FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
2003
2003 - 0019.PDF
BUSINESS RESTRUCTURING BRENDAN SOBIE / WASHINGTON DC Court to study US Airways plans General Electric and The Retirement Systems of Alabama emerge as key backers of stricken carrier's bid for survival US Airways hopes to secure bank ruptcy court approval this week which will allow it to complete its financial and fleet restructuring by the end of March. A federal bankruptcy court will review the carrier's reorganisation plan at a 16 January hearing. The airline hopes to amend leases on aircraft and airport gates, enter into new loans and finance a new fleet of regional jets. General Electric, one of US Airways' largest creditors, has emerged as a key backer of the reorganisation plan, agreeing to lend US Airways $480 million, reduce lease rates on 36 Boeing air craft and provide $350 million in new regional jet financing. The plan depends on shedding excess aircraft, lowering lease rates on remaining aircraft and acquir ing new regional jets. The carrier has already returned over 30 main line aircraft to reach its new fleet size of 279 aircraft and hopes to secure court approval next week for lease amendments on most of its 150 remaining Boeing aircraft. US Airways is proposing to lease its 737-300s and 737-400s at $90,000 a month and 757-200s at $175,000 a month. Lease agreements on all 129 of its newer Airbus aircraft are not being revised. But US Airways is proposing to amend leases on most of the 100 Bombardier Dash 8s operated by its regional subsidiaries. It is proposing new monthly rates of $20,000 per month for Dash 8-100s and $30,000 a month for longer-range Dash 8-200s. US Airways will also launch a new regional jet subsidiary. GE has agreed to provide $350 million to cover an unspecified number of new Bombardier CRJ or Embraer 170 family aircraft that will be operated by this subsidiary. US Airways is also expanding its own regional jet fleet through new commitments with partner carri ers, beginning with Midway Airlines, which relaunched opera tions earlier this month with the first of 18 CRJ200s. Pending bankruptcy court approval, GE will also provide $120 million in debtor-in-possession (DIP) financing and another $360 million upon US Airways' emer gence from bankruptcy. These loans are on top of the $500 mil lion in DIP funding from The Retirement Systems of Alabama (RSA), the main sponsor of the Aluminium producer Alcoa is to cut 8,000 jobs - 6% of its workforce - as it struggles to cope with low prices and weak demand for gas turbine components. The job losses will come from businesses serving the aerospace, automotive and industrial gas tur bine markets, and in its US smelt ing plants. The US company has reported a $223 million loss for the fourth quarter of 2002, including a $95 million after-tax charge to cover the restructuring. This is Alcoa's second major restructuring since 11 September 2001. In late 2001 the company announced it was cutting 6,500 jobs, and in July last year Alcoa was forced to cut its aluminium production capacity, but corn- reorganisation. RSA has also agreed to loan US Airways another $240 million after its emergence from bankruptcy protection. US Airways last week revealed it lost another $118 million, pushing its losses for the first 11 months of 2002 just over $1 billion. Standard & Poor's says the new GE deal, by providing more funds at a critical juncture, "advances the airline's efforts to emerge from bankruptcy". pleted the acquisition of Fairchild Fasteners at the end of 2002. The latest restructuring includes the divestment of non-core businesses that generated approxi mately $1.3 billion of the company's $20.3 billion in sales last year. Alcoa's revenues were down 10% over 2001. In the segments most affected by the cutbacks in com mercial aircraft and engine produc tion, flat-rolled and engineered products, sales were down by 7% and 13%, respectively. By the end of 2002, Alcoa had achieved annualised cost savings of $600 million, with the goal of reaching $1 billion a year in 2003. Savings from the latest cuts will be realised in 2004, according to the company. FORECASTS CHRISTINA MACKENZIE / PARIS EADS aims to dominate market EADS is positioning itself to be undisputed European leader in the aerospace and defence sector in 2003 and will take over other compa nies to do so, says co-chief executive Philippe Camus. But he warned that 2002 sales will probably remain flat, with earnings falling 18% to €1.4 billion ($1.46 billion). Camus says he will aim for "external acquisitions, notably in Europe", in the field of "network-centric defence, including manned and unmanned platforms, electronics, space and especially integrated intelligence." Last September EADS reported a cash reserve of €1.8 billion ($1.9 billion), but Camus says he has the full backing of share holders, raising the possibility of a further fundraising effort such as a rights issue to support the acquisitions programme. Camus hopes that EADS's existing military programmes will help it through the continuing slump in civil aviation, but says the company still needs to reduce its civil exposure relative to other activities. "We have to develop within our industrial group major military application programmes, helicopters, missile or space programmes because these have and will enable us to survive and even prosper during times of the civil crisis. This is why the confirmation of the €18 billion A400M [mili tary transport] programme is a great success - the biggest contract in EADS's history," Camus says. Camus says the objective for Airbus is to continue taking 50% of the world commercial aircraft market. Looking ahead to the group's 2002 financial results, Camus predicts turnover close to the 2001 figure of €27.6 billion, with a strong net cash position and earnings before inter est and tax of around €1.4 billion, compared with €1.7 billion in 2001. CUTBACKS Alcoa orders another round of redundancies www.flightinternational.com FLIGHT INTERNATIONAL 14-20 JANUARY 2003 17
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
