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Aviation History
2000
2000 - 1949.PDF
TWA is latest takeover target PAUL LEWIS/WASHINGTON DC TRANS WORLD Airlines has become the latest major carri er to become a takeover target, with two prospective bidders. Meanwhile, the US Congress con tinues to cast an increasingly criti cal eye over die proposed United Airlines and US Airways tie-up. Air Tran Airways has been reported to be holding initial talks to acquire TWA. This is turn has spurred a competing $381 million offer from an unidentified consor tium of private investors led by Global Airlines. Adanta-based Air Tran, former ly Valujet, is rebuilding its opera tions in the wake of the 1996 fatal crash of a McDonnell Douglas DC-9 which resulted in die airline being temporarily shut down. While die carrier has returned to profitability, financial analysts NEWS IN BRIEF M AEROSUR TALKS TAM-Bolivia has opened merger talks with Bolivian carrier Aerosur after a strike by airline unions and a gov ernment-sponsored hearing to review its recently grant ed operating licence. The start-up carrier, which is 49% owned by Brazilian air line TAM, was due to start domestic services next month using two Fokker 100s. Fears over the threat it poses to local airlines has stiffened resistance to the newcomer, however. Opt ions under consideration by the two airlines include an outright merger or sale of an unspecified amount of AeroSur stock to TAM- Bolivia. A decision on whether to proceed is expected by the end of the month. Sources suggest the Bolivian Government will not object to the move. Privately owned Aerosur is the country's largest domes tic operator. doubt whether it has the financial clout to acquire TWA, which is larger. Global Airlines is relatively unknown and had been consider ing launching a start-up after an earlier offer to buy TWA failed. The company has given TWA chairman Bill Compton until 25 June to respond to the new offer after which it will approach the air line's shareholders directly. According to Global chief exec utive Emil Bernard, it has offered $5 a share, comprised of a $2 a share stake in Global, a $2 per five year convertible bond and $1 cash. TWA, which has not made a profit in more than 10 years and has seen its share price slump, confirms an approach by Global but declines further comment. Air Tran chairman Joseph Leonard, in the meantime, has made a play for more slots at Washington National Airport in a testimony before a US senate com mittee examining the proposed United and US Airways merger. The deal is running into mounting political opposition over the pro posed reallocation of US Airways' Washington slots to start-up DC Air as part of its planned merger. "A cursory review of die business plan clearly indicates diat DC Air will not be an independent carrier. DC Air will lease United aircraft and flightcrews, adopt the United pilot contract terms, use mainte nance and ground facilities, partic ipate in the United frequent traveller programme, all under die direction of a current US Airways vice-president," says Leonard. He adds that divesting US Airways' slots to DC Air will not result in meaningful competition. DC Air chairman Robert Johnson, in response, has said he is only will ing to participate in die merger if his carrier was to acquire all of the National slots. Meanwhile, Continental boss Gordon Bethune, speaking in London, said that American Airlines stands to be the biggest loser if the United/US Airways merger goes through. "American could not sit idly by, it's too danger ous for them. They risk being squashed by a rival 30% bigger." The Continental chairman and chief executive says American has already had talks with Delta and Northwest about a possible tie-up. "Something is going to happen and it will set the ball rolling for others to act." While Continental expects to play a part in any consolidation, the situation is complicated by the fact that 30% of the airline's stock is held by Northwest. Bethune says there has been no progress in attempts to buy back the snares. • Snecma looks for more acquisitions after completing Labinal purchase ENGrNE and equipment manufacturer Snecma is looking for further acquisition or merger opportunities after the signing of its latest deal on 15 June with French industrial holding company Sopartech for the takeover of its Labinal sub sidiary. Snecma president Jean-Paul Bechat says the state-owned manufacturer is "ready to wel come other partners" following the completion of the Labinal purchase. The recent reorganisation of the company into propulsion and equipment divisions has left it with "an open structure", says Bechat. "This left us perfectly placed for integrating the aeronau tical activities of Labinal." He reveals Snecma was in com petition with Rolls-Royce for the acquisition and won "because we had the possibility of making a more global offer". Bechat: has funds for more acquisitions The operation left Snecma with Turbomeca, Microturbo, Globe Moteurs and Cinch Connecteurs, together adding 10,000 employees to the workforce, Fr7 billion ($1 billion) to sales and, through Turbomeca's helicopter engine business, a global after-sales net work. The purchase included Sopartech's three automotive companies, which are due to be sold to the Valeo group later this year for Fr2 billion. Bechat is on the look-out for further acquisitions. "People close to our business will be wel come," he says. "There are European [engine] companies smaller dian us." The company has relation ships in programmes with Germany's MTU, Italy's Fiat Avio and Sweden's Volvo Aero, although none has confirmed talks with the French manufac turer on a possible takeover. Bechat says the only conditions are that any acquisitions "provide real synergies". Snecma is the fourth largest engine manufacturer in the world, with sales of Fr31.9 billion in 1999, double the figure for 1996. The company, which made Frl .7 billion profit last year, has a substantial warchest to fund acquisitions. • 20 FLIGHT INTERNATIONAL 27 June - 3 July 2000
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