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Aviation History
1990
1990 - 3283.PDF
BUSINESS Loral sells Space Systems share Loral has agreed to sell a major stake in its newly- acquired Ford Aerospace com mercial satellite business to three European partners — France's Aerospatiale and Italy's Alcatel and Selenia Spazio. The three companies will pay a total of $182 million for a 49% joint share in Space Sys tems/Loral, the commercial communications and weather satellite business acquired as part of Loral's takeover of Ford Aerospace. Financial analyst Peter Aseri- ties of First Boston says that Loral got a "terrific bargain" in the middle of a depressed de fence market. The deal values Space Systems, a small part of Ford Aerospace, at $372 million — about half the total $715 million paid by Loral in July. Ford's other space-related ac tivities, which include contracts with NASA and the US Depart ment of Defense, are not in cluded in the deal. Loral completed its takeover of, Ford Aerospace last week, setting up av new corporation, Loral Aerospace Holdings, in partnership with the merchant bankers Shearson Lehman. Each contributed $147.5 million to the acquisition, with the re mainder financed by bank bor rowings. Loral will operate the company, and owns 51.5% with an option to increase its holding to 70%. Loral has already sold Ford's BDM division separately to the Carlyle Group for $130 million. The deal with the three Euro pean partners is subject to gov ernment and .corporate approv als, and is expected to be final ised by the end of the year. All three companies have worked with Ford: Aerospatiale was teamed with Ford on In telsat V and Arabsat; Alcatel is a major partner on Intelsat VII; and Selenia has teamed with Ford on several projects includ ing Intelsat V and VII and sev eral European communications satellites. Space Systems/Loral (for merly Ford's Space Systems Di vision) has annual sales of about $350 million. Its major programmes include the Intelsat VII series; the Geostationary Operational Environmental Sat ellite (GOES), which will be the next-generation US meteorologi cal spacecraft; and the Super- bird series of domestic telecom munications satellites for Japan's Space Communications Corporation. • BUSINESS IN BRIEF LEASING VENTURE Polaris Aircraft Leasing and Aeromexico have, formed a jointly owned leasing com pany. Two MD-88s, placed by Polaris on a ten-year operat ing lease with Aeromexico earlier this year, will be the first aircraft owned by the new venture. The initial transaction is valued, at around $57.5 million. AEROSPATIALE PROFIT Net profit of Aerospatiale amounted to Fr45 million ($8.8 million) in the first half of this year compared with a Frl09 million loss in the same period last year. Reve nue increased 6.6% to Fr 15 billion. The company said the decline of the dollar made it unlikely it would match the Fr204 million profit recorded in 1989 and expects 1990 sales to reach Fr33 billion from Fr31.7 billion last year. FR GROUP FALLS Pre-tax profits of the FR Group fell 9% to £10.8 mil lion in the first half of this year. Turnover of the inflight refuelling to target-towing company rose to £86.7 mil lion from £73.4 million last year. MCDONN^I-1- gyOtJGi-^^ C-17 programme noses bach on track... but at a price Write-off hits McDonnell Douglas McDonnell Douglas has taken a $93 million write off to cover excessive costs in developing the US Air Force's C-17 airlifter. The company, which in recent months appears to have pulled the troubled programme back on track (Flight International, 17-23 Oc tober), has "...reversed the earn ings previously recorded" under the full-scale engineering development (FSED) contract, an admission that it will not now achieve financial incentives for completing FSED far enough below the $6.55 billion fixed- price contract ceiling. The corporation's third- quarter financial results fail to make any provision, however, for the massive losses expected in developing the US Navy's A-12 Avenger II strike aircraft. MDC's partner General Dynam ics has already written off $450 million to cover its share of the predicted $900 million over run, but McDonnell says it is awaiting "...reimbursement for certain costs that are the subject of claims made or being made to the Government". A bi-annual cost-performance review of the C-17 programme ordered by the Air Force has still not been completed, but Douglas says that it expects to complete FSED and -construc tion of the first six aircraft "at or near contract break-even". The first C-17 is due to leave final assembly this month, and will fly in June 1991. The $93 million .charge (equivalent to $58 million sifter taxes) reduced MDC's third- earnings from its subsidiaries from $72 million to $14 million net. This result is disguised, however, by a $234 million gain from "...the settlement of cer tain pension fund obligations", which allows the corporation to book overall earnings of $248 million for the third quarter. McDonnell Douglas made $38 million during the same period last year. McDonnell is booking one other troubled programme, the US Navy's T-45 trainer, at break-even, pending settlement of responsibility for changes to the airframe and engine. One bright spot in the figures is the performance of the twin- jet line at Douglas in Long Beach, which now appears to have recovered from the trau matic effects of management re organisation early last year. The company delivered a re cord 40 MD-80s during the period, ten more than in the same period last year, and booked $46 million in MD-80 earnings — up from $1 million last year. • Spar acquires Leigh assets Spar Aerospace has acquired the Ottawa-area assets of bankrupt Leigh Instruments. The Canadian company will op erate Leigh's Carlton Place plant and take over defence contracts on which some 150 former Leigh employees have been working under the supervision of trustee Peat Marwick Thome since the company declared bankruptcy on 12 April. Most of Leigh's financial problems resulted from cost overruns on defence contracts, principally the Canadian Forces' Shipboard Integrated Communi cations System (SHINCOM). Spar will now try to establish a realistic schedule for undertak ing SHINCOM, says Spar Aero space executive vice-president Anthony Anderson. • FLIGHT INTERNATIONAL 31 October - 6 November, 1990 15
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