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Aviation History
1995
1995 - 1763.PDF
BUSINESS MAS profit rise fails to impress PAUL LEWIS/SINGAPORE MALAYSIA AIRLINES (iMAS) managed to deliver its long-awaited profit recover)' for the 1994/5 financial year, but the improvement failed to live up to expectations following a lack lustre second half. The group turned in profits of MS139 million (S56.6 million) for its full year to the end of March, recovering most of the ground lost in 1993/4, when profits had dwindled to only M$16 million. Financial analysts are unim- RESULTS IN BRIEF M MAERSK RECORD PROFITS Maersk Air produced record results for 1994, largely because of strong traffic growth on the Danish carri er's expanding European network. Net profits grew fivefold, to DKrl32 million ($24 million), as sales grew by more than 15%. New international services from the Danish hub at Billund into London, Frankfurt and Amsterdam helped interna tional passenger numbers rise by 38%. Two new Boeing 737-300s were added to the fleet, while one of the older types was sold. • CARGOLUX SALES RISE Cargolux says that growing demand and good cost per formance from the first year of Boeing 747-400F freighter operations helped the cargo carrier to turn round losses to a $3.2 mil lion profit in 1994. The Luxembourg-based airline says that it flew 39% more freight, while trimming staff back to 1,283. Sales were up by 27% to $307 million. pressed with the extent of the turnaround, however. After a strong showing in the first half of the year, financial markets had been projecting group profits in the region ofM$190-215 million. MAS chairman Tajudin Ramli also admits that airline services failed to make money, with the improved results stemming largely from ancillary operations, such as in-flight catering and air port services. "These results are very, very disappointing," says Terence Chan, analyst at securities house Kleinwort Benson. He blames the performance on "excessive capaci ty growth", which added around M$200 million in extra costs. MAS took delivery of 15 aircraft in 1994/5, including its first five Airbus A3 30s, helping to push financing charges up by M$143 million. That was offset partially by $123 million in compensation for the late delivery of the first A330. The group had been forced to fill the gap by leasing McDonnell Douglas MD-lls from World Airways, a company in which Late delivery of A3 SO contributed to a poor recovery at MAS Tajudin's Malaysian Helicopter Services (MHS) has a 25% stake. The airline did manage to reduce the number of under utilised aircraft by leasing out some its fleet to joint-venture part ners, including Royal Air Cambodge and Air Maldives. Four Boeing 737-400s have also been leased to Jet Airways of India and Myanmar Airways Inter national. As a result, capacity growth was broadly in line with a 19.3% rise in traffic across the system. Passenger- load factors edged up to 69.8%, while cargo averaged 67.3%. Analysts warn that the airline's capacity expansion, combined with mounting competition form other international carriers, will continue to depress yields. On domestic routes MAS is obliged by the Malaysian Government to maintain domes tic services, most of which are uneconomical and are losing money due to regulated pricing. Revenue from domestic routes grew by only 1.2% in 1994, while sales from international services rose by 12%. Tajudin has refused to com ment on speculation that MAS wants to hive off many of its unprofitable domestic services to Pelangi Air, 18% of which is owned by MHS. • US workforce heads for record low EMPLOYMENT IN the US aircraft industry is at its low est point in nearly two decades. It is likely to reach a new record low, possibly this year, as compa nies continue to shed staff, warns the Aerospace Industries Association (AIA). Direct employment in aircraft, missiles and space manufacturing slumped to below 590,000 in 1994, down from more than 900,000 at the height of the boom in 1989. With numbers still falling, the workforce is on course to dip below the 560,000 low point, reached during the 1970s following the aftermath of the Vietnam Wu\ The grim predictions come in the latest annual employment sur vey conducted by the AIA Aerospace Research Center. The study points to the steady decline in US defence-procurement spending, which has virtually' halved from its peak of $80 billion in the late 1980s and is expected to level out at around S30 billion for the rest of the decade. Civil aerospace is expected to show some employment growth as aircraft ordering returns, but will not be enough to offset the defence decline, says the AIA, especially in the light of fierce foreign competition in US domestic and export markets. The AIA goes on to say that the US aerospace industry as a whole (including areas such as avionics) has shed more than 500,000 jobs in the past five years. In 1994, companies shed 80,000 jobs taking the total down to 827,000. The AIA esti mates that the workforce is due to fall by another 53,000 again this year, boosted by Boeing's recent decision to raise the num ber of lay-offs. Production workers and administrative staff appear to have suffered the brunt of the squeeze, with technicians and engineers suffering marginally lower percentage declines. • FLIGHT INTERNATIONAL 14 - 20 June 1995
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