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Aviation History
2000
2000 - 1330.PDF
Lufthansa seeks Austrian stake ANDREW DOYLE/MUNICH LUFTHANSA IS reportedly in talks with SAirGroup over the purchase of the Swiss company's 10% holding in Austrian Airlines, which is being offered for sale after die Austrian flag carrier's defection to the Star Alliance. Although the German airline will not comment on reports link ing it to a move for the holding, SAir confirms: "We want to sell our stake in Austrian, but we are not providing details about talks or interested parties." Lufthansa has been reluctant to cement alliance relationships via equity purchases, but is prepared to invest to protect strategic interests. It holds a 20% stake in Star partner British Midland and in Austrian Airlines Group carrier Lauda Air. It has offered to participate in die pri vatisation of several east European carriers and is expected to lead a Star bid for a stake in alliance mem ber Thai Airways International. Austrian and affiliates Lauda and Tyrolean Airways joined Star last month, having left die Swissair-led Qualiflyer Group after die collapse of its relationship with US Delta Air Lines, which linked with Air France. SAir had last year attempt ed to build its holding in Austrian by buying a 9% stake held by All Nippon Airways, now a Star mem ber. The sale was blocked by the Austrian Government amid fears that SAir might gain a board veto. Lufthansa's planned investment follows a tough year for Austrian Airlines Group, which saw profits before interest and taxes drop 73 % to Sch290 million ($20 million) after failing to guard against fuel price rises. The group was also badly hit by disruption associated with die Kosovo conflict. Netprofitfell by over 80% com pared with 1998, to Sch216 mil lion, while turnover was up 4.4% to Sch21.36 billion. Austrians defection to Star could result in Lufthansa taking a 10% stake Austrian says it will suffer "short-term negative effects and extraordinary expenditures" as a result of switching alliances. It admits that "die benefits resulting from entry into the Star Alliance must be rapidly implemented". Traffic agreements with Lufthansa and Scandinavian Airlines for flights to Germany and Scan dinavia, respectively, "should have a positive effect", it adds, while a codeshare with United Airlines should cover 60 destinations by die year end. • Lufthansa Cargo and Deutsche Post are to pool their 2 5 % stakes in express packages carrier DHL International in a new joint venture company called Aerologic. The pair are also forming e-logic, a sup ply-chain management e-com- merce joint venture. Deutsche Post will manage Aerologic and chairman Klaus Zumwinkel says the move is "an important step towards a successful initial public offering for DHL". • Troubled Aviation Sales looks to sell US MAINTENANCE giant Aviation Sales says tiiere is "substantial doubt" about its abili ty to continue in business, and that it is looking at asset disposals, "including the potential sale of its manufacturing operations". The Miami-based company announced a net loss of $21.7 mil lion last year - compared with a $25.5 million profit in 1998 - after warning that it would take a $72 million fourth quarter charge against a reduction in the worth of its parts stockpile. The company says it is "not in compliance" with agreements on loans totalling $270 million at year end. Although lenders have agreed to waive these until 31 May, "there can be no assurance" that it will obtain a new credit facility. Aviation Sales is trying to sell four Airbus A300s. Manufacturing dis posals could include passenger entertainment, avionics and air craft interiors capabilities. • SAA sets its sights on Air Tanzania after pulling out of bid for Uganda MICHAEL WAKABI/KAMPALA SOUTH AFRICAN Airways (SAA) has trained its sights on Air Tanzania after dropping a bid for a stake in Uganda Airlines. The move revives a takeover plan sub mitted in secret to the Tanzanian authorities last November, and recently disclosed by Tanzanian sources. Shareholders in Uganda-based long-haul carrier SA Alliance Air, SAAs main vehicle for targeting the East African market, have meanwhile met to review plans to launch regional operations, although die strategy poses a clear threat to incumbent carriers. Cash- strapped Alliance has also been granted $126,000 by Kampala to keep it flying until the end of this month. SAAs planned partnership with Air Tanzania would involve a rebranding, combined sales and marketing and a route network restructure. SAA also aims to take over Air Tanzania's fleet planning, revenue management and ticket ing, financial management and maintenance. Aiming to avoid a repeat of its experience with Uganda Airlines, where it encountered a hostile leg islature, SAA had planned a semi nar with Tanzanian legislators on 8 April. The event was blocked by an opposition angry at Air Tanzania's exclusion from the event, but not before details of SAA's plan had been revealed. The Ugandan Government's funding of Alliance will help pay off a $420,000-a-month operating deficit, with SAA having offered to fund 40% of the sum (equal to its shareholding), but requiring 60% shareholders Uganda and Tanzania to provide the balance. A meeting in Dar es Salaam last week edged towards a new business plan for Alliance, although Tan zania is reluctant to hand over regional routes. Further problems are posed by Soudi Africa's non-membership of African trading group Comesa, meaning that with SAA as its largest shareholder, Alliance would not be party to the open skies pact. Ugandan transport minister Michael Werikhe says there are "more than 50" areas of conflict with SAA over Alliance, and if a deal cannot be agreed by 30 April, "anything is possible, including winding up die business". Meanwhile, a liquidator has been appointed for Uganda Airlines after the collapse of SAAs bid for the carrier. • 24 FLIGHT INTERNATIONAL 25 April - 1 May 2000
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