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Aviation History
2002
2002 - 0070.PDF
MERGERS • Pratt & Whitney Canada is to bolster its aftermarket service capability by acquiring Altair Avionics, a manufacturer of diagnostic systems based in Norwood, Massachusetts. Altair's equipment allows aircraft and engine parameters to be recorded in flight, while its inter net-based data management system allows operators to track usage and performance. • Hamilton Sundstrand has purchased the Hydraulic Systems division of Italy's Magnaghi Aerospace. Based in Brugherio, the division is an aerospace actuation supplier with annual revenues of around $20 million. • Kamanisto acquire Wichita, Kansas-based Plastic Fabricating, a privately held manufacturer of composite parts and assemblies for aero space, with estimated sales last year of over $14 million. • L-3 Communications is buying the detection systems division of PerkinElmer for $100 million to boost its security products busi ness. The PerkinElmer company produces air transport security equipment, including baggage and freight scanning systems. The purchase is the latest in a number of acquisitions by defence and electronics special ist L-3, which have included the defence business of Bulova Technologies for $44 million. The Lancaster, Pennsylvania- based business, with annual revenues of $55 million, produces fuzes and safe-and- arm devices for weapons. • Canadian simulator manufac turer CAE has completed its $247 million purchase of SimuFlite Training International from GE Capital. The sale will be financed by the sale and leaseback of SimuFlite assets. BUSINESS GOVERNMENT AID GRAHAM WARWICK / WASHINGTON DC America West first to receive federal support under new act But strict conditions may deter other airlines from applying for government loans AmcrJcaWestAirliw The Phoenix, Arizona-based airline will now be able to ward off bankruptcy The US Government has granted $380 million in loan guarantees to struggling carrier America West, the first US airline to receive state support under the Air Transport ation Safety and Stabilisation Act. However, conditions attached may deter other carriers from applying. The guarantees will allow America West to secure $445 mil lion in loans needed to ward off imminent bankruptcy. In return for the guarantees, the government will take options on a 33% non voting stake in America West, and will also receive over $100 million in fees during the life of the loan. In order to receive the guaran tees, the carrier must provide the newly formed Air Transportation Stabilisation Board (ATSB), a com mittee headed by Alan Greenspan, which disburses the Stabilisation Act funds, with executed commit ments for $600 million in creditor concessions outlined in its applica tion for the loan guarantees. The ATSB has also warned America West that it must keep labour costs down if it is to repay the loan, and told the airline's chief executive Douglas Parker that it recognised a "significant risk of default". America West originally asked for $400 million in guarantees and offered warrants for just over 5% of its shares, but the ATSB rejected the proposed terms. Even with the revised conditions, the Board's eventual decision was not unani mous. Board member Peter Fisher, the US Treasury undersecretary for domestic finance, argued that guar anteeing America West's loans posed too high a risk for taxpayers. Citibank will lend the airline $429 million, $380 million of which will be guaranteed by the US government and $45 million by two aircraft leasing companies. Two private sector investors will lend a further $16 million, with the option of converting the loan into a 10.1% stake in the airline. America West announced in early January that it would defer $72 million in aircraft lease pay ments. An airline source says that the delays would probably be "days, rather than months", and are intended to conserve cash reserves, within the terms of lease contracts, until the first payments of the guaranteed $380 million loan come through. Alms for ailing airlines The Stabilisation Act was passed by Congress after 11 September to offer state financing to carriers unable to obtain credit in the free market. Critics are concerned, however, that the guarantees will prop up airlines which were already struggling before the terrorist attacks. America West, the eighth largest US carrier, was the weakest US major airline even before the attacks, and has already picked up $38 million in cash from the Stabilisation Act. Other carriers which have applied for government guarantees are bankrupt National Airlines and Vanguard Airlines, which were struggling before 11 September. US Airways, despite being the second weakest US major, has no plans to apply for government loan guarantees. AIRLINE RESTRUCTURE Future not bright for Thailand's fallen Angel as services halted Thailand's second national carrier Angel Air is again halting all ser vices and will scrap a tie-up with China Northern Airlines. The privately owned airline has been struggling since its 1998 launch. In mid-2000 it paused operations for restructuring. Angel said on 3 January that it would halt all services from 5 January and return its sole aircraft, an Airbus A300-600R, to lessor China Northern. It had been running Bangkok-Hong Kong, Bangkok-Macau and Phuket-Hong Kong passenger services. The airline says it aims to return to service "soon", starting cargo services to Shanghai on a leased McDonnell Douglas DC-8 before resuming passenger services. Future operations will also focus on China, although Angel plans no more links with China Northern. Following its grounding in 2000, Angel signed a partnership agree ment with the Chinese carrier. However, the partnership never went further than wet lease two A300-600RS, one of which was returned in October, after Angel scrapped Phuket-Osaka services. 16 8-14 JANUARY 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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