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Aviation History
1987
1987 - 0997.PDF
United divided as Ferris resigns CHICAGO With the battle raging around him for control of Allegis Corp and its United Airlines subsidiary, Richard Ferris last week resigned as chairman of the group. As a result Allegis will probably change its name back to United Airlines and the hotel and car rental subsidiaries will almost certainly be sold off, the airline says. Ferris fought to keep the group in one piece, opposing bids from the pilots' union and from a group of corporate raiders, Coniston Partners, to take control of the airline. The fate of the carrier still hangs in the balance. The board is considering both offers and says it is anxious to protect shareholders' interests. Ferris' proposed payment of a $60 a share divi dend, which was approved by the board last month, is also under discussion. It would effectively stave off the hostile takeover bids, but would saddle Allegis with an additional debt of $3 • 5 billion. An unnamed Allegis official has said that at least $350 million will be raised through the sale and leaseback of Canadian hotel properties. Allegis used the sale and leaseback device last year to raise $80 million in pre-tax profits for the company, which was then trying to raise cash for its purchase of Hilton International Hotels. The pilots offered $4-5 billion for the airline and United's Apollo computer reservation system in April, although Ferris said that neither the corporation nor its subsidiaries were for sale. Their offer was criticised for lack of funding, but the union now says that New York investment bank Salomon Brothers is committed to putting up most of the money, and that it will raise the rest through selling shares publicly and to employees. About 20 per cent would be sold to the public, he says. It is not clear whether Coni ston wants to control Allegis or, as it has done in the past, is just conducting some profit able sharedealing. The part ners say they have spent about $500 million buying 13 per cent of Allegis' shares. They stand to gain a consid erable amount from the rising share price, particularly if the $60 distribution is paid. Coniston is attempting to win shareholder consent to remove the existing Allegis board and replace them with its own team. Another possibility is that the pilots will team up with Coniston. The union wants to see the airline stand alone again, and Coniston promises to sell off the subsidiaries. The pilots say that, as part of Allegis, United has higher seat/mile costs than its major competitors but lower profits, and that the group's diver sification is hurting it. "Our careers are in aircraft and not in hotels, and we feel threat ened by that," a union spokes man says. FAA succeeds in rescheduling WASHINGTON D.C. The US Federal Aviation Administration (FAA) has been successful in persuading major airlines -to adjust their summer schedules voluntarily to reduce some of the delays and congestion caused by overcrowding of key airports at peak traffic periods. American Airlines has announced changes that will affect most of its 1,600 daily flights. Even Delta, which has resisted FAA pressure to adjust its schedules—par ticularly at Atlanta's Hart- field International Airport— said it has changed timings on 1,973 of its 2,300 flights system-wide. Congestion is such that Atlanta has now overtaken Chicago O'Hare as the world's busiest airport, the FAA says. • The Administration is now officially out of the business of running Washington's Dulles and National Airports. By an Act of Congress the FAA has turned their operation over to a new regional authority. Braathens is major 737-500 customer Independent Norwegian carrier Braathens SAFE is one of the launch customers for the 737-500, with an order for 25 of the type. The latest 737 variant, the -500 seats between 108 and 130, closer to the size of the -200 than the -300. It will be powered by General Electric/ Snecma CFM56-3B1 engines. Orders to date stand at 73. .*JU<» jSsijjy iUtfLMlMiWU AIR TRANSPORT Iberia backs Canary Island carrier MADRID Iberia says its planned inter- island carrier in the Canaries should start operations this winter. The new third-level carrier will have capital of Ptas 10 billion ($80 million) behind it, 51 per cent put up by Iberia and the remainder raised on the commercial markets. Iberia has been losing money on its Canary and Balearic Island services for years, and wants to create independent companies which could run them profitably using turboprops—probably Casa CN.235s. Iberia's presi dent, Narciso Andreu, said recently that last year's losses on the inter-Canary Island routes alone amounted to Ptas 3 billion ($24 million). The only hold-up is approval from the appropriate Spanish ministries, which Iberia expects "shortly". As part of the plan to offload routes which cannot be run profitably with jet services, Aviaco, of which Iberia is now majority share holder, is gradually taking over some of the thinner mainland domestic routes. If the Canary Island project proves successful it will be followed by similar set-ups in the Balearic Islands and the province of Andalucia. Tigers says * Japan is "unfair" WASHINGTON D.C. Flying Tigers has filed a formal complaint against Japan for "unfair and discrim inatory trade practices in its failure to honour inter national air transport obligations". The complaint, filed with the US Department of Trans portation, calls for the imme diate suspension of Nippon Cargo Airlines' (NCA) three extra 747 freighter flights to various points in the USA. In 1986 the Japanese agreed to allow US carriers to handle their own import freight. FLIGHT INTERNATIONAL, 20 June 1987 23
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