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Aviation History
1993
1993 - 1160.PDF
BUSINESS TAP runs loss up to $335 million TAP-Air Portugal has admit ted that its losses for 1992 will be five times greater than previously forecast. The state- owned airline has also again denied reports suggesting that United Airlines is close to tak ing a major stake. Financially troubled TAP now estimates that its losses for 1992 are likely^to come in at around the Escudos 50 billion ($335 million) mark, despite forecasts of only a month be fore which had suggested that the deficit would total Escudos 10 billion. Operationally, the airline showed reasonable growth dur ing 1992, pushing up pas senger numbers by 9% to 3.5 million, and seeing passenger load factors edge up by a point, to 68%. Despite these advances, however, the Portuguese na tional carrier continues to be dogged by financial crises. Cash problems came to a head in April, when the airline was unable to pay the full salaries for all of its 10,000 employees, which resulted in worker demonstrations. A restructuring is under way, led by Santos Martins, who was brought back as TAP president in December. He leads a new five-strong team of directors charged with the task of over hauling the carrier's finances and reducing its cost base in readiness for a planned privatisation later this year. Up to 49% of the carrier is due to be sold, raising specula tion of bids from foreign air lines. Iberia in neighbouring Spain has privately expressed an interest and more recent reports have suggested that United Airlines could take a major stake. TAP denies the rumours, saying that it has not received a proposal from United or any other airline and "...is not even aware" that the US carrier has any intention of participating in the privatisation. A TAP official adds that a foreign airline would be limited to an equity holding of only 20%. United Airlines re fuses to comment. • FOCUS 00- 50- o4 French aerospace-industry sales 1/1 Constant francs j — Current francs f f*l „ , Militar y / Civi l 83 84 Source: GIFAS 85 86 87 90 Year 92 (est) France feels the recession It is likely to be a depressed aerospace industry which arrives at the 40th Paris airshow on 11 June. The French industry is no exception. Latest figures from its aerospace association, GIFAS, suggest that 1992 marked a further decline in sales, to FrlOlA billion ($18.8 billion). In straight value terms (current francs) that marks a 1.5% drop, smaller than had been feared earlier. In terms of real volume (measured in "constant francs" adjusted for inflation), sales fell by 4% compared to 1991, their second year on a downward trend, and the worst fall for a decade. Military and civil markets appear to have shrunk equally, with civil sales, recorded at 53%, retaining the majority. GIFAS also estimates that the workforce dipped by 7%, to 111,300. The better news, however, is that the orderbook appears to have risen by 21.6%, compared to the depressed 1991 levels. British Midland slips but expects upturn Despite revealing disap pointing profits for 1992, Sir Michael Bishop, chairman of UK regional carrier British Midland (BM) believes that there are signs of a "dramatic" improvement this year, includ ing early indications of a recov ery on domestic routes. "We've seen the cycle turn for us," says Bishop, although he warns that recovery is likely to be patchy during 1993 for the airline industry in general. BM's parent group, Airline of Britain Holdings (ABH), which includes Loganair and Manx Airlines, saw pre-tax profits slip to £834,000 in 1992, down from £2.1 million in 1991, although sales grew by 14.5%, to £392 million. Bishop says, however, that the headline figure masks a strong recovery from that for the second half of 1992, when the group turned round a first- half loss of around £11 million. The net result was helped further by the demise of Dan- Air, which stimulated traffic towards the end of the year, and by aircraft sales. Without these factors, the group would have made a modest net loss. The recovery has continued into 1993, producing a record result for the first quarter, with passenger numbers up by more than 15%. Most encouragingly, the airline has seen the first growth in two years on its major domestic routes from London Heathrow. Half of the group's business is now on European routes — with the expansion due to con tinue, with the potential to launch one new service to major capitals in each of the next three to five years, pro vided that slots continue to be freed at Heathrow. Bishop forecasts a 20% growth in movements at the airport over that period. European services have ben efited from BM's "Diamond EuroClass" low-cost business- travel initiative launched in Bishop: "Cycle has turned for us March. In the month after its introduction, premium-fare traffic grew by 26%, including that on the new Heathrow- Frankfurt service. Bishop notes that competitors have been forced to respond with reduc tions of up to 30% in business- class fares and says that BM will maintain its fare base dur ing the northern summer. Bishop admits, however, that BM is in need of an equity injection to reduce its 400% debt gearing. SAS, which raised its stake in ABH to 34.9% in 1992, will take that to 40% by 1994, but Bishop says that there is no present intention to sell out to the Scandinavian carrier. There are provisions to buy back the stake if merger talks, in which SAS is now involved, bring it into conflict with BM. • NEWS IN BRIEF MAERSK PROFIT Danish carrier Maersk Air made a DKr30 million ($4.8 million) profit in 1992, re versing the 1991 result when the carrier reported a DKr2.5 million loss, its first in ten years. Revenues rose 8% to DKrl.4 billion, helped by a 29% growth in interna tional passenger numbers. The charter and airline- leasing operations also per formed strongly. FLIGHT INTERNATIONAL 19 - 25 May, 1993 21
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