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Aviation History
1986
1986 - 0884.PDF
AIR TRANSPORT KLM cashes in to buy 747-400$ AMSTERDAM KLM will be the first Euro pean airline to fly the long- range advanced technology Boeing 747. The Dutch flag carrier is to put the $300 million proceeds of the largest airline equity issue of recent years towards buying six 508-seat 747-400s. But with the order costing KLM about $700 million the airline will also be tapping other sources of funds. The company expects more than 50 per cent to be generated by cash flow, with another $160 million coming from a Swiss franc bond issue next month. The 12 million new common shares, which formed the bulk of last month's equity offer, will allow KLM to expand its loan base while keeping a unitary debt equity-ratio. In fact, KLM signed the contract with Boeing on March 27, the day after KLM made its share offer and almost two weeks before the offer closed. But to avoid influencing the share price the US Securities Exchange Commission insisted that KLM and Boeing delay announcing the deal until last week. The SEC stipulation even meant that KLM could not publish its regular monthly traffic update. When the offer closed on April 8, KLM had raised $307-5 million from 15 mil lion shares (including three million ex-Dutch Govern ment shares) at $20-50 each. The Dutch Government's holding in the airline had been reduced to 36-6 per cent. Investors have taken a stake in an airline with ambi tious fleet expansion plans. Traffic is expected to grow annually by about 5 per cent, according to KLM's medium- term forecast. Net profit last year was F1290 million (about $80 million), and a similar result is expected in the finan cial year just ended, despite a 1-3 per cent dip in traffic in the 12 months to March. KLM already has out standing orders for 30 Boeing 737-300s and is an early customer for the 100-seat Fokker 100, for which it has ten orders and five options. The 737-300s will be delivered between September 1986 and April 1987, with the first Fokker 100 arriving the following year. The six 747-400s, which will come off the Seattle pro duction line in 1989 and 1990, will be used to roll-over the same number of 747-200s. But KLM says it still hopes to increase its long-haul fleet by an average of one aircraft per year, so Boeing has the chance to win further orders. The last of a batch of 13 747-300swillbe put into service in September. The 747-400, which can carry a full cabin 7,200 n.m. will allow KLM to offer non stop Far East services. The carrier is especially keen to exploit an apparent thaw in the Soviet Union's attitude to trans-Siberian flights (Flight, April 5, page 8) to launch non-stop Amsterdam-Tokyo services. The airline is still evalu ating engines, with the General Electric CF6-80C2 and the Pratt & Whitney PW4000 the only two in the running. KLM's current 747 fleet includes both GE- and P&W-powered aircraft. The order is an important breakthrough for the 747-400 programme. Other European carriers will now be under pressure to upgrade their fleets with the aircraft. Indeed, British Airways has already expressed discontent that the UK Government's control of its purse strings is preventing it buying the most advanced replacements for its ageing 747 fleet. Firm orders for the 747-400, which was given the go-ahead in October, now stand at 30. Northwest Airlines was launch customer with an order for ten, followed by Singapore Airlines' order last month for 14. United Airlines can convert four orders for 747s made last year to the -400 variant. Blast triggers ban call Capt Reg Smith, president of the International Federation of Airline Pilots Associations, has called for a boycott on coun tries giving sanctuary to terrorists in the wake of the Trans World Airlines 727 bomb blast. Engineers in Athens expect the aircraft to take up to a month to repair before being flown back to Kansas for an interior refit. Tradewinds weathers storm STANSTED Tradewinds, the UK sched uled cargo carrier which ceased trading last January, 4 has found a buyer. Lonhro is selling the airlinel ( without aircraft to Michaely Watt, chairman of Tal-Air Group Holdings at Stansted and Aidan Connolly, finance f director of Jersey-based T E Holdings, for an undisclosed sum. They will each hold 50 * per cent of the shares. The new Tradewinds will k operate one 707 on lease from T Greyhound Leasing in the USA, which is due for delivery » on April 25. The aircraft was previously in service with the defunct cargo carrier Scimitar f and is now being hushkitted by Tracor in Santa Barbara. The existing three 707s, one f of which was on lease from Greyhound and two owned, are said to be returning to Boeing for eventual use on military contracts. "The new j aircraft has just been through a major check and has an absolutely clean airframe," says Jane Sellers, managing director of Tal-Air. Tradewinds' scheduled licences, nine in all, have been retained, as have most of its customers. "We are planning to operate two scheduled routes to Chicago and Khartoum once a week each," says Sellers. Remaining capacity will be filled by ad- hoc charters worldwide. "Half the availability is already pretty well sewn up," she says. "We're very pleased to see the support from the market". Operations should begin on May 2, with the first sched uled flight on May 16. The new owners estimate that the first year turnover will be between £10 million and £12 million based on one aircraft and a 3,200hr utilisation. They plan to take on a second 707 in eight to 12 months. "Tradewinds was an oppor tunity we couldn't really let go because it was such an unusual one," Sellers says. The carrier's revival will create 30 new jobs, many of them for existing Tradewinds crew members. FLIGHT INTERNATIONAL, 19 April 1986)
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