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Australia Air for China:

Proposed new entrant, Australia Air, has won International Air Services Commission draft approval to operate between Australia and China.

Australia Air is a division of Sydney based real estate developer Asset Developments and plan to operate a single DC-10-30 on a weekly service between Sydney and Beijing with services to Shanghai, Shenzen and Guangzhou to commence at a later date.

Australia Air hopes to be operational by the end of this year though this is subject to the necessary financial arrangements being in place. Qantas has declined to restart services to China and Australia Air was the only bidder on the route.

Bae’s Big Loss:

British Aerospace has announced its results for 1992, an operating loss of $81m (about $175m), loss before tax and exceptionals of $201m (about $434m) and including exceptional items, of £1. 2bn (about $2. 6bn). The company made an operating profit of $215m ($465m) in 1991.

Problems with the company’s Regional Aircraft Division were largely responsible for the operating loss while a write off of £1bn ($2. 16bn) in Regional Aircraft activity added to the figure. This included a provision for estimated costs associated with the financing arrangements of the existing BAe 146 fleet, the closure of the Hatfield manufacturing facility, the transfer of ATP production from Manchester to Prestwick and the establishment and operation of the new BAe/Taiwan Aerospace venture, Avro International Aerospace.

As has been the case recently, BAe’s defence businesses made money, $352m ($760m) in 1992, while commercial aircraft lost $337m ($728m). The company’s motor vehicle (Rover Cars), property development and other businesses also lost. BAe’s defence businesses seem set to record further good results, particularly in the wake of the Saudi Arabian order for a further 48 Tornados under the Al Yamamah programme, the promise of the continuation of the Eurofighter 2000 (EFA) and the securing of further production orders for the T-45 Goshawk. Interestingly, the various Harrier programmes employed the largest number of people.

Near Miss at Gatwick:

London Gatwick Airport’s very busy international terminal had a close shave with a Continental Airlines Boeing 747 in February, the aircraft’s starboard wingtip missing the building by about 30m (100ft) during an attempted automatic landing.

The 747 had arrived from Houston, Texas, in light drizzle and low cloud and failed to couple the airport’s ILS. A go-around was initiated and a second attempt at an automatic landing made, but once again the ILS was not coupled and the terminal was narrowly missed as the aircraft was well to the right of the runway centreline. A manually flown ILS approach and landing was then successfully carried out.

Compass Airlines

As our Stop Press deadline has fallen just 36 hours before receiver manager Richard Barber reports to the Old Supreme Court regarding the future of Compass we have decided not to carry a report on the collapse of the airline in this edition’s Stop Press.

Our reasons are that it would be over-taken by events and would require such space, even in abbreviated form, that few other news items would be able to appear. Considering the excellent press reporting to date we feel that it would be more appropriate to wait till our next issue when we will be able to produce an in-depth comprehensive analysis of the event.

However, readers wanting to know more about the status of the airline up till the time of the issuing of the half year report can turn to p18 where we analyse the numerous problems that led to the higher than loss and the proposed plan of action required to get the carrier back into the black. Page 90 also carries an article on the TPC’s investigation into Compass allegations of fowl play within Australia’s travel agency environment.

Bae Looks at Atp Upgrade:

British Aerospace is examining ways of stimulating the sluggish sales of its ATP regional turboprop and has applied to the British government for launch aid to back a programme of upgrades.

It will be decided whether or not to go ahead with the updated ATP in mid year, but the company is in the meantime looking for partners for its turboprops business, taking in not just the ATP but also the Jetstream 31 and 41. Discussions have been held with potential partners in nine countries, including the Asia-Pacific region. ATP production is being moved from Woodford, near Manchester, to Prestwick, Scotland, this year, where Jetstreams are already built. Ten ATPs will be built in 1993.

Footnote: It was reported in Newsdesk last month (pl) that the ATP would be renamed Jetstream 61 with the move of the production line to Scotland. This decision has now apparently been reversed, and the ATP will (for the moment, at least) continue to be referred to as the ATP! What is that saying? “The more things change the more they stay the same”!

Eurofighter Delayed Again:

The Eurofighter 2000 (EFA) programme has been delayed yet again, the result of continuing technical problems with the integration of the aircraft’s flight control system (FCS) and constant frequency generator (CFG).

The problems have resulted in a situation where there is at the moment no specified or target date for the aircraft’s first flight, which is already two years behind schedule. It is thought the first flight will now not take place until at least the second half of this year.

Deutsche Aerospace is in charge of FCS development with GEC-Marconi developing the software, and there has been reports of tensions between the two companies over the cause of the problems. Ferranti Bendix is producing the CPG (which ensures an unvarying onboard power supply), the unit displaying poor reliability due to overheating so far.

United Cuts Top Jobs:

In an attempt to halt continuing losses, United Airlines is to eliminate about 20% of its senior positions and of its 83,000 employees, some 2800 will be made redundant if cost reduction plans proceed.

United lost $US224m in the final quarter of 1992, bringing its loss for the year to $US957m. Of that, $US540m resulted from changes to accounting standards. The airline is fighting to win more than $US290m worth of productivity gains from its workers and also wants them to take a 5% pay cut as well as deferring pay increases scheduled for this year until 1995. The unions involved have rejected United’s offer so far.

 Ansett Looks to Asia:

The International Air Services Commission (IASC) has granted Ansett Airlines permission to operate 11 weekly flights to Singapore, thus boosting the airline’s plan to create a network of routes throughout Asia.

The Commission has granted 2640 seats per week to Singapore, the equivalent of seven Boeing 767 services from Sydney and four from Perth. The flights can be started late next year, considerably later than Ansett had hoped for. The IASC also gave approval for Qantas to operate one extra service a week from Cairns and Darwin to Singapore and to use larger aircraft (Boeing 747s instead of 7678) on other Singapore routes. The ruling increases Qantas’ Singapore capacity to 3000 seats per week, 1200 seats (or about three 747s) less than the capacity it had applied for.

Ba Under Fire:

British Airways’ disputes with other operators continue, the airline now under further fire from Virgin Atlantic over the ‘dirty tricks’ matter, from American Airlines over BA’s 25% stake in USAir and from Air France over BA’s takeover of Dan Air.

In the Virgin case, the airline wants some $A64m in compensation for damages caused by the BA campaign against it but has extended the deadline for settlement in an attempt to avoid going to court, while American Airlines’ chairman Robert Crandall has said he will drop his attack against BA’s interest in USAir only if there was an international multilateral open skies agreement, a situation which would give US airlines significantly better access to London Heathrow airport.

In addition, Air France has launched court action challenging the European Commission’s decision to approve BA’s takeover of Dan Air, a British airline which had a strong northern European presence with many routes linking the UK with provincial France.

 Anz Profit Up:

Air New Zealand has announced an unaudited consolidated net profit of $NZ60. 9m (approx $A46m) for the six months to the end of December 1992, an increase of 8. 7% over the same period of 1991.

Revenue increased by 6. 9% to $NZ1. 164bn ($A880m) and the operating profit was up 7% to $NZ70. 1m ($A53m). ANZ’s directors noted the result was achieved in conditions of nil to low growth, excess aircraft capacity and aggressive price competition in most markets.

 Northwest and United End Honolulu Stopovers:

Northwest and United are both withdrawing from the Australia/Honolulu route citing lack of profit as the major reason.

In Northwest’s case it will cancel its four times a week Sydney to Los Angeles via Honolulu services from April 4. The decision to end the three times per week DC-10 and once per week 747-200 flights was taken on economic grounds, economy class doing well but the high yield business and first classes were not performing adequately. A situation exactly the same as experienced by American when it was forced (due to lack of 747-400s) to operate DC-10s from Australia to the US via Honolulu, thus effectively eliminating its capability to make any inroads into the high yield business market. This now leaves Northwest with three Sydney/Los Angeles 747-400 direct flights per week plus the controversial thrice weekly service connecting Sydney and New York via Osaka. Meanwhile, United will also discontinue its Hawaii stopover from April 4 for the very same reasons. United operated DC-10s daily from Sydney to Honolulu via Auckland though will continue with its 10 a week 747-400 Australia/LA non stops.

This now makes Continental the biggest player in the Australia/Hawaii market followed by Qantas and Air New Zealand which routes via Auckland. United’s withdrawal from the trans Tasman will also serve to increase load factors and yields on this traditionally cut throat route whilst increasing Continental’s uplift into Hawaii, something that the ailing airline could certainly do with.

Aeroflot to Sydney:

Russia’s Aeroflot will start scheduled services between Moscow and Sydney via Bangkok in mid May using Airbus A310s configured to seat 183 passengers, 12 first class, 35 business and 130 economy class.

Two services will be operated each week, aircraft departing Sydney on Tuesdays and Sundays. Aeroflot also has permission to fly to two other cities but will wait to see how the Sydney operation goes before expanding further.

Supersonic Oshkosh:

Those contemplating taking a break from the mundane could do worse than participate in this years Australian Aviation/Torii Tour’s Oshkosh trip.

As well as the usual aeronautical delights, as outlined in the advertisement on p69 of this issue, visitors to this year’s show will also have the chance to experience a supersonic “joyflight’ in the Concorde. When the Concorde last visited Oshkosh in 1990, these flights proved to be extremely popular with quite a number of the tour group taking the rare opportunity to ‘go supersonic’, after all, the chance to fly at Mach 2 at a relatively affordable cost does not come that often! Another unique feature of this year’s event will be demonstrations by the world’s top aerobatic pilots, who will take to the skies as part of the Brietling World Cup aerobatic championship. Overall though just the sight of hundreds of warbirds and very rare vintage and antique aeroplanes in such a beautiful and friendly setting is more than enough reason to begin packing.

Remember, life is to short to miss rare opportunities!

Alright for Some:

Times are tough, things are rough, but it’s alright for some.

Spare a thought for the Sultan of Brunei, who has just taken delivery of his personal Airbus A340 (worth about $US120m and entirely for private use) after having paid for it with cash! The Sultan has also ordered a Boeing 747-400, but as this won’t be available until 1994, the A340 was required “as soon as possible”. Both aircraft have been from Lufthansa, the German airline being the first to put the A340 into service, from March 1.

 MDC Cuts to Survive:

McDonnell Douglas’ commercial transport division is taking steps to survive the recession and the resulting reduction in orders by intro- ducing aggressive cost reductions and effi- ciencies which will allow the company to operate profitably building fewer than 60 airliners each year.

The company has made indirect cost reductions of over $US750m per annum since 1990 and direct costs have also been cut. Manhours needed to build an MD-80 were 80,000 in 1990 and are less than 50,000 now, while the target MD-11 figure of 150,000 manhours by the end of the year is half what it was in 1991.

The MD-11 is currently subject to a series of improvements which will see its maximum range increased by 7% to 7000nm (12,960km) by the end of this year. A com- bination of aerodynamic modifications, weight reductions, engine and nacelle mod- ifications and increased fuel capacity contribute to the longer range.

Hornet Production Cut:

McDonnell Douglas is reducing the production rate of its F/A-18 Hornet fighter from six to four per month and has laid off 347 workers.

The F-15 Eagle production rate has also been winding down as the last batch of aircraft for the USAF moves down the line.

The company has meanwhile awarded $US17m worth of subcontracts for development work on the F/A-18E and F, includ- ing for the landing gear (Allied Signal, with Dowty Aerospace Canada as major subcontractor) and electrical system (Leland Electrosignals).

The first of the F/A-18E (single seat) and (two seat) series is due to fly in 1995 with deliveries to the US Navy beginning in late 1998.

Saudi Order Fills Tornado Gap”:

Faced with a nearly idle Tornado production line at its Warton facility, British Aerospace has been given relief with Saudi Arabia’s order for 48 Panavia Tornado interdictor/strike (IDS) aircraft as part of the Al Yamamah defence package which will also probably include 60 Hawk advanced jet trainers (30 are already in service), 88 Westland built Sikorsky Black Hawk helicopters and, other aircraft and military hardware.

Saudi Arabia already operates 96 IDS and 24 air defence variant (ADV) Tornados. The order will help fill the so called Tornado Gap’, the time between the end of Tornado production and the start of Eurofighter 2000 manufacture at the end of the decade. Some 19,000 workers’ jobs will be secured as a result of the order, helping not only BAe but also the large number of subcontracting firms involved in the programme.