FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
2002
2002 - 2716.PDF
BUSINESS MANAGEMENT DAVID FIELD / WASHINGTON DC Oilman takes reins at ailing United Ex-Chevron Texaco vice-chairman gives himself until mid-September to win union concessions or seek Chapter 11 New United Airlines chief execu tive Glenn Tilton took up his posi tion at the troubled US carrier last week facing a self-imposed mid- September deadline to wrest $2.5 billion in annual concessions from its unions or seek Chapter 11 bank ruptcy protection. Tilton comes to the job with no experience of the airline industry and no reputation in the business. That may be his greatest chance for RESCUE AARON KARP / WASHINGTON DC National gets new lease of life National Airlines has secured a $112 million financing package which the US low-fares carrier believes will allow it to survive in the long term. The Las Vegas-based airline has been operating under Chapter 11 bank ruptcy protection since December 2000, and its reorganisation plans had hinged on securing a $50.5 million loan guarantee from the US Government. But the Air Transportation Stabilization Board turned down its loan guarantee application last month, leaving the carrier on the brink of being grounded. National has secured new cash equity and concessions from its lessors - including International Lease Finance and Finova - and creditors, and expects to emerge from bankruptcy in early October. The centrepiece of the package is a debt-for-equity exchange, which will leave creditors in control. The carrier says it has reduced operating expenses by around $50 million by re-negotiating lease rates and vendor contracts, and pay cuts. The source of the investment is believed to be Wells Fargo subsidiary Foothill Capital. success at the carrier, which has lost about $3 billion in the last 18 months. Tilton joins United from energy giant Chevron Texaco, where he became vice-chairman after the October 2001 merger of Chevron and Texaco. Tilton, who joined Texaco in 1970, replaces United's acting chief executive, Jack Creighton. Appointed to the temporary post in October last year after the departure of Jim Goodwin, Creighton had planned to step down as soon as a replace ment could be found. Tilton proved to be the only can didate for the United job capable of winning the backing of the pilots' and machinists' unions. The Air Line Pilots Association and the International Association of Machinists have board seats at United and hold veto power over executive appointments. Tilton made no reference to bankruptcy in his first address to employees. Some analysts suggest that Tilton's tenure may be brief. One analyst says: "He may have promised the unions not to file for bankruptcy, but it may not be up to him." Outsiders have had some success rescuing airlines, note observers, citing the tenures of for mer utility company executive Leo Mullin at Delta Air Lines and for mer hotel executive John Dasburg at Northwest Airlines. Former United chairman Jerry Greenwald came from the automobile indus try. Each executive brought with him a clean slate and little baggage to strife-torn airlines. Meanwhile, the unions have forced the resignation of United's president, Rono Dutta, and of long standing chief operating officer Andy Studdert. ACQUISITION JACKSON FLORES / RIO DE JANEIRO AIRG buy brings Aerosur link AIRG's new owners may reintroduce former LAPA identity After attempts to merge with Southern Winds last month failed, Argentinian carrier AIRG has been sold to an Argentinian/Bolivian group for an undisclosed sum Flight International, 13-19 August). AIRG, formerly LAPA, is in Chapter 11 bankruptcy protection and it is understood that its estimated $130 million debt will be absorbed by the new owners. The airline will also form a partnership with Bolivian private domestic carrier Aerosur. AIRG has been struggling to maintain its share of the domestic market. The Argentinian government had requested 99% shareholder Eduardo Eurnekian to divest himself of AIRG due to his part-owner ship of Argentinian airport operator AA2000. With the sale, Mario Folchi - a former Aerosur representative in Argentina - gains 45% of AIRG and becomes chief executive, while 25% of the company's shares have gone to Aerosur's chief executive, Humberto Roca. AIRG's new owners have indicated that the carrier will reintroduce its former LAPA identity and they intend to improve the airline's financial health. LAY-OFFS Fairchild Dornier brings 'social plan' to an end Fairchild Dornier has laid off 1,650 employees, the bulk of them from the frozen 728/928 programme, according to bankruptcy adminis trator Eberhard Braun. All have been paid since July by a "social plan" arrangement, under which the German government guaranteed 80% of the salary for three months. Fairchild Dornier laid off the workers rather than try to extend the scheme, saying it could not justify "additional large commitments". Russian industrial group Sibal is still discussing the possibility of buying the 728/928 line, but nei ther company will comment on how talks are progressing Flight International, 13-19 August). The company still employs 1,600 workers in its Airbus aerostructures, maintenance and customer services divisions, all of which, it says, are profitable and are likely to continue to be so after 30 September. In addition, the recent floods in central Europe may have put paid to hopes of rescuing the 328JET programme. Richard Schrieber of potential investor US investment partnership Diemling Schrieber & Park says the company was negoti ating the sale of several 328JETs to the German government for VIP transport, surveillance and mar itime patrol duties. "This would have kept the line going for at least...a few months," and would have made the pro gramme a more appealing proposi tion. But "what might have been possible two weeks ago is now not realistic," due to the calls for up to €10 billion ($9.9 billion) in flood aid, he admits. Time is running out for the pro gramme - current contracts will be fulfiled by the end of September, when the line will be sold or shut down, says a company source. 28 10-16 SEPTEMBER 2002 FLIGHT INTERNATIONAL www.flightinternational.com
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
