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Aviation History
2003
2003 - 2424.PDF
HEADLINES BUSINESS US no-frills airlines lay down 2004 ambitions Increased competition in tradi tionally mainline carrier territory will fuel the expansion of US low-fare airlines next year, if the rhetoric from last week's third quarter results is to be believed, writes Darren Shannon. Conversely American Airlines' $1 million net profit and US Airways' $90 million net loss con firm doubts over whether US mainline airlines are managing to resolve systemic problems that have been plaguing them since the end of 1999. Fleet expansion and capacity increases dominate the 2004 predictions of the chief execu tives of AirTran Airways, America West Airlines, JetBlue Airways and Southwest Airlines. The low- fare carriers reported higher third-quarter net profits of $19.6 million, $32.9 million, $29 million and $106 million, respectively. Hints by AirTran that it has a place for the 50 Boeing 737-700S and -800s now optioned as part of the 100- aircraft deal recently signed with the US manufacturer, and Southwest's admittance that regional jets could be integrated into its rigid one aircraft type business model, have sent shiv ers through the top six mainline carriers. They had hoped small third-quarter profits and reduced losses had signalled a turn around in their fortunes. The low-fare carriers are not limiting their expansion to capacity. Southwest confirms for the first time that it is looking at an overhaul of its inflight product that could include entertainment and online connectivity, while online-dependent JetBlue, which sold 72.4% of its seats through its own web site in the third quarter, says it will expand its booking channels and cus tomer services to capture passengers with less access to technology to assist its expan sion into Boston and "one or two" other markets in 2004. AIR TRANSPORT EMMA KELLY / PERTH & BRENDAN SOBIE / SINGAPORE Bombardier set to scoop Qantas turboprop order Carrier expected to take Dash 8 Q300s and Q400s as part of fleet rationalisation Bombardier is poised to land a major order for its Dash 8 Q Series as Qantas prepares to finalise plans to revamp its regional feeder fleet. The Canadian manufacturer has been in a two-way competition with ATR since June, when the Australian carrier issued a request for proposals for 50- to 70-seat air craft. Qantas was expected to make a quick decision for deliveries to start next year Flight International, 24-30 June). With an incumbent fleet of around 30 Dash 8s, Bombardier was always seen as the frontrunner, and industry sources say the 50-seat Q300 will be selected to replace the turboprops. These are operated by QantasLink carriers Sunstate Airlines and Eastern Aus tralia Airlines. Qantas general manager regional airlines Chris McArthur denies that a final selection has yet been made, however. The airline expects to make a formal decision in this half of the calendar year, he says, but declines to comment further. In addition to the Q300s, sources say Qantas also favours the larger Q400 as a replacement for some of its ageing BAe 146s, which are operated under contract by National Jet Systems. Qantas started evaluating 146 replace ments in 2000 in a joint pro gramme with British Airways, but a selection has never been made. Sources now say that Q400s will replace part of the 146 fleet, with the rest possibly to be replaced on an interim basis by Boeing 717s - a type Qantas acquired through its purchase of Impulse Airlines. Flight International understands that the overall plan is to go from three types (BAe 146s, Dash 8s and 717s) to two. More 717s could be acquired in the short term, but the airline is believed to be looking to switch to another type in the long term and is evaluating the CRJ700/ 900 and Embraer 170/190 families. New Dash 8s will replace old as Qantas renews its regional fleet BUSINESS NICHOLAS IONIDES / JEJU KAL looks overseas for KAI funding Korean Air (KAL) says it has secured tentative commitments from for eign groups interested in putting up to $300 million into Korea Aerospace Industries (KAI) after the airline completes its planned takeover of the country's dominant manufacturing company. In August KAL signed an agree ment with Daewoo Heavy Industries 6c Machinery covering the purchase of its 28.1% stake in KAI for up to 130 billion won ($113 million). The two other 28.1% shareholders, Hyundai and Samsung, also tentatively agreed to issue new KAI shares to KAL, enabling the airline to control more than 50% and giving it man agement rights. Creditors currently own around 15%. KAL - which has its own in- house manufacturing division, KAL Aerospace - has since encoun tered vehement opposition from KAI employees, while there were initial difficulties in follow-on negotiations with Hyundai and Samsung. But KAL Aerospace president Suh Sang-mook says all is now pro ceeding smoothly in talks with KAI shareholders. Memoranda of understanding should be con verted into contracts by early November. This will be followed by six to eight weeks of due diligence, allowing for the deals to formally close by the end of the year. Suh says KAL is already working to bring foreign funds into KAI and this could lead to a $200-300 mil lion injection from abroad. "There are a couple of compa nies - big companies - which want to invest in KAI if Korean Air takes the leadership of the company," says Suh. "Whether it is a partner in some way or real ownership I cannot say today," he adds. KAI was formed in 1999 through the merger of parts of the aerospace divisions of Daewoo, Hyundai and Samsung, but KAL refused at the time to fold its financially stronger KAL Aerospace unit into it. The three main shareholders also tried to bring foreign compa nies in to take up to 35% and in May 1999 a consortium of BAE Systems and Boeing was selected as preferred investment partner, but the talks later collapsed. 6 28 OCTOBER - 3 NOVEMBER 2003 FLIGHT INTERNATIONAL www.flightinternational.com
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