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Aviation History
1986
1986 - 0502.PDF
AIR TRANSPORT US union unrest threatens mergers WASHINGTON D.C. Labour unrest at TWA and Eastern Air Lines could upset new merger plans under consideration by both airlines. At TWA, amid rumours that a take-over of Ozark Airlines may be imminent, flight attendants are threat ening to walk out in protest over pay and working condi tions. TWA said last week that, if this happened, it would hire as many as three thousand new stewards and stewardesses to keep the airline flying. At Eastern a flight atten dant strike has been threat ening, but any action is not expected seriously to set back the announced takeover of Eastern by Frank Lorenzo's Texas Air Corp. Full details of that takeover have yet to be announced, but the offer by Lorenzo is expected to centre around $10 in cash or stock for each Eastern share. In the interim there are reports that other airlines are also interested in making an offer for Eastern, but none as yet has come forth publicly with such an offer. Eastern's unions, which fought the airline manage ment's cost-cutting efforts every step of the way, may of course be facing an even tougher task-master in Frank Lorenzo. Lorenzo is reviled by organised labour, and in the case of an attempted takeover of TWA by Lorenzo, the unions were able to turn the tables on him and arrange for the airline to be taken over by New York financier Carl Icahn, whom they disliked less. Since last December Eastern has been in almost continuous negotiation with its unions in an effort to cut its costs by at least $400 million during 1986, and thus avoid a major financial crisis. But as the financial crisis actually intensified last week, the International Association of Machinists, representing mmmmii ^ Eastern has problems with unions and solvency. Is it going to land or take off? 12,000 Eastern mechanics and other workers, said it would be willing to discuss this contract but not to grant concessions unilaterally. In the meantime, the banks and other lenders which hold $2 • 5 billion of Eastern's debt are impatiently awaiting some solution to the Eastern crisis. • The chief US Federal Drug Enforcer has said that 35 or more Eastern Air Lines work ers, most of them baggage handlers and mechanics based in Miami, face indictment for helping to smuggle very large shipments of cocaine past Miami customs. The "Feds" have been on Eastern's back over drug smuggling since 1984, when US customs agents seized an Eastern TriStar after finding drugs on 22 earlier flights. Last summer customs agents discovered 1,7221b of cocaine in suitcases hidden behind air conditioning panels in the baggage compartments of two Eastern jets. Eastern was fined $1 • 3 million, and the resulting investigation apparently developed informants who reported that the drug smug gling racket has been oper ating since 1981, and has bought in about 20 shipments, some weighing nearly 1,0001b, since 1985. The smugglers apparently conspired with Eastern's baggage handlers to bypass security. Japan's carriers find expansion finance TOKYO Japan's Export-Import Bank has offered a highly attractive loan package to the nation's airlines for their current round of re-equipment. The bank is lending $522 million to the three major carriers at special low rates of interest for this year's purchases and has indicated that it will be prepared to offer similar terms in future. The news has been welcomed by Japan Air Lines (JAL), All Nippon Airways (ANA), and Toa Domestic Airlines (TDA), which have all begun major re-equipment program mes. JAL will invest $2,400 million in its fleet in the next four years (Flight, November 16,1985, page 22) and ANA is expected to place an order for 10-20 short-haul aircraft worth up to $800 million in the second half of 1986. TDA also wants new short-haul and long-haul aircraft. ANA will require its new aircraft by 1989 to replace a 14-strong fleet of 737-200s used on domestic services. Sources in Tokyo say the leading contender is the 737-300, although Japan's foreign ministry is understood to be pressing for an Airbus purchase to ease the trade deficit with Europe. TDA is considering aircraft for both domestic and inter national routes following signs that the Government will allow it to compete with Japan's other carriers on a broader front. TDA plans to buy five aircraft for use on an expanded domestic trunk network and two long-haul aircraft for the launch of its first internationl flights. The A300, of which TDA already operates ten, will probably meet the domestic requirement, while the airline is looking at both the A340 and MD-11 for use on trans- Pacific routes. TDA has applied to launch Tokyo- Honolulu services later this year and should it receive the go-ahead, it will lease in equipment before introducing its own aircraft at the turn of the decade. In the current year Japan's Exim Bank allocated $294 million to Japan Air Lines to buy three 747s, $194 million to ANA for two 747s, and $34 million to TDA for an A300. The special loans cover 80 per cent of the total cost with an nual interest of 6 • 2 per cent. FLIGHT INTERNATIONAL, 8 March 1986-
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