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Aviation History
1993
1993 - 1213.PDF
BUSINESS FOCUS 125- 100- c .0 £ /!>- 50- 25- ^5 CO 90 i f 91 French aerospace £ ^• ^ m 92 Civil' Military-— — Export ^9 m 5.0 LO 90 in 49% 91 ^ CO 5? CO 92 orders Aircraft & missiles — Engines — Equipment— 90 91 92 Order recovery, or just a Mirage? Last year's deal to sell 60 Mirage 2000-5 fighter aircraft to Taiwan was vital for Dassault Aviation's orderbook. It has also been crucial in lifting order figures for the whole French industry, as preliminary results from trade association CIFAS illustrate. After the dismal performance in 1991, order intake grew by nearly 22% in value to reach an (unconsolidated) total of Frll2 billion ($20.6 billion). This was nearly all due to a doubling in military-export orders, led by the Taiwan sale. By comparison, domestic military orders, which have suffered from steady cutbacks in the French defence budget over the past three years, show little improvement. The civil sector continues to suffer from crisis in the airline industry and dipped below a 40% share of total orders for the first time since 1985. GIFAS points out that even the 1992 "recovery" leaves order intake down by at least 16% in real terms on the totals which the industry was achieving in the late 1980s. While waiting for general economic recovery, a few more major defence-export deals would be welcomed. SIA slumps under yield pressure Singapore Airlines (SIA) has posted an 8.4% slide in profits as intense competition and a strengthening currency put heavy pressure on yields. Group net profits for the year to March slumped to S$851 million ($519 million), worsened by the lack of aircraft sales, which had netted S$88 million the year before. Sales were up only 4.2% at S$5.6 billion, despite a healthy 14.2% increase in overall traf fic. SIA estimates that the rise in the Singapore dollar de pressed revenues by S$167 mil lion, while intense competition in a market under heavy over capacity resulted in another S$412 million of lost income. Group yields fell by 10.5%, with cargo suffering the great est drop, at nearly 13%, against a passenger decline of 7.1%. SIA pushed up capacity by 17.8%, through increased fre quencies and four new destina tions. As available seats ran ahead of traffic, passenger load factor fell by 2.2 points, to 71.3%, while cargo lost a point, to 66.4%. The group has budg eted for an 8% increase in seat capacity and 21% growth in cargo during 1993-4. Despite the slide, SIA is on course to be the world's most profitable airline in 1992-3 and is "cautiously optimistic" on passenger-traffic figures in the year to come. Cargo markets are expected to remain soft, at least in the first half of 1993-4. It also warns that pressure on yields will remain worldwide, as supply outpaces demand. • BA optimistic despite 35% drop in earnings BY KEVIN O'TOOLE British Airways remains "quietly optimistic" for an improvement in yields this year, despite revealing a 35% fall in earnings, which topples the UK flag-carrier from its position as the world's most profitable airline. As expected, BA's pre-tax profits were down substan tially, at £185 million, for its year to end-March. Falling yields and heavy investment lay behind the profit fall, which comes despite the group carry ing a record number of passen gers and the second-best load factor in a decade, at 70.8%. BA also confirms the launch of a £442 million rights issue to shore up the airline's strained finances after acquisi tions totalling over £600 mil lion. Besides the two major investments in USAir (£264 million) and Quantas (£304 million), BA has invested £15 million for a stake in France's TAT and spent £45 million taking over Dan-Air. These investments have pushed the group's debt-to- equity to 160%, but the rights issue should bring that back to a more manageable 100%. "We have strengthened our alliances with pounds [ster ling] of investment," says chairman Sir Colin Marshall, distancing the airline from talk of the looser marketing alli ances now finding favour else where in Europe. "Our NEWS IN BRIEF LORAL PROFITS Loral has confirmed earlier predictions of a record year to end-March 1993, with $177.8 million profits on $3.3 billion sales. "Earnings exceeded even our aggressive expectations," says chairman Bernard Sch wartz. He adds that the group's cashflow again reached $400 million. SOBELAIR PROFITS Belgian airline Sobelair saw its profits leap by nearly 43%, to BFr63 million ($2 million) in 1992, as a 26% growth in passenger numbers, approach ing the 1 million mark, trans lated into a 35% increase in revenues. Sobelair is 70% owned by the country's na tional carrier, Sabena. objective is to be the core of the first and most successful global airline networks which are emerging," he adds. Financial analysts have wel comed the rights issue and expect BA to return to profits of £220-250 million over the next year, provided that it keeps up the pressure on costs and is successful in capturing more high-yield traffic. Over the past year, BA has seen yields fall by 5.7% as premium traffic declined stead ily, although the rate of yield deterioration slowed during the year. Marshall says that a 1% improvement in yields would have been worth £45 million at operating level. There are now early signs emerging of an improvement in passenger mix, he believes. During April, the airline saw its first rise in premium business since August and forward bookings are "encouraging". BA plans to continue its fre quency-led capacity growth over the coming year, with a further 13% increase, including 21% on the heavily oversub scribed North Atlantic. The growth will slow to only 4% in 1994-5, however. The airline has again set a cost-saving goal of around £150 million, a target which was exceeded in 1992. • Thai income halves R ising costs and fierce com petition have more than halved profits at Thai Airways over its first half-year to March. Analysts believe that the carrier may now only achieve a full- year profit of little over Bt2 billion ($79 million), against the airline's earlier projections of over Bt6 billion. In its first quarter, Thai saw profits disintegrate, from Bt792 million, to Btl20 million, al though in the second quarter the slide was held to 14%, producing a profit of Bt450 million on static revenues. • 22 FLIGHT INTERNATIONAL 26 May - 1 June, 1993
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