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Aviation History
1999
1999 - 1376.PDF
UJJZJjJ-ZD European airlines7 profits slip JULIAN MOXON/BRUSSELS EUROPEAN AIRLINES re mained profitable last year and ordered record numbers of aircraft, but it was a "black" year for punctuality, according to the Association of European Airlines (AEA) Operating profits, at SI .94 bil lion, were $400 million lower than for the previous year. Although 1997 figures were a record, much of the profit resulted from a 30% "windfall" drop in fuel prices to a 2 5-year low. In its annual review of the industry, the AEA blames lower load factors on the profits drop, but adds that this was bal anced partly by slightly higher yields, lower costs and a small reduction in the interest burden. It was the fourth consecutive year ofprofits. Growth remained strong, at 7.5%, although it was significant ly lower than the 11 % figure for 1997. Traffic on Asia-Pacific routes grew by only 3.8% - a fig ure far below the 10% average for the previous five years. The AEA says the fall was attributed largely to the "meltdown" in the South Korean and Indonesian markets, where traffic fell by 3 0%. AEA airlines ordered 334 new aircraft, a huge increase on the Orders for the A320 family gave Airbus the edge in Europe last year 1997 figure of 128. Only 76 of these were widebodies and, of those, 11 were cargo aircraft. For the first time since the Boeing 747 was introduced there were no orders for that type. Airbus dominated the order- book, selling 230 aircraft against Boeing's 65, its single-aisle range accounting for 189 aircraft against just 22 for Boeing's New Gen eration 737. Airbus holds 64% of the order backlog for AEA airlines, although Boeing still accounts for 47% of the current fleet. Cargo was virtually stagnant, increasing by just 0.3 %- the low est figure since 1991-and reflect ing downturns in the Japanese and Hong Kong markets. Delays to European departures almost reached the record level set in 1989, with 22.8% of all intra- European departures delayed by more than 15min. It adds that June and September "were the worst months on record". Airports and air traffic control contributed 18% to the overall figure in the third quarter of last year (figures for the fourth quarter are not yet available) and are set to increase by a further 20% because of the crisis in Kosovo. A source at Eurocontrol says that the situa tion "is likely to continue for at least three years", while new mea sures to increase capacity, such as reduced vertical separation mini ma, take effect. AEA secretary-general Karl- Heinz Neumeister criticises the "total lack of a chain of command" in the air traffic management sys tem, citing Eurocontrol's lack of a decision making mandate and the European Civil Aviation Confer ence as having "no teeth". • Delta completes acquisition of Atlantic Southeast ATLANTIC SOUTHEAST Airlines (ASA) has become a wholly owned subsidiary of Delta Air Lines following the approval of a shareholders' meeting of ASA Holding, the parent company of the regional airline. Delta and ASA have announced schedule changes, beginning on 1 June, that will include ASA jet ser vice to three new markets - Day- tona Beach and Melbourne, Florida, and Montgomery, Ala bama. AS A's service replaces Delta flights. New ASAnon-stop jet ser vices are due to begin on 1 August between Islip, Long Island, and Atlanta, Georgia. Delta announced plans in February to acquire ASA, a regional feeder. The S700 million purchase of ASA Holding boosts Delta's share of traffic in the south-eastern USA, and consoli dates its already dominant posi tion at its main Atlanta hub. The airline had held a 28% stake in Atlanta-based ASA, a Delta Connection carrier. ASA maintains its own identify, retaining a workforce of 2,600 peo ple and flying 21 Bombardier Canadair Regional Jets. It has firm orders for 3 6 more, and options on another 53. • AlliedSignal plans structural realignment to reduce costs A LLIEDSIGNAL Aerospace will complete a major re structuring of its organisation by the end of this month, in a move designed to reduce costs and com plexity, and to simplify supply chains and improve market focus and profitability. "We've organised our businesses in the way our customers buy," says AlliedSignal Aerospace president and chief executive Bob Johnson. The company's traditional busi nesses have therefore been re grouped into four major product, systems and service units: those of engines and systems, avionics and lighting, aerospace services and aircraft landing systems. Inter secting these are three specially created marketing units responsi ble for marketing and sales of all products in the air-transport and regional market, the business and general-aviation sector, and the defence and space arena. The move is expected to improve market focus and to make it easier for customers to work with the company in general. The restructuring builds on earlier re alignments which, essentially, saw AlliedSignal Aerospace operating as four individual companies. "We did not have the strength of being totally integrated. We tried for a while to work as four separate companies, but the message from our customers was that we were still hard to work with," adds Johnson. "One of the biggest com plaints we have had is the supply chains have been too complicated," he says. The recently appointed presi dent believes that die new organi sation is "an evergreen structure that will let us grow", and repre sents a less centralised - but more integrated - picture. Johnson also says that the revamp should help the organisation realise up to 7% growth in business this year, with sales of around $8 billion expected. This could grow to around $ 10 bil lion by 2001, he adds.. Three key strategic elements also form part of the revised plan. These include the continued growth of AlliedSignal's profitable services businesses, tighter target ing of new opportunities in key markets, and leveraging its widely acknowledged industry leadership in safety systems such as enhanced ground proximity warning, traffic alert and collision avoidance and windshear warning systems. These, and other safety-related systems, account for sales of S1 bil lion. The aerospace aftermarket businesses account for 50% of die company's total sales, while techni cal services generate 10% and orig inal equipment the remaining 40% of revenue. • 24 FLIGHT INTERNATIONAL 19 - 25 May 1999
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