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Aviation History
1958
1958 - 0151.PDF
FLIGHT, 31 January 1958 157 CIVIL AVIATION CAPITAL BUY 880s . . . MOST people's first reaction to Capital Airlines' order for 15Convair 880s, to be delivered from September 1960 at a cost of $60 million, must have been that the airline has taken leaveof its senses. The order is so incomprehensible that it cannot be judged by normal air transport business standards.An order of this size and timing by Capital is not a logical sequel to that airline's actions during the past eight months, as recountedin Flight of January 10. The airline's financial troubles became publicly known last May, when the company "deferred" its repeat-order for 15 Viscounts and its order for four Comet 4s and ten Comet 4As- Then in the summer it took the lead in the U.S.industry's subsequent campaign for higher fares—a campaign which has now developed into a propaganda battle with no holdsbarred, and with the moral support of the American banks. July brought the surprise appointment of Maj-Gen. David H. Baker,a U.S.A.F. financial and procurement expert, as president in place of Mr, J- H. Carmichael, who was elevated to the chairman-ship. But the big shock came in November, when Capital applied to the C.A.B. for a $12.2 million subsidy to be spread over the nexttwo years. This putting-back of the clock jolted the pride of die U.S. trunk-line industry, which has been virtually free of subsidyfor five years. At the same time Capital forecast depressing losses, amounting to as much as $10 million by 1960. The next event, earlier this month, was the resignation ofMr. James W. Austin, the company's vice-president traffic and sales, who was the driving force behind the successful "mer-chandising'1 of the Viscount. (He became president of Northeast.) Finally, within the last few days, Capital have successfully nego-tiated with Vickers and Rolls-Royce deferment of their $lm per month Viscount payments for January, February and March.This is the background to Capital's order for 15 Convair 880s. What can be the explanation for such an astonishing non sequitur The Convair 880, which was launched on the strength of T.W.A.'s order (i.e., Mr. Hughes' order), is not selling well. Deltaordered ten at the same time as T.W.A. ordered 30 in June 1956; but during the 18 subsequent months, Convair have sold onlyeight more 880s—four to an as yet non-existent Argentine airline, Transcontinental, and four to R.E.A.L. of Brazil. This thin order-book (by U.S. standards) must be causing concern at Convair: only a few days ago the firm issued to the world's Press a statementof the extent to which the firm is technically and financially com- mitted to the 880 project. Some $50 million have now been"committed or expended" on 880 development. Certainly a new order by a major airline would give a much-needed boost to 880 sales. Capital were an obvious target for Convair, because the airline has always been favourably disposedtowards jets to supplement its Viscounts, and to open up longer routes as a means of balancing the difficult short-range economicsof the present network. There is no doubt that the Comets were "deferred" (they are now apparently cancelled) with reluctance. But Capital are in no position to attract share or debt capital tothe tune of $60m for an 880 order at this time. So Convair have apparently decided to finance Capital's purchase of 15 Convair880s themselves, just as Vickers and Rolls-Royce financed Capital's 60 Viscounts. The precise terms of this surprising deal are not available as Flight goes to press, but an interesting aspect is that Convair have undertaken to fulfil Capital's remaining obligations to Vickers and Rolls-Royce, apparently amounting to £17,325,000. This sum is included in the total credit expenditure capital and is said to be equivalent to £38,754,000. . . . AND FINNAIR CARAVELLES FIVE AIRCRAFT IN USE FOUR AIRCRAFT IN USE WINTERIZATIONTRIALS THREE AIRCRAFT IN USE _ . PERFORMANCE (TEMPERATE) LIMITEDTWO AIRCRAFTIN USE OF A. EXPECTED GENERAL HANDLING AND ENGINEERING DEVELOPMENT'ONE AIRCRAFT PILOT'S DEC 1958 MAR 19S9 JUNE 19S9 SEPT 1959 DEC 1959 MAR 19tO its homeland sandwiched between Scandinavia andRussia, Finnair is obliged to prevent Aeroflot and S.A.S. from drawing too far ahead in the procurement race. Aeroflotcould soon be operating Tu-104s to Finland, and S.A.S. will be receiving Caravelles next summer. B.E.A.'s Comets should beseeing service by the winter of 1959-60, very likely on the longer routes such as London - Helsinki. Unless Finnair were offeringcompetitive equipment by 1960 their position would be in jeopardy. ,, The Finnish company have now announced their intention oftaking delivery of three Caravelles from Sud Aviation in time for 1960's summer traffic (the six S.A.S. Caravelles are being deliveredin mid-1959). An option has also been taken on a further three. Finnair enjoy a well-founded reputation for basing policyon sound economic judgment. Assuming that purchase of new aircraft is forced on Finnair by competitive forces beyond theirown control, then there are sound economic reasons for choosing the Caravelle. Their peripheral situation in Europe permitsFinnair to derive greater advantage from the speed of the short- haul jet than can the airline's centrally situated neighbours. Amongthe available turbojets, Sud Aviation were able to offer a sub- stantially lower purchase price and more attractive operating coststhan de Havilland, Boeing or Convair. Also on Europe's periphery are Air Algerie, Tunis-Air andRoyal Air Maroc, three airlines being referred to as likely cus- tomers for the Caravelle. AIRWORK'S INTEREST IN AIR CHARTER ANOTHER factor behind uie demise of the Accountant (see-**• page 131) appears to be a shortage of capital on the part of Aviation Traders. This has not only prevented the company fromdeveloping its own production facilities for the Accountant, but has also restricted the sister-company, Air Charter, Ltd., in theair transport field. Air Charter, using a fleet of three DC-4s, six Avro TudorSuper-Traders and nine Bristol 170s, is based at Southend and Stansted, its principal operation being the Channel Air Bridgelinking Southend to Calais, Ostend and Rotterdam. This cross- Channel ferry service was inaugurated in 1955, and in 1956diverted a considerable volume of traffic from ferry services already being flown by Silver City. Last year saw sharp competition bothfrom Silver City and from the railway cross-Channel car ferries. This year will see further fare-cutting on the part of Silver City.To meet this competition, and to cater for the growing volume of traffic, would require an influx of fresh capital from outsidesources. Negotiations have been continuing between Airwork and AirCharter since last summer (well before Lord Ogmore's speech in the House of Lords stating the Government's desire to see arationalization of the independent British airlines), and culminated last week with the announcement that Airwork had "acquired asubstantial interest in the air transport and engineering group of companies headed by F. A. Laker." THE COMMONS DEBATE CIVIL AVIATION T\TOTEWORTHY points from last Monday's Commons debate^ on the B.E.A. and B.O.A.C. accounts—which we intend to summarize at greater length next week—were as follows.The Minister of Transport, Mr. Harold Watkinson, said: "I should not lead the House to believe that B.O.A.C. are going tohave a good financial year [to March 31, 1958], because they are not." The Corporation's position had been affected by their"obsolescent aircraft." He went on to say that the final D.H. proposals for B.E.A.'s jet"only reached the Minister of Supply and myself this morn- ing. ... In the next few days we shall know how the Bristoland Hawker Siddeley company has got on in America . . . and we shall have a clearer knowledge of the basis on which thede Havilland offer is made." He said his department was in consultation with architects for a new long-haul building at L.A.P. Central [this is the first official intimation that the Millbourn recommendations have been accepted]. British manufacturers are traditionally wary of publishing target-dates. Not so Vickers: here, unequivocally stated, is the flight development programme for the Vanguard, first flight of which is scheduled for mid-October of this year. Vickers say that design is now about 90 per cent complete; some 29,000 drawings have been issued out of a total of 32,000. On the production side, jig and tool design is now 100 per cent complete, and the manufacture of the first set of production tools is about 85 per cent complete.
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