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Aviation History
2001
2001 - 0155.PDF
and US Air share This includes the lease rates TWA pays on many of its 190 air craft, which are widely recognised to be over the odds on account of the airline's poor credit rating, which Standard and Poors has low ered to 'D' in the wake of its Chapter 11 filing. American, in addition to aircraft, gains a domi nant position at the 15th busiest US airport, St Louis Lambert, which unlike its own main hubs at Chicago and Dallas Fort Worth (DFW), is not slot constrained. "Over the next few months we'll look at the frequency and hubs and see how its works with DFW and Chicago," says American vice chairman Bob Baker. TWA's St Louis hub mainly serves cities to the east and west and as such is complementary rather than com petitive with American's two hubs to the north and south, he notes. Separately, American has tabled a $1.2 billion deal to buy 20% .of US Airways' operations and struck another agreement to acquire a 49% holding in DC Air. The deal is designed to make United's pro posed $4.3 billion purchase of US Airways more palatable to the US Department of Justice (DoJ), which has anti-trust concerns over the acquisition and has delayed a final review until April. US Airways' prospective new owner United would in turn give American 14 gates, 3 6 slots, 86 air craft and a half share of its shuttle service along the Washington DC- New York-Boston corridor. Amer ican would support DC Air's planned Washington National Airport operation by supplying 11 Fokker 100s on a wet lease basis. "We believe that today's agree ments with American, United, TWA and DC Air assure job secu rity for US Airways' 45,000 emp loyees and thousands of others, guaranteeing vital air service and enhanced competition," says US Airways chairman Stephen Wolf. While the planned TWA buy has met with general approval, the US Airways and DC Air deals, which depend on the DoJ approv ing United's acquisition, are less certain. An enlarged American and United would end up controlling over half of US air traffic and the country's other major carriers Continental, Delta Air Lines and Northwest scrambling to respond. "Once this process starts, it is likely to reduce the industry to three major airlines that would be unlikely to compete vigorously. We would lose the low fares and other consumer benefits gained from airline deregulation," warns Rep James Oberstar of the House Transportation Committee. • Nimrod blamed as BAE shares tumble STEWART PENNEY/LONDON POORLY PERFORMING Nimrod upgrade and Hawk trainer programmes have been blamed in a profits warning from BAE Systems which resulted in the company's share price slumping 2 5 % in a few hours. The company is taking a charge of £525 million ($723 million) split between its 2000 and 2001 accounts. BAE chief executive John Weston also warned that profit growth is not expected to return until 2003. The company, formed last year by the merger of British Aerospace and Marconi Electronic Systems, is following the trend established by defence rivals like Lockheed Martin and Raytheon who have hit significant financial problems following large scale takeovers and acquisitions. Nevertheless, Weston says the merger is delivering benefits with cash savings of £100 million already achieved and it remains on target for a £275 million contribu tion in 2002. The latest problems are likely to result in several thousand job cuts on top of the reductions announc ed lastyear in the wake of the merg er. The Hawk factory at B rough is thought to be particularly at risk. The company says programmes and customer support and solu tions (CS&S) are most affected. It blames the Hawk advanced train er/light attack aircraft and the beleaguered Nimrod maritime patrol aircraft programmes. The slow progress of significant con- tractorisation contracts at the UK Ministry of Defence has hit CS&S. As a result it will take a £3 00 million charge before tax on the technical ly troubled Nimrod programme in 2000 and exceptional charges against profits in 2000 and 2001 of £110 million and £115 million respectively. BAE says that the fixed price £2.2 billion programme to develop and convert 21 Nimrods to MRA4 standard will cost around £3 00 mil lion more than the contract value. BAE is already known to have paid the MoD £46 million in liquidated damages. The programme's prob lems, including rebuilding the age ing fuselages and equipping them with new build wings, emerged in early 1999. While BAE has Hawk orders from Australia, NATO Flying Training in Canada, South Africa and for replacement fuselages from the UK Royal Air Force, it has not recently secured a worthwhile order for the trainer. The company says tight defence budgets have limited orders. The next major deal is expected to come from India which, like Australia, will build the majority of the aircraft. In the medium term BAE says it foresees a market for 2 00 Hawks in the next six to eight years. Weston expects other sectors including avionics, North America and commercial aerospace, to deliver profitable growth. • China on target for first manned spaceflight CHINA HAS demonstrated the ability of its Shen Zhou manned spacecraft to change orbit in a trial undertaken on the vehicle during its second unmanned test flight after its 10 January launch. The Shen Zhou moved from its original position into a circular 328km(203 miles) by 334km orbit on 11 January. In this orbit, recov ery could be achieved on days three, five and seven of the flight. The test flight was expected to last a week, compared with the 21 hrs of the first flight in November 1999. Shen Zhou was launched on a Long March 2F booster from Jiuquan, carrying "animals and microbial cells". The test flight is expected to lead to the first manned spaceflight by a nation other than Russia or the USA. • FLIGHT INTERNATIONAL 16 - 22 January 2001 5
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