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Aviation History
2002
2002 - 2696.PDF
ANALYSIS ANNIVERSARY When the world changed Pearl Harbour, Hiroshima, the fall of the Berlin Wall: no single inci dent in the 20th century matched the impact that last September's terror attacks on the USA had on the world's collective conscience. Yet unlike these events, 11 September scarcely changed his tory's broad march. The already fal tering US economy wobbled, splut tered back and has dipped again, but it has not collapsed; the War on Terror saw the Taliban's quick defeat and al-Qaeda's emascula tion, but, so far, no more concerted terrorist assaults on the West; life for most - outside a few dangerous regions - has continued as before. The same could be said for aero space. A year ago - with that image of the final moment of United Airlines flight 175 before it slam med into the Twin Towers - our front cover predicted 11 September would be the day aviation changed forever. Yet how much has altered? Two European flag carriers have collapsed and at least three major US airlines are in serious financial crisis. But all were in trouble long before 11 September. Passenger rev enues are down, but no more so than in the slump of the early 1990s. Some airlines, such as UK low-cost carriers Ryanair and Easyjet, have had a bumper year. Airport and on-board security has been tightened, especially in the USA. But loners like would-be shoe bomber Richard Reid and alleged hijacker Kerim Chatty aside, there have been no serious threats to passenger aircraft. The massive hike in US defence spend ing has boosted the embattled defence industry, forced into con solidation after the end of the Cold War. But Washington's move has not been matched by other coun tries, even its closest ally, the UK. In manufacturing, Boeing has been the biggest victim, its strengthened position in defence nowhere near making up for the massive cuts in capacity and work force it has had to make in its Seattle commercial aircraft facto ries. In Europe, the post-11 September slump was the final straw that persuaded BAE Systems to axe one regional aircraft, the RJX, and for financiers to halt their backing for another, the stillborn Fairchild Dornier 728. In these pages we look at the effect the downturn of the past 12 months has had on airlines and air line security; defence aviation; and business and general aviation. Air transport: USA No business sector was worse affect ed by 11 September than US air lines. "One year later, most still endure weak demand, low ticket prices, labour costs and mounting debt," says credit rating agency Standard & Poor's. US Airways last month sought Chapter 11 bank ruptcy protection and United Airlines faces the same fate. Despite huge job lay-offs and the grounding of hundreds of aircraft, losses among the US carriers have mounted. A drop in oil prices after the attacks and bail-outs from the government's stabilisation board helped airlines limp through the first three quarters after 11 Sep tember; now, with the failure of the economy to revive in the second half of 2002, deep-rooted financial problems are hitting home. Stan dard & Poor's Philip Baggaley says most airlines were losing money before 11 September and their cur rent travails cannot be blamed on stay-at-home travellers. "A lack of consumer confidence actually had little to do with the airlines' finan cial woes during 2002, and has held up surprisingly well to date, although recent economic weak ness and declines in the stock mar ket may change that," he says. Union intransigence over pay cuts will not help airlines strug gling to stay solvent. US airline his tory is littered with bankruptcies, crises and casualties of poor cost control. Although long-term pas senger growth and economic recovery will see the sector revive, only a miracle will prevent some big names going under in the next 18 months. Air transport: Europe Although the transatlantic market was affected extremely badly by the drop in passenger confidence after 11 September, Europe gener ally has not been hit as badly as the USA. But several flag carriers, incl- 8 10-16 SEPTEMBER 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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