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Aviation History
1968
1968 - 2661.PDF
811 . FUCHT International, 21 November 1968 The first of two BAC One-Eleven 4O0s was handed over on November 9 to Bahamas Airways and left early on Monday, November //, for the Bahamas. These two aircraft are being leased to the airline pending the delivery of two 500 Series on order for delivery next June. This is in fact a new aircraft off the production line and is being leased by BAC. John Swire & Sons and their associates, who also control Cathay Pacific Airways, took over Bahamas Airways on October I (see "Flight" for September 26, page 508). The 400 arrived on November 12 and services will start on December I AIR TRANSPORT Eagle and After THE RIPPLES OF THE British Eagle shut-down and liquidation(see Flight for last week, page 767) spread quickly to' allcorners of the British air transport industry and, predict- ably enough, to its main markets abroad. The practical gap left by the airline's failure was soon being filled as some scheduled services went to Cambrian and BUA (see later) and as the other independents crowded round to see what could be picked up from the reallocation of the inclusive-tour and other charter operations. Far more disturbing, however, than arguments over the disposition of the former Eagle operations was the persistence of reports that one or more British independents might be in similar trouble and might not last the winter. There is no suggestion that the major sector of the business is in trouble of this sort, but the fact that affairs are being closely observed abroad, particularly in America, is in itself enough to under- line the acute dangers to the industry as a whole of any more closures. Industry sources point to two main areas in which steps can be taken to prevent further disasters: the Air Transport Licensing Board, and the airline managements themselves. The Board of Trade, as explained later, has no power to support ailing airlines financially; but the ATLB has powers to raise the alarm and, if necessary, to take action to prevent an airline from overreaching itself operationally. The ATLB in fact issued a clear warning to British Eagle earlier this year, at the hearing of an application by the air- line for transatlantic scheduled services. The Board told the airline in effect that it was of the opinion that it was under- capitalised for the conduct of its existing operations, let alone for the mounting of the quite considerable transatlantic schedules which it was proposing. The warning, if heeded, was apparently not acted upon. The ATLB could have taken things a stage further; it was after all in the process of deliberating the transatlantic application when the airline mounted its inaugural IT service to the Caribbean. The Civil Aviation (Licensing) Act, 1960, in fact requires the ATLB to revoke, suspend or vary a licence as appropriate ifa t any time it is not satisfied that a licensee has adequate financial resources to mount the operation. This is the ATLB's ultimate sanction, and obviously before it is invoked there is opportunity for less formal contact with the licensee to issue any warnings which may be felt appropriate. The ATLB has powers to inquire into the operator's accounts in camera. The Act, in using the words "at any time," implies the need for continuous surveillance of the industry; but many observers consider that the limited resources of the ATLB at present, added to the fact that much of the documentary evidence which it needs is not routinely available but has to be asked for, makes continuous surveillance difficult to achieve. Quite apart from action which the ATLB may be able to take in individual cases, the importance of this surveillance lies also in coercing airline managements to put their houses in order and keep them there (particular concern is felt in the industry that an airline of Eagle's standing should have flouted the terms of its Caribbean licence in the way that it did). There is also concern that some airlines are neglecting to adopt modern management techniques, or, having adopted them, to pay more than lip-service to them. The failure to establish a broadly based and strong management again reflects on the financial strength of the company and deters institutional investment in the long term and the support of merchant banks in the shorter term. Hambros, as mentioned later, did not further support British Eagle in extremis because it had lost faith in the British Eagle management; earlier, at the time of the transatlantic hearings, Kleinwort Benson had offered sup- port for the airline amounting to £1 million, but this was reportedly tied to demands for management restructuring which were not acceptable to the airline. Within two or three days of the cessation of operations by British Eagle at midnight on November 6 it had become obvious that there was very little chance indeed that the airline could be saved as a going concern. Too much money would be needed, and there was too little in the way of viable contracts and operating licences to make a take-over or rescue operation worthwhile. Apart from debts and liabilities amount- ing to something of the order of £10 million, balanced by assets, including owned and partly paid-for aircraft on lease purchase, amounting to about £5 million, a backer would have needed also to support the airline through the thin winter season during which very large sums would continue to be lost.
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