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Aviation History
2004
2004-09 - 1759.PDF
AIR TRANSPORT RESTRUCTURING MARY KIRBY / WASHINGTON DC Fear over US Airways bankruptcy Bombardier, Embraer and GECAS seek to limit damage from US carrier's second Chapter 11 filing in two years US Airways owes $7.5 billion under aircraft purchase and lease obligations Bombardier, Embraer and GE Capital Aviation Services (GECAS) have acted quickly to stem the short-term impact of US Airways' latest bankruptcy protection filing, but admit uncertainty about its long-term effect. The three companies face some of the greatest exposure to US Airways, which on 12 September filed its second Chapter 11 bank ruptcy protection in two years. They hold billions of dollars in financing for the carrier's May 2003 firm order for 170 regional aircraft and 380 options. Bombardier was the first to act, announcing that 16 aircraft from the 43 CRJ700s and two CRJ200s awaiting delivery would be deliv ered to GECAS under the original purchase agreement, while four would be reconfigured for other customers. The remaining 25 deliv eries were deferred, as per a July agreement with the airline. Embraer has suspended delivery Another new airline is planned in China as passenger demand con tinues growing at double-digit per centage rates. The start-up has yet to be named, but hopes to begin operating from Guangzhou by the second half of 2005, say its local and foreign back ers. Domestic flights are expected to be operated initially using 150- General Electric says it is "perfectly content" with the existing and prospective revenue-sharing partic ipants (RSPs) for the GEnx next- generation engine for Boeing's 7E7, despite Snecma's surprising deci sion not to join the programme. The company is close to finalis ing details of RSP arrangements with Ishikawajima-Harima Heavy Industries through the Japanese of the 63 remaining Embraer 170s due for delivery to US Airways. Embraer president Mauricio Botelho has reportedly told staff the suspension could affect its pro duction targets over the next 18 months to two years. In contrast, Bombardier says its measures will ensure production levels for the rest of its financial year. But with 37% of Bombardier's seaters, followed by international services at a later date. Singapore-based aerospace com ponents and systems supplier A- Sonic Aerospace is seeking to estab lish the new carrier with local and foreign partners. It signed an agree ment last week with state-owned Guangdong China Travel Service (Holdings) and Hong Kong-backed order backlog assigned to US Airways and financially ailing Delta Air Lines, analysts question its abil ity to restore profitability. Bombardier says it will "manage delivery schedules and production rates proactively". Should US Airways fail to emerge from protec tion, its orders "could go to other customers" such as Air Canada or US regional SkyWest Airlines. China Xpress "to jointly apply and obtain approval from all the rele vant authorities" in China to own an airline. It later brought in Singapore- based logistics company Airocean Group as a shareholder. Travel services provider Guang dong China Travel will hold a 51% stake and China Xpress, owned by Airbus - scheduled to deliver the first of 29 new aircraft to US Airways in 2007 - remains uncon cerned, noting that the A330-200s and A320 family aircraft on order "are in short supply" and there is "a lot of demand for them". Separately, GECAS has temporar ily suspended financing RJs for US Airways "and will be talking to [the airline] about if and how this might continue while they are in Chapter 11". The GE unit leases 122 aircraft to US Airways. US Airways has listed liabilities of $8.7 billion against assets of $8.8 billion. However, the airline also owes $7.5 billion under future air craft purchase and lease obligations alone. With "defaults or cross-defaults looming" under agreements with Bombardier, Embraer and GECAS - as well as with the US government - US Airways "had no- practical alternative but to file for Chapter 11 protection", says the airline. a Hong Kong finance company, will have 5%. A-Sonic will have 25% and Airocean 19%. A-Sonic has already tried to invest in Australia's SkyWest Airlines, and says that if it is suc cessful in investing in a regional such as SkyWest, the Chinese oper ator could "establish routes to and from markets such as Australia". report that the "GEnx will mark a new step forward in the strategic partnership between the two engine makers in 2004". Since then Snecma has stepped up its involvement in other pro grammes, not least the acceleration of the SM146 with NPO Saturn for the Russian Regional Jet and its 10% share of the GE/Pratt & Whitney Engine Alliance GP7200. RISK SHARING GUY NORRIS / LOS ANGELES GE shrugs off Snecma's decision not to join GEnx engine team LO necma's decisio not t joi GEnx ( Aero Engines (JAEC) consortium, and with Italy's Avio, which collec tively represent a share of roughly 27% (Flight International, 31 August). General Electric ultimately plans to have RSPs involved in a total of 35% of the programme, and says "discussions" are under way with Volvo Aero of Sweden, a long-term GE partner and devel oper of the RM12 licence-built ver sion of the F404 combat engine. GE also says the French manu facturer will be heavily involved as a supplier in the GEnx. "It will be involved, no matter what," it says, pointing out that Snecma's Texas- based composite fan blade assem bly site will be used to provide parts for the GEnx programme. Snecma originally planned to be an RSP, saying in its 2003 annual START-UP NICHOLAS I0NIDES / SINGAPORE Latest Chinese airline will fly from Guangzhou 8 21-27 SEPTEMBER 2004 FLIGHT INTERNATIONAL www.flightinternational.com
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