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Aviation History
1993
1993 - 1649.PDF
BUSINESS TAP seeks state aid to prevent collapse BY KEVIN O'TOOLE The financial crisis at TAP-Air Portugal could force the flag-carrier to close by the end of this year, unless the Government produces a fresh capital injection of Es80-100 billion ($500-625 million), president Fernando Santos Martins has warned. The Portuguese Government has indicated that it is ready to make the money available, pro vided that the flag-carrier pushes ahead with its cost- cutting programme and comes to an amicable agreement with its unions over a restructuring plan. Talks between the com pany and workforce continue. Martins, previously TAP president between 1980 and 1982, was brought back in December to see through re structuring of the troubled air line and prepare it for partial privatisation later this year. A stake of up to 49% is due to be sold. Lufthansa has ex pressed interest in co-operation with TAP, although not neces sarily in taking an equity stake (Flight International, 19-25 June). TAP denies rumours of interest from United Airlines. The Portuguese flag-carrier has been plagued by heavy losses and debts which have mounted to around Es70 bil lion. Martins has admitted that the airline operations are likely to show a loss of more than Es20 billion when full figures are revealed for 1992. Adding in the cost of closing the Air Atlantis charter opera tion with the loss of 200 jobs in April 1992, the deficit is likely to total more than Es27 billion. A similar loss is fore cast for 1993. Earlier this year, TAP warned that net group losses could approach Es50 billion, a figure which would put the airline among the world's top loss-making carriers. The airline's new manage ment team is keen to cut staff numbers, which now stand at around 10,500, down from 10,800 at the end of 1992. No official plan has been disclosed, but the number of employees at the end of 1993 is likely to be close to the 9,000 mark. One option being mooted is to hive off services such as cater ing and handling from the main airline into independent operating units. Staff cuts have been opposed by unions, which have threat ened industrial action. Workers protested this year when the airline was unable to pay the April wage bill on time. TAP has also cancelled four Airbus A340-300 deliveries because of financial problems. • —- ^v »• :• WrS • Cargolux keeps loads steady but profits slip Poor yields squeeze Luxair profits Luxair managed to scrape a small profit for 1992, de spite plummeting yields which all but cancelled out a major capacity increase at the Luxem bourg flag-carrier. Profits fell to LFrl6.5 million ($475,500), from LFrl22.9 mil lion in 1992, despite a healthy 16% growth in revenues to LFr6 billion. Passenger numbers grew by more than 22% over the year, as the carrier added two new Boeing 737-400s to its fleet, but falling yields prevented this from turning to profit. Profits were also down at the Cargolux joint venture with Lufthansa, which took a 13% stake in Luxair last year. The cargo operation reported a net profit of $1.4 million, down from $21.1 million. Revenues and traffic volumes stayed mainly flat. • BAe reshape allows room for mergers British Aerospace has re organised under a new legal structure, which will give it the ability to pay sharehold ers dividends and also make it easier to form joint ventures for the turboprop, space and missiles businesses. The change creates a BAe holding company which will oversee a series of separate operating companies. Core businesses, including defence and Airbus units, are now within BAe (Operations), while other operations including Rover cars, Jetstream turbo- props, Dynamics and Space are separate subsidiaries. When the group was formed in 1978, all of the operating companies were included within the parent BAe entity. This meant that the £1 billion provision against losses at the regional-jets business in 1992 had to be written against the parent company's balance sheet. Because of lack of re serves, BAe was forced to ob- US maintenance teaming takes off FFV Aerotech and Stevens Aviation have agreed a strategic alliance to provide expanded maintenance serv ices in the US regional-airline, corporate and general-avia tion markets. The first venture is a paint and refurbishment shop for corporate and regional air craft, at FFV Aerotech's re gional-airliner centre in Nashville, Tennessee. FFV will own and manage the paint centre, while Ste vens provides "significant financial support" under a long-term contract for paint and refurbishment services. Stevens also plans to open a corporate-aircraft interior shop in Nashville to comple ment the existing FVV centre. Other co-operative ventures are due to follow, say the companies. Stevens will mar ket FFV's avionics and acces sory overhaul capabilities to its corporate and general-, aviation customers. D tain a court ruling before it could pay out a dividend. Under the new structure, the loss could be taken at operat ing-company level. When John Cahill joined the group as chairman 12 months ago, he made it clear that a key aim was to "unlock profits" for the shareholders. Although the new structure does not create any operational changes, the fact that the Jet stream and Space units are now held as subsidiaries will make it easier for BAe to put them into future joint ventures. The Dynamics missile business, which is close to linking with Matra, and Corporate Jets, which is being sold to Ray theon, are also kept separate for this reason. The new structure also cre ates the beginnings of the long- mooted aerostructures unit within BAe (Operations). Ini tially, this will only contain the regional-jet operations not in cluded in the Avro joint ven ture, and could later cover corporate-jet fuselage work at Chester. A long-term aerostruc tures strategy is pending. • 76 FLIGHT INTERNATIONAL 30 June - 6 My, 1993
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