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Aviation History
1996
1996 - 0528.PDF
BUSINESS Sell-off costs push iall into losses GRAHAM WARWICK/DALLAS AVIALL HAS reported a loss of $241 million for 1995, mainly because of a $212 million fourdi- quarter charge to cover disposal of its airline engine-overhaul business. The Dallas, Texas-based company has agreed to sell the business to Miami-based Greenwich Air Ser vices for $260-280 million (Flight International, 14-20 February). Aviall's new president Eric Anderson says that the parts-distri bution business and Inventory Locator Service subsidiary which make up the continuing operations accounted for about $350 million of the company's 1995 revenues which totalled $870 million. He says that the Aviall board is committed to growing the distribu tion and information businesses, which are profitable. Anderson adds that the proceeds from the sale of the engine-overhaul operations will be used to pay down debt, and that continuing businesses "...should be a solid financial pic ture, with a very strong balance sheet". The company is actively looking for additional product-lines to distribute and is "open to acqui sitions", he says. Aviall decided to sell its engine- overhaul business after results dete riorated rapidly in the fourth quarter, largely because of poor performance on fixed-price con tracts. The company came close to defaulting on debt payments, but reached agreement with its banks. "It was a pretty tough financial position," he admits. • NEWS IN BRIEF • AIR ATLANTIC SOLD Canada has approved the sale of regional carrier Air Atlantic to the IMP Group. Air Atlantic was temporarily rescued from bankruptcy in 1995 by British Aerospace, which had an interest in the airline's five Jetstream 41s, but rules requiring 75% Canadian ownership of dom estic airlines led to IMP tak ing over control. Eva soars to first profit a year ahead of schedule as traffic rises by 58% Eva races to first profit FAST-EXPANDING Eva Air has turned in profits a year ahead of schedule, only four years after its launch as Taiwan's first privately owned carrier. The air line has also announced it is to launch a new airline in Panama by die end of the year. The carrier, which started oper ations in July 1991, had not planned to reach break-even until the end of 1996 after completing its five-year strategic plan. Instead, it ended 1995 showing a modest net profit of $7.2 million, and forecasts that that figure will grow to $22 million this year. The airline has also continued its break-neck expansion, pushing sales up by 45% in 1995 to above $1 billion. Passenger numbers were up by 50% to top 3 million, while load factors improved to 72 %. Cargo, which now accounts for 30% of sales, more than dou bled over the year, to around 230,OOOt. Eva, which was is part of Taiwan's Evergreen shipping and freight conglomerate, expects to see the dramatic expansion con tinue this year, with sales forecast to grow another 20% close to $1.3 billion. Another two Boeing 747-400 Combis are due to join the long- haul fleet over the year, taking the tally of 747-400s to 12, including eight Combis. Another Mc Donnell Douglas iVlD-90 will also join the short-haul fleet. The Panama operation is being set up to serve Central and South American markets. A local partner will be selected by the middle of the year to set up Ever Panama Airways. Eva is looking at several aircraft options, including Boeing 767s. A decision on routes and aircraft type will be made in the next few months. Panama is one of the few countries that formally recognises Taiwan. J KLM pulls directors from Northwest board K LM HAS WITHDRAWN its three senior executives from the board of Northwest Airlines in a further twist to the boardroom bust-up between the two alliance partners. KLM's president Pieter Bouw, managing director Leo van Wijk and chief financial officer Rob Abrahamsen have resigned their places on the Northwest board. KLM will instead appoint inde pendent board members to over see the Dutch group's 19% voting interest in Northwest. The resignations are being presented by KLM as a concilia tory move, designed to ease rela tions between the two carriers. In particular they address North west's fears that KLM represents a "creeping control threat". KLM says that the three exec utives could not "...unify their responsibilities" as directors of both airlines. Northwest also welcomes the decision as a "posi tive" move. Cracks in the alliance partner ship broke into a highly public dispute in November, when the Northwest board voted to adopt a "poison-pill" measure to pre vent KLM gaining any further control. In reply, KLM argued that its shareholder rights were being curbed and filed a legal action against its partner. Among the US airline's com plaints were charges that Bouw had used his board presence to pursue KLM interests at the expense of those of Northwest. Despite the strained relation ship, both partners stress that the alliance has been highly success ful at an operational level, and neither seems prepared to jeopar dise the flow of profits from the co-operation. In the first nine months of its financial year to the end of December, KLM includes in come of DF1166 million ($100 million) from its holding in the now highly profitable Northwest. KLM had written down the holding during Northwest's financial troubles, but is now writing it back as the shares soar in value. KLM's overall net earn ings for the first nine months stood at DF1528 million. • 12 FLIGHT INTERNATIONAL 6 - 12 March 1996
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