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Aviation History
1963
1963 - 0731.PDF
Sheikh Najib Alamuddin, chairman and president of Middle East Air lines, in the cockpit of ME A's first Caravelle 6N with the Prime Minister of the Lebanon, Mr Rachid Karame. MEA have a second Caravelle on order. The first has already entered service on the Beirut - Athens and Beirut - Cairo routes AIR COM M ERCE . . . BELT-TIGHTENING IN HOLLAND- ALT HO UGH KLM's reported loss in 1962 of F1.76m (£7£m) was only fractionally better than the result for 1961, the real story is not quite as gloomy as these figures suggest. Nor perhaps is it as gloomy as might be suggested by the plans of Dr F. Q. den Hollander, the chairman, for "rigorous economies." In the first place, the 1961 results enjoyed the benefit of a Fl.llm tax refund. Secondly, the 1962 results were deliberately exaggerated by the inclusion of a special item of Fl .20m to cover "reorganization" expenses. Third, the latest year's results did not derive full advantage from the drastic pruning of the staff (the number of employees fell by over 1,000 to under 17,000). And finally, all the propeller aircraft (except for the Electras and a few freighters) are now fully written down in the books. Nevertheless, a further dose of strong medicine is prescribed by Dr Hollander. On the advice of an American firm of management consultants, appointed in September 1961, KLM's bid for profitability calls for a thorough reorganization of the company's structure at home and overseas, a reduction in the size of the fleet, staff cuts (particularly on the flying side), and a big sales drive. A further staff reduction of about 2,000, to just over 14,000, is envisaged, though as in the case of BO AC, it is hoped to achieve these cuts by normal wastage, limiting of recruitment and early- retirement inducements. There will be cuts among the staff of 800 pilots, 400 flight engineers, 50 radio operators and more than 800 cabin staff, though it is not known to what extent. There will be no cuts in engineering and technical staffs. Two DC-8Fs are being ordered to bring the DC-8 fleet to 16. The fleet will, at the beginning of 1965, include also 11 Electras, nine Viscount 800s and four DC-7Fs. Three of the ten Convair 340s will be transferred to Curacao and the remainder, together with other surplus propeller types, sold. The need for an Electra jet-replacement will arise in 1966. Of the £37£m loans guaranteed by the Netherlands Government £25m have been used to redeem loans in the USA (these have been taken over by Dutch interests). The financing of the DC-8Fs will leave about £6m for an Electra replacement. In addition the Dutch Government has agreed to lend KLM a further £5m, though KLM hope that it will not be necessary to take this up. The most significant KLM development in 1962 appears to have been a sharp increase in non-scheduled services. These more than doubled to bring in revenues of as much as FL64m. (The volume of scheduled capacity and traffic, in contrast, was virtually un changed.) This growth of low-rated charter traffic, coming at a time when average fares on scheduled services were declining as passengers swapped from first-class to economy services, was largely responsible for the sharp drop in the average revenue rate— which was the worst single feature of the financial year. This drop 704 FLIGHT International, 16 May 1963 prevented the airline from reaping any tangible benefits from its success in arresting the recent decline in load factor and in reducing still further its unit costs (to the equivalent last year of 28d per c.t.m.). KLM's prudent policy of rapid depreciation and early disposal of redundant aircraft (as many as 13 aircraft were disposed of last year, excluding two Super Constellations and two L.749s scrapped for spares) means that the airline is not overcapitalized to the extent that has become endemic in Europe. Indeed, even in a bad year such as 1962, KLM's revenues and investment capital were closelv matched. Unfortunately for the Dutch airline, its problem is more fundamental; its costs are still much too high in relation to its low average revenue rates. This gap is too wide to be bridged in the near future by any improvement in load factor. Only by re appraising the airline's less remunerative activities, and by attacking further its overall cost level, is the new board going to succeed in restoring KLM to profitability. This is what Dr den Hollander has now set about doing. The broad aim is to get more work out of fewer aeroplanes and fewer staff, and to make KLM smaller in size but as great as ever in terms of influence and profitability. —AND IN IRELAND FOR the first time in many years Aer Lingus are almost certain to find themselves with an operating loss in the year 1962-63. A loss of about £175,000 is expected on routes east of Dublin— though Aerlinte made a profit on the North Atlantic. The general manager, Mr J. F. Dempsey, has appealed to his 3,500 staff for a self-imposed pay pause. The reason for the loss is said to be the company's failure to achieve what it has come to regard as its normal increase in traffic, the fall-off being principally on the Irish Sea routes. The growth in BEA's operations in and out of Dublin, coupled with an increasing volume of scheduled and charter operations by other carriers, have affected the position seriously, according to Mr Dempsey. "So far as Aer Lingus is concerned," Mr Dempsey says, "passenger traffic on cross-Channel routes showed no increase." The prospects for 1963-64 are that Aer Lingus might "do no more than break even on their operating account." For the Irish transatlantic airline, Aerlinte, a profit of aboui £450,000 is likely to be recorded when final accounts for 1962-63 are presented. According to Mr Dempsey, the 1963-64 North Atlantic prospects look reasonably bright. SCOTTISH PATRIOTS CALEDONIAN AIRWAYS have withdrawn their petition to the CAB to intervene in the BOAC-Cunard case. The Scottish airline is reported to have said that it has decided not to press its inter vention "for patriotic reasons." Assuming that there are no last-minute changes in plan, it looks as though the CAB will hear BOAC's revised application, which is drawn up to enable BOAC to operate on feW/o/'BOAC-Cunard. on June 18—just over a year after the formation of the company was announced. Other parties to the case now include Pan American and TWA as well as Seaboard and Mackey. Caravelles for IAC? After more than a year's indecision the Indian Government has now authorized Indian Airlines Corpor ation to proceed with its negotiations to purchase three Caravelles Boeing 707-320C Approved The Boeing 707-320C has been granted an FAA certificate of airworthiness after two months of flight tests and demonstrations. Total airline orders for the 320C stand at 13 aircraft. PanAm will be first to put the aircraft into service. Other "C-jet" customers include World Airways, American Airlines and TWA. Turbulence Kills a Passenger On May 7 an elderly man was killed and 25 other passengers were injured when a TCA Vanguard hit severe turbulence on a flight from Vancouver to Edmonton The aircraft was flying at 21,000ft 50 miles west of Rocky Mountain House, Alberta, when the incident occurred. A TCA spokesman said that the seat belt sign had been turned on just before the turbulence was encountered.
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