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Aviation History
1997
1997 - 0017.PDF
BUSINESS BA frees USAir and prepares to intensify American fight KEVIN O'TOOLE/LONDON BRITISH AIRWAYS has finally agreed to sever its partnership with USAir, putting its sharehold ing^ the US carrier up for sale and planning to draw the marketing alliance to a close by April. The news increases pressure on BA to push through its new al liance with American Airlines, which faces a series of crucial deci sions in the first quarter of the year as it steers its way through compe tition approval and the allied US- UK open skies talks — a necessary condition of winning anti-trust immunity for the deal. USAir has first refusal to buy BAs 24.6% stake, but must make a decision by mid-February. After that, BA would be free to sell the shares on the open market, with the proviso that the sale does not allow any investor to build up a stake of more than 5% in USAir. BAhas invested a total of around $400 million in USAir preference shares since signing up a marketing and codesharing alliance three years ago. The relationship, which had always appeared strained, finally broke down into acrimony when BA signed up the new Ayling: flagging US policy change alliance agreement with American Airlines and USAir replied by launching a lawsuit against its for mer partner. Bob Ayling, BA chief executive, denies that the share sale was prompted by the USAir lawsuit, claiming that it would "...clearly be unwise to pursue an alliance with an unwilling partner". He adds that BAs intention is to bring its rela tionship with USAir "to a close". USAir has called the decision "an important first step" in its new goal of becoming "an effective, independent competitor" between the USA and London Heathrow. BA hopes to have an alternative transatlantic arrangement in place by the time the USAir marketing pact is dissolved from 29 March, although prospects of having won approvals for its American alliance by then are remote. The next milestone in UK approval for the new alliance comes on 10 January, when BA and others must file their responses to an initial ruling by the country's competition watchdog, the Office of Fair Trading (OFT). The proposal is for BA to give up 168 slots a week at Heathrow, which represents around 90% of the new slots which American would bring to the alliance. Details of exactly how the slots would be selected and distributed have not been released, but they would have to be made available for competi tive transatlantic services. BA now has some 38% of slots at the airport, which on latest figures would represent a total of around 3,700 take-off and landing move ments each week. The OFT is expected to make a recommenda tion within a couple of weeks of receiving the responses. • Aerospatiale and Dassault beat deadline AEROSPATIALE and Das sault have agreed on the sec ond stage of their merger — meeting the Government's 1 Jan uary deadline for agreement on the basic structure of the company. In a deal signed in December, the presidents of both companies signed a protocol under which the main elements of the combined organisation, to be called "Dassault Aerospatiale", were settled. The agreement leaves Dassault with its desired "autonomy", adding a divi sion containing the fighter and business-aircraft manufacturer to the three branches of Aerospatiale: civil aircraft, space, defence and missiles, and helicopters. Each branch will be directed bv its own management committee, while international, research and personnel will be joined. Dassault will, in effect, be an autonomous unit under a similar arrangement to that for F'urocopter, but will be 100% -owned by the new company and have two of five members on the management board. Agreement is still needed on the financial aspects of the merger, which centre on the valuations of Aerospatiale and Dassault, provid ed by their respective banking groups. This is expected to be resolved "soon", according to a source close to the negotiations, leaving Dassault with between 17% and 25% of the enterprise. Conclusion of the merger will leave the Government free to pur sue the privatisation of Aero spatiale and to look for further agreements aimed at rationalising die European aerospace industry. The revised programme for the privatisation of defence electronics group Thomson-CSF" will also go ahead in 1997, and the new Dassault Aerospatiale group is being tipped as a potential bidder. The Lagardere Group, which won the original decision, remains the favourite. This would probably lead to a missiles "grand alliance" bringing together Matra, Thom son-CSF and British Aerospace, and threaten the planned missiles alliance between Daimler-Ben/. Aerospace and Aerospatiale. • NEWS IN BRIEF • DASH 8-400 CASH Bombardier has won C$57 million ($42 million) from the Canadian Government in repayable launch aid for the 70-seat stretched -400 ver sion of the de Havilland Dash 8. Bombardier and the gov ernment of Ottawa will fund C$400 million of the devel opment cost, with the remaining C$200 million coming from risk-sharing partners, including Mit subishi Heavy Industries and Pratt & Whitney Canada. The aid will be repaid when deliveries start in around early 1999. Bombardier earli er won a Government loan of C$87 million for develop ment of a 70-seat version of its Regional Jet. Formal launch of the programme is awaited from Bombardier. • KLM RAISES FARES KLM, which was among the first of the carriers to add a ticket surcharge to cover soaring fuel costs, has now officially raised fares by up to 5% on a range of internation al markets. Alliance partner Northwest Airlines will also raise the price of tickets in the Netherlands market. The existing fuel surcharge has been withdrawn. • PIA PRIVATISATION Pakistan has called in a team from International Finance (IFC), the consulting arm of the World Bank, to advise on restructuring and privatisa tion ofPakistan International Airlines (PIA). IFC, which recently advised on the suc cessful privatisation of Kenya Airways, is also to look at Pakistan's state-owned rail way. The restructuring study is to take six to nine months. • TRANSAT EYES EUROPE Canadian charter airline and tour operator Transat plans to spend up to C$150 million ($112 million) in 1997 to buy a top tour operator in France or the UK. FLIGHT INTERNATIONAL 1 - 7 January 1997
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