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Aviation History
1999
1999 - 3229.PDF
HEAIDLJJJ. Onex raises offer for Air Canada BRIAN DUNN/MONTREAL THE ONEX investment group has improved its takeover offer for Air Canada in response to Star Alliance's bid to keep the carri er in the airline grouping, but there appears to be no quick end in sight to the Canadian airline industry's nine-week old merger battle. Onex raised its bid for the Canadian flag carrier to C$13 ($8.85)asharefromC$8.25, taking its total offer to C$2.1 billion. The new bid tops last month's offer from Lufthansa and United Air lines, which was itself higher than the original Onex offer. Air Canada says it will continue to challenge the legality of the hos tile Onex bid - made in conjunc tion with oneworld alliance heavyweight American Airlines and which would merge it with Canadian Airlines - in the Quebec Superior Court. Air Canada claims the Onex plan would violate a federal law aimed at keeping the airline out of the hands of one dominant shareholder, al though its challenge could be com promised by moves from Canadian transport minister David Collenette to raise a 10% cap on single share holders. Air Canada says a change of policy is only "hypothetical". The carrier's president and chief executive, Robert Milton, says the revised Onex offer proves that its original bid "was an attempt to acquire Air Canada through an inadequate offer". He adds that under Air Canada's own plan to buy back its shares the airline would incur no additional debt, whereas the new Onex bid requires an addi tional C$3 00 million, in addition to the assumption of Canadian's debt plus the extra borrowing costs. Several fund managers say the sweetened Onex bid will be diffi cult for Air Canada to top, and that it may be high enough for Air Canada shareholders to accept. Air Canada shares were trading at C$10.50 before trading was halted for the Onex announcement. "In the absence of an Air Canada counter-offer, it looks interesting for Air Canada shareholders," says Mark Mettrick of Standard & Poors in Toronto. "Shareholders may feel there is far less uncertainty if they stick with Air Canada. Onex hasn't indicated how it will pay for the cash portion of its offer." • NEWS IN BRIEF • LOCKHEED UPHEAVAL Lockheed Martin president Peter Teets has retired after taking the blame for the com pany's poor financial perfor mance. Teets announced his retirement after the company slashed its earnings outlook for next year by 50%. The company mainly blames satellite launch delays and failures. Micky Blackwell, executive vice-president of Lockheed Martin's aeronau tical systems business, is also retiring, to be replaced by Dain Hancock, president of the company's Tactical Air craft Systems F-16 unit. Launchers like the X-34 could form the basis of a next generation vehicle US Government wants cash for NASA T HE Clinton Administration is to request money in next year's budget for NASA to start a five-year programme to develop technology for a next-generation reusable launch vehicle (RLV). NASA has concluded that "the current commercial market and the state of technology are not sufficiently favourable to enable private-sector development of sec ond-generation RLV without gov ernment cost-sharing", chief engineer Daniel Mulville told Congress last week. Instead, the agency plans to spend more than $5 billion over the next five years to prepare for a com petition in 2005 to select a vehicle that will replace the Space Shuttle. That contest is expected to pit a Shuttle-derived vehicle against a new RLV Mulville says NASA is working with the Administration's Office of Management and Budget to draw up an investment plan that would "maintain competition and reduce the risk associated with developing second-generation RLV architec tures by 2005". The plan is to include upgrades to the Shuttle, another RLV tech nology demonstrator comparable to the Lockheed Martin X-33 and other smaller flight-test vehicles similar to the Orbital Sciences X-34andBoeingX-37. The programme will also pave the way for third-generation RLVs, which will offer safety and reliabil ity comparable to airliners. J New Zealand F-16 costs will be doubled THE TOTAL costs of New Zealand's Lockheed Martin F-16 lease from the USA is expect ed to top NZ$1.2 billion ($618.6 million) over the next 10 years, nearly double previous disclosures on the value of the contract. The deal, however, is expected to save the country NZ$831 mil lion over the lease period, com pared to the cost of retaining the Royal New Zealand Air Force's (RNZAF) McDonnell Douglas A-4 Skyhawks to 2011 and acquir ing a replacement from 2 006. According to estimates con tained in Cabinet papers released by defence minister Max Bradford, the cost of the longer-term replace ment would total NZ$2.09 billion. The papers estimate a new fighter acquisition after 2006 would cost a minimum ofNZ$1.7 billion. The papers confirm that the back-to-back five-year F-16 lease arrangement will see New Zealand pay NZ$124.8 million for the pro vision of aircraft. The total capital equipment component is expected to cost NZ$775.2 million over 10 years, including a NZ$267 million aircraft reactivation package and facilities works. The total operating costs of the F-16s over the lease period are pro- jected at NZ$358.5 million, com pared to NZ$3 34.5 million in A-4 operating costs. The papers reveal that the Cabinet has endorsed an increase of NZ$150 million in allowances for the RNZAF to support F-16 operations over the lease period. A further NZ$42 million has been set aside to cover the "purchase of equipment to allow the aircraft to be deployed into hostile situations and a structural integrity mainte nance system". This includes an electronic countermeasures pod and a targeting and navigation pod. Money has also been put aside for simulators and a small purchase of guided munitions. The papers show a major up grade is planned after the full lease if the aircraft is purchased. • FLIGHT INTERNATIONAL 3 - 9 November 1999
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