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Aviation History
1998
1998 - 0818.PDF
BUSINESS Manage people better, says survey THE UK AEROSPACE in dustry has kickstarted anoth er phase of its plan to improve business performance by pressur ing companies to develop people management strategies. The initiative, launched by the Society of British Aerospace Com panies (SBAQ, follows an industry survey of people management. The survey concludes that com panies that integrate human resource policies with business goals will continue to outperform those companies that do not. With over half of the companies sur veyed having little or no human resource (HR) strategy, the con cern is that the UK aerospace sec tor as a whole is underperforming despite its annual£l 3 billion ($21.6 billion) turnover. The study, commissioned by the SBAC and the Department of Trade and Industry and carried out by the Institute for Employment Studies, was based on responses from 350 aerospace companies employing a total of 85,000. It shows that only 46% integrat ed their personnel policies with product market strategy, with only- one in four companies having a personnel or HR specialist on the board. Performance is stronger in businesses that manage their staff strategically, the report states. The average value added per employee was £60,000 across all companies with HR directors on the board, compared with an average of just over £40,000 for those with no board level director. Performance was also higher in companies using a range of so- called "innovative working prac tices" such as team working, problem solving groups, formal training, broad job grade struc tures and perrormance-related pay. With over 30% believing the skills level of their employees is "medi um to low", with engineering shortages the most critical, the sur vey voices concern over the limited skills training in the sector. SBAC director-general David Marshall says the survey will be used to help companies "main stream" people management into the business plan. • Lockheed Martin and Justice Department head for court RAMON LOPEZ/WASHINGTON DC LOCKHEED MARTIN and the US Department of Justice (DoJ) are heading for a courtroom showdown over the defence giant's proposed merger with Xorthrop Grumman after failure to agree a massive programme of divestitures to satisfy- competition concerns. Lockheed Martin says that it had offered to divest up to Si billion of assets in an attempt to smooth DoJ and Department of Defense (DoD) fears over the merger, but the company says that the competi tion watchdog had demanded dis posals accounting for over half of Xorthrop Gmmman's §9.1 billion annual sales. The Government's demands for divestitures, which are unprece dented in size and scope,"... under mine die economic viability of the transaction", says Lockheed chief executive Vance Coffman and his Xorthrop Grumman counterpart, Kent Kresa, in a joint statement. The DoJ has left the door open for further negotiations, but says that there is a "significant gap" between the two parties. US Attorney General Janet Reno says that the proposed merg er would "...take the competitive wind out of the sails of innovation in die production of many critical [weapons]". William Cohen, the US defence chief, says that the acquisition would "...increase market concentration and adverse ly affect competition in critical areas of defence electronics". He adds that die merger propos al is the most difficult that die US Government has had to handle since the end of the Cold War, when the US defence industry- began consolidating. "No previous merger has raised so many interre lated problems across so many markets." Coffman and Kresa still insist that die merger offers the potential for $1 billion of annual savings for the US Government, which now could be lost. They go on to argue that the combined companies would account for less than 2 5% of defence electronics purchased by die DoD, which would be ".. .well below levels that should create antitrust concerns". Xorthrop Grumman is to take a pre-tax charge of Si 80 million in die first quarter because of the costs related to the contested merger. Even without the latest merger, however, Lockheed Martin has again emerged at the top of the DoD's latest list of US defence con tractors. The group received prime contracts worth Si 1.6 billion dur ing fiscal year 1997 and the acquisi tion of Xorthrop Grumman would have stretched its lead further, adding S3.5 billion. Boeing leaped to second place in the wake of its McDonnell Douglas acquisition, but was still just below S10 billion. • EasyJet eases into second home in Switzerland NO-FRILLS UK carrier easyjet has secured a 40% stake in charter operator TEA Switzerland from owner Air- finance. The London Luton-based airline intends to relaunch TEA as easyjet Switzerland as soon as itcan exercise an option for a controlling stake. The move follows easyjet's failed attempt to acquire Air Holland and the need to reduce dependence on its Luton base. Easyjet says that it will only be able to take a 90% stake if the Swiss foreign ownership limit is lifted from 40%, which will happen if the country decides to join the European Union-driven plan for "open skies" on 1 October, ending Swissair's monopoly on scheduled services. The carrier will also wait to see if cost reductions at TEA can be achieved through "lease restruc turing and combined marketing". The airline will start operating Easyjet is exporting the low cost formula to Switzerland TEA aircraft on its existing route from Geneva to Luton on 1 May, while TEA will continue for the time being with its charter opera tions. By 1 October, easyjet hopes to move TEA's operations from Basle to Geneva and fly to destina tions including Amsterdam, Barcelona and Xice - routes already served from Luton. Easyjet says that it also hopes to operate- some services from Zurich. TEA operates five Boeing 737- 300s, leased from International Lease Finance of Los Angeles, and has two 737-700s on order. 3 26 FLIGHT INTERNATIONAL 1 - 7 April 1998
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