Machinists.
MarkAir's Unsecured Creditors Committee has been given until Monday to secure a deal to sell the airline to B&T Flyer Holdings, a group led by USAir Express President Terry Hallcom. The Anchorage bankruptcy court judge that granted the committee's motion to defer the carrier's Chapter 7 liquidation filing also chose local attorney Bill Barstow as trustee.
TWA has signed an agreement with Perillo Tours to offer a common-rate airfare from 50 U.S. cities traveling on a Perillo escorted tour program to Italy, to simplify bookings. TWA expects increased travel to Italy because of the program and will increase capacity to Rome and Milan to accommodate it, Mark Coleman, senior VP-marketing, said. In April, it will upgrade its New York-Milan service by replacing 767s with 747s, and it will increase flights to Rome from daily to as many as 12 a week. Passengers coast-to- coast will pay the same fare for the tours to Italy.
The combined financial results of Orient Airlines Association (OAA) members rose sharply in fiscal 1994-95, as nine of the 16 carriers posted profits for the year. The group's operating profit increased more than 60%, to $2.09 billion from just under $1.3 billion in 1993-94, and net earnings more than tripled to $1.31 billion from $319.9 million. Operating revenues grew 16.2% to $45.12 billion, and operating expenses was up 14.7% to $43.03 billion.
Correction: The Air Line Pilots Association originally said it would accept arbitration with FedEx if the company accepted by 5 p.m. Monday and agreed to arbitration parameters within five working days. The conditions were stated incorrectly in The DAILY of Oct. 25.
Canadian Airlines International reported record net earnings of C$96.3 million (US$70.3 million) for the third quarter, but it failed to meet earnings projections because of higher-than-anticipated fuel costs and foreign exchange losses. As a result, Canadian is likely to suffer a full- year net loss larger than its previously forecast C$35 million, according to Senior VP-Finance Drew Fitch.
The House Transportation aviation subcommittee yesterday approved by voice vote legislation (H.R.2276) to reestablish FAA as an independent agency and reform its personnel, procurement and funding systems. The subcommittee adopted the bill basically as introduced but adopted a package of amendments, including language to protect employees' rights to organize and bargain collectively, and to require FAA to negotiate with its unions on a new personnel management system.
Cathay Pacific Airways plans to launch service between Hong Kong and New York via Vancouver on July 1. The carrier's expansion beyond the U.S. West Coast is a result of an air services memorandum of understanding signed Sept. 29 by Hong Kong and the U.S. several weeks ago, giving Cathay access to 14 points in the U.S. (DAILY, Oct. 2). Cathay plans to operate five flights a week to New York initially, using Boeing 747-400s, and expand to daily service on Sept. 1. Cathay said it will have traffic rights between Vancouver and New York.
Burlington Air Express, continuing its expansion of perishables service, has acquired Miami-based Perishables Refrigeration Inc. Terms of the acquisition were not released. "The transportation of perishables is an important market segment for Burlington as the exports of these products from Latin America continues to grow," said Greg Montgomery, VP and managing director of Canada, Latin America and the Caribbean. "Having our own refrigeration facility is a key step in offering a quality service that can grow with the market," he said.
