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Aviation History
1993
1993 - 2021.PDF
BUSINESS Austrian dilemma: Alcazar or Lufthansa? BY KEVIN O'TOOLE Austrian Airlines has indi cated that it will give a decision by September on whether to pursue a co operation deal with Lufthansa, in place of its proposed merger with Dutch flag-carrier KLM, Scandinavian Airline System (SAS) and Swissair, under the Alcazar banner. The German national carrer announced that it had opened talks with its Austrian neigh bour earlier this year (Flight International, 19-25 May), in an effort to head off accelerating moves towards an Alcazar merger. Moves began at the start of 1993, when Austrian entered talks over an enlarged partner ship with SAS and Swissair, its partners within the European Quality Alliance, and KLM. A series of internal working groups was set up to look at the options for co-operation, resulting in a report in May recommending that the four airlines move towards a full merger. Detailed talks continue on how the merger would work in practice. The talks have been compli cated by political concerns over the fate of the national airlines within Alcazar. Doubts were fuelled by the leak of an inter nal Swissair memorandum of understanding (MoU) in June, which gave details of how the four airlines would be fused together into a single, jointly managed and owned airline. Austrian would hold a 10% stake in the venture, with its three larger partners taking 30% each, raising fears in Aus tria that its national interest would be submerged. Opponents of the venture point to implications within the leaked MoU that Austrian would effectively lose a board- level veto after an initial three- year transition period. Instead, Lufthansa is offering a co-operative agreement, cov- Review urged for US anti-trust laws Martin Marietta chairman Norman Augustine is urg ing a major revision of US anti-trust competition laws, to ease the consolidation within the world defence industry. Speaking to the American Bar Association, Augustine claimed that US anti-trust laws needed to be framed to reflect the reality of the defence mar ket and security needs. "The Justice Department, NEWS IN BRIEF FRENCH FALL French defence electronics company Thomson-CSF suf fered a 5.5% downturn in business in the first half of 1993, with revenues reach ing only Frl3.9 billion ($2.3 billion). Sextant Avionique, which is owned jointly by Thomson-CSF and Aerospa tiale, reports a similar 4.8% decline in sales to under Fr2.5 billion. Federal Trade Commission and the US Congress should imple ment...changes in anti-trust policy designed to increase the competitiveness of US compa nies aboard, and to further recognise that market bounda ries, in commercial business, no longer coincide with geo political boundaries," com ments Augustine. He urges the Clinton Admini stration to "...adopt formal policies, designed to take into account unique features of the defence industry", as well as listening to the Pentagon when evaluating the effects of proposed mergers within the sector. Martin Marietta's recent ac quisition of GE Aerospace rep resents "...the kind of restruc turing that must occur throughout our industry", ar gues Augustine. He cites . the aborted merger of Olin and Alliant Techsystems as an ex ample of where "...anti-trust regulators focused narrowly on competition concerns". • ering scheduling and some technical and operational areas, but stopping short of an equity stake. The German carrier points to existing agreements with Finnair and Luxair as a model for how the agreement could work. Management at Austrian, which is still involved in de tailed discussions with both groups, has indicated that it expects to make a decision on which agreement to follow by "early autumn". Although the Alcazar airlines remain shy of setting public deadlines, officials have indi cated that a decision on the future of the Alcazar proposal is also expected to emerge dur ing September. • FOCUS Alcazar grouping Group sales 1992 Airline workforce S15.3 billion 68,875 Scheduled passengers and traffic Passengers Traffi Pax 32.8 million RPK 67.3 billion SAS = SK Swissair = SR KLM = KL Austrian = OS Austrian and the Alcazar alliance If the Alcazar alliance goes ahead, it will certainly solve the problems of scale which are worrying Europe's smaller national carriers. The four airline groups together had sales of around $153 billion in 1992 — higher than even the US groups. Admittedly, that includes non-airline interests, such as the SAS hotels business, but, even discounting these, Alcazar's size would be impressive. It would sit well within the world top ten for both scheduled-passenger numbers and traffic. The problems, though, are political rather than numerical. National fears within Austria, which would be the junior Alcazar partner, are already threatening a split (see story this page). Concerns were not helped by a leaked Swissair memorandum of understanding (MoV) which outlined plans for full merger and talked of the need to make provision for a hefty post-merger rationalisation. Speculation in Austria has suggested that the result could be the loss of 30,000 jobs from among the four airlines and the possible end of Vienna as a hub. The airlines have played down the significance of. the leaked MoU, and dismissed the speculation point-blank, but the doubts have not been so easily shifted. FLIGHT INTERNATIONAL 18 - 24 August, 1993
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