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Aviation History
1988
1988 - 0006.PDF
AIR TRANSPORT EC is to investigate BA/BCal deal LONDON Lord King, chairman of British Airways and now of British Caledonian, is expected to meet representa tives of the European Commission within the next few days, to discuss the impli cations of BA's successful offer for BCal. A number of UK objectors, led by Michael Bishop's Airlines of Britain Group, have lodged protests with the EC, claiming that the merger will enable BA to stifle competition within the UK. Although the UK Monopolies and Mergers Commission (MMC) decided in November that this would not be the case, provided certain condi tions were adhered to Flight, November 21, page 4), the EC has the power effectively to overturn its ruling. Under Articles 85 and 86 of the Treaty of Rome, the EC may decide that BA's actions constitute an "abuse of a dominant position" within the UK market. These so-called "competition rules" enable the EC, through the European Court, to order that the merger should be reversed, and to impose heavy fines if BA does not comply. EC Competition Commis sioner Peter Sutherland has written to Lord King, advising him of the EC's reservations about the deal, and an EC source in London tells Flight: "We have been closely follow ing the whole takeover battle. We shall be meeting BA and BCal very shortly to discuss the competition aspects of the merger, and we want to see how far BA will go in meeting the concerns of the Com mission". The end to the prolonged takeover battle between BA and its rival suitor, SAS, was both sudden and swift. Amid widespread speculation that SAS was about to double its offer for a minority stake in BCal, BA increased its offer for the whole airline to £250 Uprated Saab 340 flies The prototype Saab 340B, an uprated version of the original Saab (SF) 340, is now well into its flight test programme, which will lead to production and delivery in 1989. The -B version has more power and a higher maximum take off weight. ——** i £ jm ^r^8 I'M jr^u ' 'Jl TJL~^-~i;,?9i ~> , jM Wf ite«-^ "^'•~c-" ^ ^i Bf HlttaBBtaa.^..- =535 million in cash. Given that BA's original, pre-Black-Monday bid was worth £237 million in equities (not cash), and that BCal had in the interim sold a hotel group, the clinching bid left the industry wondering just how much more Lord King might have paid if BCal had any remaining energy for further haggling. City talk had always predicted an eventual King victory by use of "canniness", lobbying power, and influ ence. Eventually Lord King made a bid which surprised the City by its generosity: "We wanted it, so we bought it", BA's chairman said in a statement which summed up the situation. Early this week it was still not clear whether B A had paid the full price. It wants to buy BCal's charter wing, CalAir, but BCal was asking an addi tional £20 million for it. With the future of a merged BCal/SAS operation clouded by political uncertainties, £250 million proved an irresistible offer for BCal's major shareholder, the investment group 3i. BCal's board, which had previously supported the SAS package, unanimously recommended the BA offer to its share holders. Earlier, Harry Goodman's Air Europe had its High Court appeal against the MMC ruling dismissed, and the C AA confirmed that it would proceed with its examination of BCal's route licenses, at the request of BA. That application will now be withdrawn by BA, leaving the European Commission to have the final word on the subject. US ATA is pleased with 1987 WASHINGTON D.C. The US scheduled airlines carried approximately 450 million passengers in 1987, compared with 418 million in 1986, 380 million in 1985, and 275 million in 1978, the year of airline deregulation, the Air Transport Association says. The 1986/87 increase is 7-1 per cent. "Prospects are for contin ued growth in demand for air transportation", ATA presi dent William F. Bolger said in announcing the 1987 figures. "To meet the future demand for air transportation and to replace older aircraft, the airlines have placed sig nificant orders for new equip ment. More than 650 new aircraft valued at $25 billion are on order for delivery throughout the remainder of the 1980s and beyond." This year's survey of air travellers showed that a record number, 126 million, or 72 per cent of the adult US population, has flown, and nearly one in three flew during the past year. The survey found that 52 per cent of airline trips during the past year were for pleasure or other personal reasons, and 48 per cent were for business. The average air traveller made approximately three and a half round trips last year. The US airlines registered a net profit of about $850 million for the first three quarters of 1987, compared with a net loss of $150 million for the same period in 1986. The profit margin—net profit as a percentage of operating revenues—for the 1987 period was 2-4 per cent. Operating profits for the first three quar ters were about $2 billion, compared with $800 million for 1986. Qantas refuses SAA deal SYDNEY Qantas is not co-operating with a South African Airways attempt to circumvent the Australian Government's ban on SAA flights between the two countries. SAA has offered to provide extra flights between Mauritius and Johannesburg if Qantas introduces a stop over in Mauritius on its current service between Australia and the Zimbabwean capital, Harare. This would obviously enable Johannesburg-bound passen gers to avoid Harare, where Air Zimbabwe is awaiting South African Government permission to operate extra connecting flights to Johannesburg. Qantas says: "It's fairly transparent what SAA is offering here. Our service is to Harare, and we are waiting for the South Africans to allow Air Zimbabwe to fly the supplemental to Johannes burg. "At the moment, we have no landing rights in Mauritius, and we don't plan to apply for them." FLIGHT INTERNATIONAL, 2/9 January 1988
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