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Aviation History
1993
1993 - 1020.PDF
AIR TRANSPORT Cash injection ensures clear skies ahead for Continental Continental comes out of Chapter 11 BY RAMON LOPEZ IN WASHINGTON DC C ontinental Airlines has emerged from a 29-month Chapter 11 bankruptcy re organisation, with the closing of a court-approved $450 mil lion cash investment received from Air Canada and the Fort NEWS IN BRIEF TEAM CRASHES A Zambian air force de Hav- illand Canada DHC-5D Buf falo crashed 5min after take off from Libreville, Gabon, at 23.00 local time on 27 April, killing all 30 people on board. The passengers were the Zam bian national football team, its manager and supporting staff. The aircraft had stopped for refuelling at Libreville en route from Lusaka to Dakar in Senegal. The air force's Buf falo fleet has been reduced to four aircraft. VARIG DEAL Varig says it will sign a mar keting and technical co operation deal with Lufthansa this month. The deal between the Brazilian and German air lines will include co-ordi nating flight times, reciprocal ticketing and improved traffic rights. The number of flights between the two countries will be increased from five to six a week. Worth, Texas-based Air Part ners investor group. Air Canada chief executive Hollis Harris says that, in the months ahead, the US and Ca nadian carriers will implement collaborative activities, includ ing schedule co-ordination and joint marketing. Houston-based Continental says that it steps out of bank ruptcy "recapitalised". It has paid all operating expenses in curred while in Chapter 11, including $40 million of debtor-in-possession financing, and has more than $600 mil lion cash in hand. The airline's long-term liabil ities have been reduced by nearly $4 billion and long-term debt totals $1.7 billion, which represents about one-quarter of annual revenues. Continental, the USA's fifth largest carrier, has survived two bankruptcy filings — the first between 1983 and 19866 and the second in 1990. Air Partners and Air Canada each take a 28.7% stake in Continental; the US carrier's unsecured creditors hold 39.8% while the pension plan has the remaining 2.8%. While in Chapter 11, Conti nental sold its Seattle-Tokyo rights to American Airlines, but gained rights for Newark- Frankfurt, Munich-Madrid and Houston-Paris. It says that it has improved employee pro ductivity by 23% during that period and cut its cost per seat- kilometre by 17%. D DoT to probe Lorenzo's new airline The US Department of Transportation (DoT) has launched a formal investigation into the fitness of Frank Lorenzo's Friendship Airlines. The former chairman of Texas Air controls 77% of the new company's voting stock. Stephen Kolski, Friendship's president and chief executive officer, and other key manag ers, all previously worked for airlines owned by Texas Air. The DoT says that "impor tant questions" remain as to whether the new-entrant car rier has the necessary manage ment expertise to meet the fitness criteria. Labour unions, such as the Air Line Pilots Association, which engaged in a titanic bat tle with Lorenzo at Texas Air in the past, have vowed to keep him from returning to the air line industry. A DoT hearing officer will establish fitness, and top-level DoT officials will review the law judge's recommendation. No timetable for a final deci sion has been established. D America West returns to profit America West Airlines (AWA), the Arizona-based carrier which has operated under Chapter 11 bankruptcy protection since June 1991, has filed its first profit for nearly three years. The airline showed first- quarter 1993 net earnings of $2.1 million, compared with a loss of $9.9 million recorded for the same period in 1992. Operating income rocketed to more than $17 million, from a loss of $7.9 million in the comparable quarter. AWA president and chief ex ecutive officer Michael Conway says that the turnaround is because of a cutback in fleet capacity from 101 to 86 air craft, plus "...other significant cost-reduction programmes im plemented over the past several months". These resulted in a cost per available-seat kilom etre of 4.37$, which is "the lowest for any full-service major airline", claims Conway. "These efforts, in combination with higher load factors and a near 7% increase in our average passenger yield, have resulted in a dramatic improvement in our financial results," accord ing to Conway. • Senator pushes cockpit-smoke law US Senator Daniel Inouye has introduced legislation in an attempt to force the US Federal Aviation Administra tion to strengthen its regula tions dealing with smoke in airliner cockpits. The Senator's action comes at the urging of the Vision Safe company in his Hawaii constituency. The company manufactures the Emergency Vision Assurance System (EVAS) (Flight International, 16-22 January, 1991). The Senator is following through on his earlier threat to begin legislation if the FAA refused to formulate an air worthiness directive (AD) ad dressing the "dense, continu ous" smoke emergency. The fate of Inouye's Bill in the busy Senate is uncertain. The Senate Bill, if passed, would instruct the FAA to in troduce an AD within 90 days of its enactment mandating the capability to deal with such conditions. Full compliance with the AD would be required within three years. Inouye says that some air craft would already meet such a requirement, by using conventional emergency-venti lation systems. Others, how ever, would be likely to require the EVAS or some other sys tem. Vision Safe estimates that the cost of compliance is 1C per airline ticket. The company and Inouye claim that 850 people have died in accidents in which dense, continuous, smoke may have been a factor, but the figure is denied by the FAA. • FLIGHT INTERNATIONAL 5-11 May, 1993 13
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