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Aviation History
2002
2002 - 2902.PDF
BUSINESS PRIVATISATION ANDREW DOYLE / SINGAPORE Taiwan faces rethink on AIDC sale Plans for manufacturer's privatisation may be scrapped as three possible investors lose interest in the proposed deal Taiwan's government may be forced to rethink plans to privatise Aerospace Industrial Development Corporation (AIDC). Three of the five potential investors - two banks and a government investment vehicle - appear to be losing enthusiasm for the deal. Senior government officials and elements of AIDC's own manage ment now favour selling AIDC piecemeal, but the proposal must be debated by Taiwanese lawmak ers, says AIDC executive office director Michael Lee. "There is top- level agreement that we should separate [the divisions]," he says. Aero engine and industrial tur bine manufacturing, education and training, and IT could be first for any sell-off. It is unclear if overseas companies will be eligible to bid. Taiwan's cabinet earlier this year passed a bill setting a strict December 2003 deadline for AIDC's privatisation. It listed five potential participants: Chiao Tung Bank, China Development Bank, the National Defence Industry Devel opment Fund, the Yau Hua glass company and the China Aviation Development Foundation (CADF). However, government-controlled CADF owns 71% of China Airlines and is preoccupied with restructur ing the carrier following the fatal crash of a Boeing 747-200 on 25 May. It has pledged to sell 20-30% of the airline to a strategic investor. Meanwhile, enthusiasm at the two banks is also waning, says Lee, leaving "two parties still interested". As a result it will be extremely diffi cult, if not impossible, to privatise AIDC by the end of 2003. Previous attempts to sell AIDC have failed, forcing the company to abandon a risk-sharing role in the Airbus A380 due to a lack of capital. Most of its risk-sharing ventures, including cockpits for the Sikorsky S-92 helicopter, empennages for the Bombardier Challenger 300 busi ness jet and wings for the Ibis Aerospace Ae270, are several years away from profitable production. Fewer orders for aircraft such as the Robin DR400 have hit Apex severely RECEIVERSHIP KATE SARSFIELD / LONDON Order downturn puts Apex into receivership Apex Aircraft, manufacturer of the Robin, Alpha, Cap and Bui Aero ranges of light general aviation air craft, has entered voluntary receiv ership as the downturn in orders and hefty aircraft development costs have hit the French company hard. Dijon-based Apex Aircraft, estab lished last year following the merger of Robin Aircraft and Cap Aviation, will operate on a reduced scale while its finances are restructured. John Kistner, owner of Apex Aircraft's UK distributor Mistral Aviation, says the economic slow down in Europe, coupled with the 11 September fallout, has led to a severe drop in orders across its range of aircraft. These include the wood- construction Robin DR400/500, the Alpha 120/160 two-seat metal train ers and the CAP 232 single-seat aer- obatic aircraft. The recently certifi cated CAP 10C, however, has been unaffected so far by the order down turn, as the aircraft was late reach ing production and still has a large order backlog. Alpha Aircraft's current position is partly blamed on its pursuit of costly and lengthy new aircraft development programmes. The long-awaited Bui Aero ultralight has yet to receive certification while the two-seat carbonfibre composite CAP 222 project has been delayed by around two years following the crash of its prototype. One French observer says: "Alpha has taken its eye off the ball and lost sight of its core business - building and delivering aircraft." FINANCES NICHOLAS IONIDES / ATLANTA Delta boss threatens further cuts unless revenue improves Delta Air Lines chief executive Leo Mullin has warned that more staff cuts may be in store at the carrier unless the bleak revenue outlook improves. Mullin, speaking at a SkyTeam alliance event in Atlanta late last month, said the "picture is not pretty" for the period ahead. "Revenue is way off," he said, adding that business class traffic in particular is too weak. "The prices are the lowest they have been in years. We continue to discount and we are even offering discounts on discounts," Mullin said. "The picture does not look like it is going to improve in the immediate future," he said. Delta is now considering taking "additional employee actions". The carrier has already cut 10,000 staff since 11 September and decreased capacity by 15%. Mullin said the carrier's revenues are around 16% below those of last year, not including the period after 11 September, and the outlook is not bright. However, he pointed to the proposed tie-up with Northwest Airlines and Continental Airlines as one way in which Delta is trying to improve. He expects regulators will approve the tie-up, brushing aside comments made last week by US Airways chief executive David Siegel, who called the plan anti-competitive. Mullin said US Airways' proposed tie-up with United Airlines is aimed at challenging Delta, and it is "appropriate" for the SkyTeam carrier to take action to counter it. Mullin sees low-cost competition as the biggest threat to major airlines. Last month Delta appointed senior vice-president John Selvaggio to lead a strategy revamp in this area and many expect the carrier to launch a new low-fare operation next year. Mullin believes it is likely that "some form of Delta Express will play a part" in the revamp. SEE FEATURE P46 RESULTS Varig optimistic despite loss Although its first-half loss dou bled to $276 million, Varig chief executive Arnim Lore expects a substantial improvement by the end of the year. A federal court in Brasilia recently ordered the gov ernment to reimburse Varig for the losses it suffered through state economic plans between 1986 and 1992 - this could add $530- 795 million to its next set of accounts. The Brazilian flag carrier is also accelerating its recapitalisa tion plans. 26 1-7 OCTOBER 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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