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Aviation History
1999
1999 - 1484.PDF
2U5JHJZ5Z Air France lends' CityJet $2.7 million AIR FRANCE has made an Ir£2 million ($2.7 million) loan to Ireland's CityJet, re deemable in shares, effectively giv ing it a 25% stake in the Dublin-based independent. UK cargo and passenger charter carrier Air Foyle has taken a con trolling 50.01% holding through the injection of a further Ir£4 mil lion as part of a strategy first revealed in Flight International (14- 20 April), while minority share holders are adding another Ir£2 million in a recapitalisation tot alling Ir£8 million. The French flag carrier's invest ment cements a relationship with CityJet which has been developed since 1996. The Irish airline oper ates wet lease and franchise services for Air France. CityJet founder Pat Byrne retains his position as chief execu tive, with Air Foyle chief Chris Foyle becoming chairman. Foyle describes his investment as "strate gic", marking "a natural progres sion" into scheduled passenger operations. Air France will take two seats on die CityJet board as a result of its investment. • MERGERS ++ SAirGroup is to acquire US air line caterer Dobbs for $780 mil lion and merge it with its own Gate Gourmet operation to become the industry's market leader. Mem phis-based Dobbs had a turnover of $891 million last year, while the combined business should gener ate annual sales of around $2 bil lion. SAirGroup aims to raise $332 million in the medium term from divesting non-core assets. ++ Pacific Aerospace & Elect ronics of the USA is to acquire aerostructures and tooling spe cialist Skagit Engineering for $1.3 million. Pacific has an nounced plans to buy Novatech Engineering. ++ British Aero space and Simitomo Precision Products of Japan are to form a company called Silicon Sensing Systems, specialising in motion- sensing technology. Finmeccanica seeks capital ANDY NATIVI/GENOA STATE-CONTROLLED Ital ian industrial giant Finmec canica, parent of aerospace and defence businesses Alenia, Agusta and FIAR, plans to raise L2,000- 3,000 billion ($1.1-£1.7 billion) of new capital in a move that could reduce trie stake held by state shareholder IRI to below 50%. In addition to furthering the pri vatisation effort, Finmeccanica chief executive Alberto Lina says the move will provide fresh re sources to boost the group's diver sified activities, including some in the aerospace field. It could, for example, help fund a move for Spanish manufacturer CASA, in which die Italian conglomerate has declared an interest. IRI controls 63% of Fin meccanica, with some of the remainder held by institutional investors and the rest floated on the stock exchange. Lina's plan-which requires government approval - would probably see a second share offering, although funds might also be raised either through a bond issue or loans. Lina has indicated that some of the capital, which he would like to see raised before the end of this year, would be invested in Fin- meccanica's space (Alenia Spazio), helicopter (Agusta) and missile (Alenia Marconi Systems - AMS) wings. The group - which also has energy and non-aviation trans port divisions - has not yet revealed its results for last year, but is expected to make a loss of around L410 million. Finmeccanica is still discussing the future of AMS with British Aerospace, which is poised to take over Marconi Electronics, the Italian company's joint venture in the missiles business. BAe - which also has the Matra- BAe Dynamics venture with Aero spatiale - would prefer to completely realign its defence interests to avoid overlapping and duplication. However, sources say that Finmeccanica wants all BAe activities in competition with AMS, from radar to missiles, naval weapons and combat systems, to be placed under the umbrella of the latter. The Italian company also aims to retain 50% control of the ven ture, and is prepared to make a major compensation payment to allow for this. Finmeccanica has a strong negotiating position in that the terms of the original AMS agreement may allow it to buy out the share held by Marconi follow ing its take-over, after which it could seek out a partner other than BAe. France's Thomson CSF, which itself once planned to buy Marconi, is already understood to have made overtures. BAe could, in theory, agree to Finmeccanica's demands and keep AMS as a separate entity, although this would mean missing out on the advantages of complete defence integration. • Government will honour contracts says Embraer EMBRAER SAYS THE Brazilian Government will honour all existing contracts even if the World Trade Organisation (WTO) upholds its ruling that Proex export financing support for regional jet sales constitutes an ille gal subsidy. Hearings on Brazil's appeal against the decision have begun, with a final ruling expected by August. If the appeal is denied, Brazil will have until November to remove Proex support or modify the programme to make it WTO- compliant. Embraer says it will continue to use Proex as it exists until the final WTO ruling, and adds that, even if the appeal is rejected, all contracts signed up to the end of this year will be honoured by the Brazilian Government. Rival Bombardier argues, how ever, that such a move would be illegal, claiming a decision against Proex would require the removal of financing support for aircraft on Embraer customers like Continental will watch the WTO appeal with interest order, but not yet delivered, when the final ruling takes effect. The Canadian company alleges that Proex support reduces the cost of buying an Embraer jet by over $2 million. Embraer argues that WTO rul ings are never retroactive and do not overrule existing contracts. The company says it is "confident a way will be found by the Brazilian Government to adjust Proex if nec essary to meet the requirements of the WTO". Bombardier cites legal opinion which says the WTO can overrule private contracts, but admits there is no precedent. Ottawa, mean while, is appealing against a ruling that its Technology Partnerships Canada (TPC) programme is not WTO compliant. TPC provides funding for Bombardier's regional aircraft programmes. • FLIGHT INTERNATIONAL 26 May- 1 June 1999
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