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Aviation History
1997
1997 - 0440.PDF
Business Northrop Grumman to close four plants NORTHROP GRUMMAN is shutting four plants as part of its continuing effort to consoli date and streamline operations. The move, which will result in a charge of $90 million, will elimi nate 2.5 million ft*(232,000m2) of excess capacity and make 755 workers redundant. I lie largest cuts come within the company's Electronics and Systems Integration division (ESID), which is to close its Combat Support Systems plant in Hawthorne, California, by the end of the year. Most of the work will be shifted to the Rolling Meadows site in Illinois, which is to become the centre for ESID's new Elec tronic Systems business unit. The Hawthorne site employs 770 workers, of whom 240 will be offered transfers. The Combat Support Systems plant at Great River on Long Island, New York, will also be closed, with 120 of its 450 employ ees to be offered transfers. Com mercial operations in Stuart, Florida, and Perry, Georgia, will also stop. The group says it will also shut its large Perry plant, set up to build the cancelled Tri-Scrvice Stand-off Attack Missile. The 450 employees will be moved within the next 18-24 mondis to a smaller site in Georgia if new commercial business can be won. 3 NEWS IN BRIEF • GARUDA PROFITS Garuda Indonesia managed to show a net profit for 1996, but largely as the result of selling off unwanted assets. According to the country's transport minister, Haryanto Danutirto, the state-owned carrier ended the year with an overall profit of 124 billion rupiah ($73.2 million), but that masked a loss of 87.4 bil lion rupiah on operations. The airline is streamlining its operations, selling off hotel property and trying to cut its debt, in preparation for a planned stock listing at the end of 1998. Sabena denies Swissair rumours JULIAN MOXON/BRUSSELS SABENA CHIEF executive Paul Reutlinger has denied growing speculation that Swissair is preparing to pull out from the alliance with its struggling Belgian partner if the carrier's unions fail to agree on new working conditions and wage strucuires. Rumours of a possible pull-out were revived by confirmation mat the Swissair board has authorised the airline's management to write down its BFr6 billion (Si80 mil lion) investment in Sabena in the second quarter of this year. "This does not mean that Swissair is pulling out. It is simply an account ing measure," says Reutlinger, adding tiiat it was merely to clean up the Swissair balance sheet. Sabena is expected to return record losses of around BPY2-3 bil lion in 1996, and the management is still fighting to improve its per formance in the face of union sus picion. Reutlinger claims, how ever, that relations between man agement and unions are "improv ing", although sources admit that the airline faces a considerable uphill task. Speaking at the European Aviation Club in Brussels on 21 January, Reutlinger predicted mat the airline was on course to achieve the target, set out by Swissair, of a return to profits by 1999. He out lines five main objectives: • a reduction in costs to BFr2 7 per tonne kilometre, down from BEr32 today; • an increase in load factors to 57% on European markets and 67% elsewhere on the network — current loads stand at a low of just 52% in Europe; • a rise in the proportion of busi ness traffic from 32% to 37%; • a reduction in connecting time to an average of 27min; • an improvement in punctuality by 1998, to take the carrier from fifth to third in the league of major European carriers. Efforts will also be made to return to the Far Eastern market from which the airline all but with drew in 1991. "That was the right decision at the time, but we all know that is where the action is, and we must be a part of that," says Reutlinger. The Sabena chief adds that he is ".. .absolutely convinced that if we take the right management deci sions we have a good chance of sur viving and succeeding". • Deutsche BA aims to return to profit by 1998 ANDRZEJ JEZIORSKI/MUNICH D EUTSCHE BA HAS un veiled a new strategy, aimed at putting the airline into profit with in 18 months and refocusing on internal German services. Since its launch by British Airways in mid- 1992, the carrier has rapidly estab lished itself as Germany's second- biggest after Lufthansa, but is still struggling to make a profit. As part of an efficiency drive, which the airline says has cut 12- 14% from operating costs, Deutsche BA has rationalised its fleet over the pastyear,sheddingall nirboprops. The aim is to concen trate on a fleet of 18 Boeing 737- 300s by October. It has also added seven more seats in each aircraft. The focus for expansion is now the internal German market. On 20 January, Deutsche BA intro duced two new routes, being flown eight times daily, from Munich to Cologne/Bonn and Hamburg. Chief commercial officer Paul Giblin says that this gives the air line operations on eight of the 11 most important domestic routes. The remaining three key routes are to Frankfurt, and Deutsche BA does not yet have enough slots to justify operating into the Luft- fH j^^^r Deutsche BA: second-biggest Gentian carrier, but struggling for profit hansa stronghold — Germany's busiest airport. "We want to put this [new strat egy] into place and see this business turn around in 18 months. Then we will look at other options," says Giblin. Of the airline's internation al routes, only connections to London Gatwick, Moscow and St Petersburg remain, alongside Deutsche BA's charter business. The airline is also introducing a new. competitive, single-class fare system on domestic flights. Giblin expects about 35% of the airline's business to come at the cheapest, DM 190 (S118), fare level, with half of the passengers paying the fullv flexible DM520 fare. Average load factors in the first half of the current business year have been some 53% on the core jet-airliner routes, says Giblin. By stimulating the market with the new fares, Giblin hopes to increase this to between 60% and 65%. Despite the forthcoming dereg ulation of European airspace, (riblin does not expect any imme diate change in ownership. British Airways holds 49%, with the rest in the hands of three German banks. The banks have the option to sell their shares in the third quarter, but no discussions have taken place, says Giblin, adding that it remains important to maintain the com pany's German identity. J 22 FLIGHT INTERNATIONAL 29 January - 4 February 1997
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