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Aviation History
1996
1996 - 3196.PDF
BUSINESS Viasa plans await employee approval JULIA HAYLEY/MADRID IBERIA'S PLAN FOR restruc turing loss-making Venezuelan airline Viasa, which includes cuts to jobs and routes, has been approved by the other major shareholders, but must now be cleared by the employees by 15 January. Iberia put forward the plan in a bid to recover some of the invest ment it has made since buying a 45% stake in Viasa. I The Spanish national carrier paid an initial $73.5 million for the stake, but had to inject another $44 million to cover losses in the first two years after privatisation. Viasa's losses have totalled $220 million over the past six years, with Iberia having seen a zero return on its investment. The restructuring plan outlines the loss of 380 jobs from Viasa's 2,200 employees (including 94 pilots), as well as the imposition of a pay freeze and a 30% reduction in aircrew allowances. The aim is to see Viasa swing back to a $14 mil lion profit in 1997 from a loss of around $ 18 million this year. The airline's main Venezuelan shareholder, the Fondo investment group, has agreed to provide $21 million towards the restructuring costs, while Iberia has agreed to write offa similar amount from die $140 million it is owed by Viasa, and to reduce annual interest pay ments on die remainder. • Surgeon's cut helps heal ailing Kiwi THE RESURRECTION OF Kiwi International Airlines now appears assured, but the sav iour who eventually stepped for ward to rescue die bankrupt low-cost US carrier came from an unexpected direction. On 26 November, with New ark-based Kiwi facing imminent liquidation, Wasatach Internat ional, the investment group and cruise-line owner, re-entered die fray — this time in partnership with a Maryland orthopaedic sur geon, apparently impressed widi die airline's low-fares operation. The partners secured Kiwi's sur vival by depositing $2.5 million in die carrier's bank and pledging to provide a similar amount in follow- up finance. They also plan to pro vide $10-20 million to buy a majority stake in the airline. Widi the cash in hand, Kiwi International plans to announce early this month where and when it will resume scheduled passenger flights, possibly in time for the December holiday season. Wasatach had previously step ped forward to rescue Kiwi, but failed to produce die promised fol low-up financing. Kiwi then turned to Isbre Holding, a New York investment company, which owns American Helicopter Ser vice, but this group also failed to deposit die necessary financing to buy die airline out of bankruptcy. Kiwi filed for bankruptcy pro tection on 30 September, scaling back scheduled services to diree cities. It then suspended sched- uled-flight operations on 15 October, but continued providing charter flights. • Meridiana fights for profit with cost cutting and employee share scheme ITALY'S SECOND-LARGEST airline, Meridiana, is fighting to stay in profit as high operating costs and declining domestic traffic direaten major losses in 1997. The carrier made a L25 billion ($16.5 million) pre-tax profit in 1995, but expects to achieve little more than break-even this year. "If nodiing decisive is done 1997 will close withMeridiana some L35 bil lion in the red," warns a source close to die airline. Meridiana is working on a cost- cutting plan, designed to save up to L29.5 billion in 1997, with the aim of returning the airline to profit again in 1999. The airline still has to secure a package of productivity improve ments plus wage and benefit cuts from its 1,250-strong workforce. Flightcrews are being targeted since diey fly only 500h a year — Meridiana is cutting its DC-9 fleet but adding MD-82 around lOOh less than flightcrew on most airlines. To sweeten the pill, and following the example set last year by Alitalia, die largest shareholder in Meri diana, the Aga Khan (with 96% of die stock) has offered employees a 2 0 % holding in the airline Meanwhile, Meridiana is plan ning to add eight further McDonnell Douglas MD-82s to its fleet, replacing six DC-9-51s. The fleet will then comprise 16 MD-82 s and four British Aero space 146-200sforuseontheshort runway at Florence airport. • September profit as Lufthansa ends poor year LUFTHANSArecovered some of its poise in the September quarter with a steady profits per formance, but doubts diat its full- year results will be able to match die record earnings of 1995. The group suffered an unexpect ed tumble in profits during the first half of 1996 as the anticipated traf fic growtfi failed to materialise. It put the brakes on expansion plans, which appear to be showing results, but, even with a profitable fourth quarter, the group result is expected to be down for die full year. Over die first diree quarters the group pre-tax profit now stands at DM434 million ($290 million), down by 14.2% over a year ago. Costs over die nine months are up by 6.7%, largely blamed on an 18% surge in fuel costs and growth in labour costs, which were pushed up by pension and redun dancy costs, despite staff reduc tions. Lufthansa Cargo has also been running up losses. Lufthansa says diat profits should stay steady in die fourth quarter, but warns that the the result depends on die outcome of the pay negotiations which are now taking place and which have already led to a "warning" strike at the start of November. Lufthansa's European partner, SAS, had earlier revealed anodier weak third quarter, which left the group showing pre-tax profits more* than halved, at under SKrl .3 billion ($195 million) over the first nine months. The Scandinavian airline group has promised to make major cost savings, but says that diese will not include redundancies. • 24 FLIGHT INTERNATIONAL 4 - 10 December 1996
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