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Aviation History
1993
1993 - 1641.PDF
AIR TRANSPORT GE/GPA set up management company GE Capital and GPA have agreed to set up a joint fleet-management company, in a move which could edge the two companies close to merger and the creation of a new world giant in the air liner-leasing market. Under a deal unveiled on 21 June, the two groups announced that they would set up a company to manage and market at least part of GPA's portfolio of 470 jet aircraft. Details will not be thrashed out until later this year, but sources close to the negotia tions expect that the new management company will eventually be used to provide services to the fleets of GPA, GE Capital and its Polaris Aircraft Leasing subsidiary — which manages a total fleet of 500 aircraft. Although the new company will be a GE Capital subsidi ary, it is likely to be based in Shannon and staffed by GPA management. GPA was thought to be close to filing for bankruptcy protection when it pulled off an elev enth-hour deal on 12 May with GE Capital, the powerful financing arm of the USA's General Electric. Under that deal, GE Capital agreed to buy 45 GPA aircraft for $1.35 billion and help launch further securitisation packages, worth $2 billion. In return, GE has been given the option to take a stake of between 65% and 80% within the next four years. GE is unlikely to exercise the op tion until GPA is on the way to recovery, to avoid any im pact on its own credit rating. The deal still has to be approved by GPA's existing shareholders, who are sched uled to meet to discuss the issue in early August. Interest from the existing shareholders suggests that GE Capital's eventual share in GPA will be "closer to 60% than 80%", say officials. • Asian carriers confront USA... The Asia Pacific region's major airlines have united to place a challenge to the growing US air-carrier presence in their markets. The Orient Airlines Associa tion (OAA) is calling on mem ber nations to push for a removal of "unbalanced and outdated bilateral agreements" with the USA to prevent a repeat of the continuing North- west/Qantas dispute. The OAA's Executive Com mittee says: "The majority of US-Asia bilaterals were negoti ated in the 1950s and 1960s and no longer provide an ac ceptable balance of frequency allocation and gateway accessi bility. US gateways open to Asian carriers are restricted to nine points, while US carriers operate to Asia from 21 points in the USA. "Despite exceptionally high standards of passenger service and the lower cost base of most OAA carriers, the distorting effect of many of the current bilaterals ensures that US carri ers enjoy a substantial market share advantage on the tra nspacific area's services." The members of the associa tion include virtually all of the major international carriers with home bases within the Oriental carriers united against US dominance Northwest warns of bankruptcy Northwest Airlines has warned its unions that a Chapter 11 bankruptcy protec tion filing is contemplated if the labour force continues to baulk at nearly $1 billion in contract concessions. The USA's fourth-largest air carrier is saddled with $4 bil lion of debt, poor earnings and sharp competition for few pas sengers. It went private in a highly leveraged buy-out in 1989 engineered by Alfred Checchi and Gary Wilson, but since then has carried the debt burden. Northwest faces $1.5 billion debt payments begin ning early next year. The airline has laid off pilots and dismissed managers, but survival requires more cuts. It asked union members to ratify a cost-reduction plan and employee-ownership scheme. The plans would represent more than half of the $900 million in employee savings the airline is seeking. The package was negotiated with leaders of the Interna tional Association of Machin ists (IAM) and the Interna tional Brotherhood of Team sters representing 34,000 of Northwest's contract staff. The deal was denounced as being inadequate and unaccept able by the Air Line Pilots Association (ALPA), which split with the other unions. The IAM rank-and-file rejected the $346 million in contract concessions, and the Teamsters called off a vote on the deal. ALPA is still negotiating with Northwest but, as Flight International went to press the association was not offering many concessions. • Pacific Ocean region. The Association's chairman Khun Chatrachai Bunya-An- anta says: "In an increasingly competitive environment, 1 want to make it quite clear that the OAA is no longer willing to accept the long-term imposi tion of inequitable bilateral agreements which disadvantage member airlines and the pas sengers they serve. The OAA chairman contin ues: "I urge Asian government negotiators to establish newer, fairer agreements which pro vide a level playing field on which OAA carriers can com pete with US carriers." D ...as USA averts bilateral crisis with Australia The USA and Australia are to step up attempts to set tle the row over Northwest Airlines' fifth-freedom rights, but, meanwhile, have declared a temporary truce. The deal allows Northwest to continue to fly three times a week on its New York-Osaka- Sydney route until 31 Decem ber, 1993, and to pick up passengers in Japan, provided that they do not account for more than 50% of the carrier's Osaka-Sydney occupied seats — the central point of the dispute. Northwest will be al lowed to move the route from New York to Detroit. In return, Qantas Airways will be allowed to continue operating its normal ten weekly non-stop flights between Sydney and Los Angeles. Negotiations will be handled "on an expedited basis with the view of resolving, by the end of 1993, differences that have arisen" with the existing bilat eral air-services agreement. Australian transport minister Bob Collins says: "The decision will take the heat out of the situation and allow both parties to consult on the broader issues underlying this dispute." • s FLIGHT INTERNATIONAL 30 June - 6 July, 1993
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