The Us Faa Has Issued An Emergency Airworthiness Directive To Inspect Lockheed Tristars For Structural Cracking. Cracking Was Found In Longerons Along Both Sides Of The Cabin That Run About 76cm (30in) Above The Cabin Windows In At Least 20 Tristars, Prompting The Ad. The Cracking Is Thought To Be Caused By Pressurisation Cycles. The Ad Required That Aircraft With 20,000 To 25,000 Cycles Be Inspected Within 120 Days, And Aircraft With Over 25,000 Cycles Be Inspected Within 25 Days. There Are Over 110 Lockheed Tristars Remaining In Airline Service. (julian Green)
Airline Affairs
Qantas Float Launched
The Qantas share float was formally launched on July 3 amid intensive advertising designed to push the ‘national icon’ aspect of the deal so as to increase its appeal to the so called ‘mums and dads’ investors. Private investors will get first bite of the 750 million shares on offer (75% of the company) for a nominal $2.00 each if fewer than 20,000 are purchased by private investors and $2.10 if more than this are purchased. The minimum purchase for private investors is 1000 shares and the exact price they pay will depend on how many are purchased and the response of the institutions when they get their chance to purchase immediately after the public offer closes. It is expected that up to 550 million of the shares on offer will be purchased by private investors. The public offer closed on July 21 with the institutions able to bid between July 24 and 28 with the final price and share allocation officially being announced on July 31, the same day as trading is expected to commence on the ASX. The institutions will pay between $1.80 and $2.10 per share. If the institutional final price is below $2.10, private investors will get a commensurate reduction in the price of their shares. Investors who retain their shares until after June 1 1996 will be entitled to ‘Loyalty Shares’ in the ratio of one for every 25 shares held. The price is considerably lower than the $2.66 needed if the government wanted to realise the full $2bn target price for Qantas, excluding the $665m British Airways has already paid for its 25% stake, for which it paid a relative premium in late 1993. The share offer prospectus also contains some interesting forecasts of Qantas’ performance for the 1994/95 financial year including revenue of $7.191bn, a pretax profit of $471m ($180m after tax), earnings of 18.1 cents per share and a 7.8% return on shareholders’ equity. Full details of the 94/95 year are expected this October. For this financial year the prospectus suggests that Qantas will gross $7.978bn for a pretax profit of $533m, an after tax profit of $237m and a return on investment of 9.6%. The all important debt to equity ratio is expected to be 46:54 by the end of June next year, a marginal improvement on the current 47:53 figure. By deliberately ‘under selling’ the perceived value of Qantas the Government is setting in place a strategy to ensure that the QF float is a major success in terms of market acceptance. Over 600,000 copies of the 114 page colour prospectus were ordered by potential investors prior to July 3 and at the lower than anticipated price on offer it is expected that there will be much grass roots support from the Australian public at large. The Government needs the Qantas float to be a major success as hot on its heels will follow a raft of major Commonwealth, State and large private sector floats including the AIDC ($300m), Commonwealth Bank ($3bn), Bank SA ($750m), BankWest ($750m), Victorian power utilities ($350m), Lihir Gold ($600m), David Jones ($800m) and eventually the NRMA at around $1.6bn. This does not take into account the public listings of any of the FAC airports which collectively could be worth a further two billion dollars over the next several years depending upon how they are finally packaged. Overall, Federal Government asset sales worth an estimated $2.1bn are slated for this year with a further $1.4bn being offered in 1996/97 amidst what is a fairly lacklustre trading environment. A successful Qantas float will increase the expected return on all these privatisations though if the float fails then the reverse could well be true. An in-depth seven page analysis of the Qantas float was presented in our July edition.
World Airline Finances Improving
Figures released by the International Civil Aviation Organisation (ICAO) show that the world’s scheduled airlines as a whole (excluding the CIS) recorded an overall operating profit in 1994 for the second year in succession following three years of losses in 1990-92. The overall operating profit has been estimated at $US6bn, or 3.2% of revenues. The US FAA has issued an emergency airworthiness directive to inspect Lockheed TriStars for structural cracking. Cracking was found in longerons along both sides of the cabin that run about 76cm (30in) above the cabin windows in at least 20 TriStars, prompting the AD. The cracking is thought to be caused by pressurisation cycles. The AD required that aircraft with 20,000 to 25,000 cycles be inspected within 120 days, and aircraft with over 25,000 cycles be inspected within 25 days. There are over 110 Lockheed TriStars remaining in airline service. This compares with a 1% return on revenues in 1993. Operating revenues rose by 10% in 1994 to $US247bn, faster than the increases in operating costs which were up 7%. While operating revenues per tonne kilometre performed remained similar to 1993 at 88.3 US cents, operating expenses per tonne kilometre fell to 85.4 US cents in 1994 from the previous year’s 87.6 US cents. The airlines’ net result for 1994 (after the inclusion of non operating items such as interest and subsidies and the deduction of income taxes) is expected to be marginally in the negative overall, although this would in itself be a vast improvement over 1993 when a net loss of $US4.4bn was recorded.
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New Qantas Cabin Crew Training Centre
Qantas has opened a new national training centre for its cabin crew in Melbourne. The $2m facility will provide training for more than 600 staff each year and also handle training for other airlines including China’s Yunnan Airlines and Nordstress, which operates leased aircraft for Alitalia. Training will be conducted on Boeing 767 and 737 cabin crew trainers which are full sized mockups of a normal cabin interior featuring first, business and economy classes. The new centre includes seven training rooms and an emergency procedures facility. It will train crews for Qantas’ domestic operations and provide facilities for existing crews to perform their annual emergency procedure proficiency tests. International cabin crew training is conducted in Sydney.
Abeles Spreads His Wings
Former TNT chairman Sir Peter Abeles has not remained inactive for very long following his 1993 resignation from the company he turned into an international transport giant. Sir Peter’s main recent venture is once again centred around aviation, Abakus subsidiary Aircraft & Aviation Specialists, an aircraft sales and leasing organisation. Although the company’s offices are in Sydney, just about all of its business is conducted overseas. Abakus also has two former TNT executives involved, Paul Keen (former chief executive of AWAS) and John Mullen, who formerly headed Ansett Air Freight.
Democrats Want Qantas Sale Review
The Australian Democrats have called for a stronger assessment of whether proposed foreign interest in the Qantas share float are contrary to the national interest. The party has asked the Senate to force the Foreign Investment Review Board (FIRB) to examine the situation and to investigate whether any equal Australian bids were available prior to considering applications by foreign investors to buy part of Qantas. The Federal Government has progressively relaxed the limitations initially imposed on potential buyers of Australia’s airports when their privatisation occurs. Strict limitations originally applied to multiple ownership but potential buyers can now bid for just about any combination of airports they want. This could alienate the Democrats and some of the more left wing factions of the Government in the Senate.
Ballarat/Sydney Air Link?
The City of Ballarat has discussed with Hazelton Airlines the possibility of operating regular services between the Victorian regional centre and Sydney. Hazelton has been operating a service between Geelong (from Avalon Airport) and Sydney using a Saab 340 aircraft since early this year but withdrew in late June due to its failure to attract sufficient business to be profitable. This was despite extensive marketing throughout Geelong, the western districts of Victoria, Melbourne and Sydney. Hazelton says it lost about $2m on the route during the five months of operation. As a consequence the share price of the airline dipped heavily, a somewhat kneejerk reaction to a relatively minor operating problem.
International Airports Study
Tourism NSW is to undertake a study into the viability of establishing international airports in the Hunter Valley, Canberra, Broken Hill and the NSW north coast regions. The study results from an overall plan to make the four regional areas more accessible to tourists. It will examine the commercial aspects of such airports, the traffic flows they would generate and consider their long term viability from a government perspective. It is understood the study will pay particular attention to the Hunter Valley and north coast areas.
Flight Attendants Say ‘non’
Flight attendants have refused to sell French products on Qantas flights in the wake of President Chirac’s decision to resume nuclear testing in the Pacific. The airline itself has not withdrawn French items for sale but the Flight Attendants’ Association passed a resolution to remove all French products from Qantas aircraft worldwide. It also demanded that no new contracts be signed with any French owned or managed companies.
Qantas To Vietnam
The International Air Services Commission (IASC) has granted Qantas approval to begin operating nonstop services between Australia and Vietnam by November this year. The approval enables Qantas to fly an initial one Boeing 767 service per week, increasing to three per week by November 1996. Hong Kong based Dragonair has become the second airline to place Rolls-Royce Trent powered A330s into service, behind sister airline Cathay Pacific. Dragonair is acquiring A330s to replace Lockheed TriStars which are used on routes into China and regional Asia services. Qantas had requested some flexibility in introducing additional capacity on this new route given its strong seasonal characteristics. The IASC therefore decided to allow Qantas to phase in additional services to accommodate this seasonal pattern. Traffic between Australia and Vietnam has increased by an average 30% per annum over the last three years.
Congratulations Stanley
At 81 most people have done most of the things that they can in life, but not that legend of aviation journalism Stanley Brogden, for on the Queen’s Birthday weekend Stanley was awarded an Order of Australia Medal for his services to aviation. A well deserved gong and one that recognises the work that Stanley has contributed to our industry in a career spanning more than half a century. I well remember when this magazine was in its preplanning stages in 1976 and I wrote to Stanley to see if he would be interested in contributing a piece on the battle between Airbus, Boeing, Lockheed and MDC to supply TAA and Ansett with their new domestic widebody jets. It was important for us to get some ‘name’ journos aboard the Australian Aviation & Defence Review project and being a totally unknown quantity I would not have been surprised if Stanley had given my invitation a miss. He liked the idea though and duly put pen to paper, something that at the time meant more to us than perhaps it did to him and his support, and the support of others, meant that the magazine you read today enjoyed a successful birth. Stanley was writing on aviation well before Hitler cast his glance eastward towards Poland with aspirations of grandeur for what would ultimately be known as his Festung Europa, and today continues his love affair with aviation as the Associate Editor of Aircraft & Aerospace magazine. Congratulations Stanley.
Skywest To Derby
Skywest Airlines – an Ansett affiliate – will provide services between Broome and Derby from this month, taking over from Ansett which has withdrawn from the Perth/Derby route due to it becoming economically unviable. Ansett has in the past operated a number of long term, low volume routes in WA at a loss by subsidising higher volume sectors. Ansett says the recent upgrading of the Skywest fleet to incorporate Fokker 50s allows Ansett to maintain its commitment to Western Australia but to provide services which are economically more viable.
Qantas ‘captain’s Choice’ Charter
Qantas will this August operate a special charter flight to Cuba, the Caribbean, South America and Tahiti. Using a Boeing 767 with over 200 passengers aboard, the charter is the third in Qantas’ successful ‘Captain’s Choice’ series which in recent times have operated to Egypt, China, India and Africa. All have been flown by Captain Wayne Kearns, Qantas’ head of Boeing 767 operations. The concept was originally proposed by a NSW businessman who felt there was a demand for inclusive tours which would take Australians to some of the world’s most interesting locations in their own aircraft and in an atmosphere of friendliness and security. The idea was developed with Victoria’s Croydon Travel, the best hotels at each location were booked and economy class passengers were given upgraded meal and beverage service. The charter has available 20 business class seats each costing $18,999 all inclusive, while the 196 economy class seats cost $12,999 each. It flies from Sydney to Hawaii, Acapulco, Mexico, Havana, Venezuela, Brazil, Chile, Easter Island and Tahiti, taking in the sights on the way and including a boat trip on the Amazon River.
Fans1 Approved By Faa
FANS1, a sophisticated aeronautical communications and navigation package, has been approved by the US Federal Aviation Administration (FAA) for use on the Boeing 747-400. FANS (Future Air Navigation System) uses satellite technology to provide a more efficient air traffic system and its development included significant input from Australia’s Civil Aviation Authority. The test programme which resulted in the recent approval began in August last year as a cooperative venture between Boeing, Honeywell (manufacturer of the airborne equipment), Qantas (which provided a 747-400 test aircraft), and the CAA, which supplied the ground system. The CAA had developed the equipment some years ago to demonstrate the FANS system and its benefits in the Asia/Pacific region and was the first in the field. When the FANS1 approval programme began, Boeing asked to use the CAA system, the only one proven for the task. The FANS1 system involves two way ground to aircraft data messages between air traffic control and pilots as well as the aircraft’s position (and other parameters) being transmitted automatically from aircraft to ground. The system also contains a GPS satellite navigation system. Approval of the system allows operators of Boeing 747-400s to use it on trans-Pacific routes between the USA and Australasia saving both time and fuel. An in-depth analysis of the system will appear in our next edition.
Jal Holds Expansion Plans
Japan Airlines (JAL) has halted immediate plans to expand services on the Japan/Australia market due to concerns about the health of the market. JAL fears that the currently soft market might result in lower yields if capacity is increased and wants to further examine general economic conditions in Japan following the Kobe earthquake. The earthquake temporarily slowed down business from Australia’s single largest source of tourists but after a flat March quarter grew by 10% in April. The Tourism Forecasting Council is predicting an average 8% per annum increase in Japanese tourists to Australia between now and 2003. By then it is anticipated that 1.5 million Japanese will visit Australia each year, double the 1994 figure. Five carriers operate between Australia and Japan: JAL, All Nippon Airways (ANA), Air New Zealand, Qantas and Ansett. Between them they offer 30,000 seats each week. Both ANA and Ansett are reported to be seeking capacity increases.
More Pilots Hired
The hiring of pilots by US airlines continues to increase, maintaining the trend established last year. The major airlines hired 666 pilots in the first four months of this year, compared with 1266 in all of 1994 and just 463 in 1993. Jet and turboprop equipped regional airlines also continued their recent strong hiring trend with 238 new pilots being employed in April, bringing their total for 1995 to 1384 up to that point. Some good news in the middle of what is still a difficult time.
Ansett On The Internet
Ansett has embraced the so called ‘information superhighway’ by linking with the Internet in conjunction with Internet specialists the Australian Computing and Communications Institute. ACCI has put together a software entry programme for Ansett so it can advertise its frequent flyer schemes, holiday packages and anything else it wishes to promote. For example, Internet travellers can call up information on one of Ansett’s international destinations and at the same time look at pictures of the airline’s Boeing 747-300 — complete with sound.
Hong Kong Dispute On Hold
The dispute between Australia and Hong Kong over air traffic rights (refer p5 July and p7 June 95 AA) has been put on hold for a period of six months while new negotiations take place. The issue had got as far as court challenges but a period of intense face to face negotiation between the two sides in late June — just a few days before severe restrictions on Cathay Pacific’s operations to Australia were due to come into force — has resulted in the existing air service agreement being put aside and a new one drawn up. All sanctions have been withdrawn for a period of six months while negotiations take place. The dispute started when Hong Kong posed a 50% passenger limit on Qantas’ fifth freedom traffic on the intra-Asian market out of Hong Kong, ending with a limit on the number of passengers Cathay Pacific could carry on its Sydney/Hong Kong flights. Cathay then began court action, at the same time threatening Ansett’s services to the area. The issue also put a cloud over the Qantas share float. The new negotiations will review all air service arrangements between Australia and Hong Kong including direct services, intra-Asia services out of Hong Kong, the refusal of the Hong Kong government to allow Qantas to fly from there to London and Cathay’s operations in the Australia/Europe market.
The Cost Of Silence
An investigation into the cost of insulating houses around Sydney Airport against aircraft noise has shown that the average house in the worst affected areas will cost $33,500 to modify and that larger homes could cost up to $50,000 each. The total cost of the programme has been severely underestimated according to the Government’s Community Advisory Committee which says the money being spent on buying and insulating schools is only the tip of the iceberg. Added to that is the fact that the government is under pressure to expand the programme to thousands of other households which claim to be suffering excessive noise since the opening of Sydney Airport’s third runway last October. There are also logistical problems as some older houses are in poor condition and their ceilings may collapse under the weight of insulation. Also, as windows and air vents will have to be blocked to keep out noise, air conditioning will have to be provided to keep fresh (and heated when necessary) air circulating through the houses. The Federal Government has already set aside $260m for the noise reduction programme and even without any extra costs, that is $10m more than the runway cost to build. AA Comment: The solution to this problem is, of course, simple. As we have said many times in this publication, all that has to be done to solve many of the problems is to reopen the east-west runway. Why this point has not been picked up by the popular press continues to amaze us, unless it has a reason for not wanting the general public to know that doing so would reroute some aircraft over certain important government politicians’ seats! The first Dassault Falcon 900EX flew for the first time on June 1. During the 1hr 45min long flight from Bordeaux (where Dassault’s Falcon plant is located) the 900EX reached an altitude of 41,000ft and a speed of Mach 0.82. The 900EX is a long range development of the 900B, featuring new AlliedSignal (Garrett) TFE731-60 turbofans, Honeywell Primus 2000 EFIS avionics and increased fuel capacity. Dassault says the 900EX has the longest range of any business jet in the world currently flying, at 4500nm (8340km).
April Traffic Buoyant
As expected, due to the influence of Easter, the DoT data for April domestic traffic reflected an improvement on the previous two months. Passengers carried increased by a healthy 8% compared with the previous April, in which Easter also fell, while all important RPKs reached 2126 million, up 10.4% on last April and indicating a trend for more people to fly longer stages than was previously the case. Capacity though also increased by 11.6% reflecting the slightly lower load factors now being experienced compared with one or two years previous. Overall, the average system wide load factor stood at 72%. Qantas is still leading Ansett marginally in both RPKs and load factor, though Ansett did carry more people than its rival. Star routes for the month were Sydney/Coolangatta, Sydney/Adelaide, Melbourne/Perth and Hobart/Melbourne. May DoT data should appear in our next issue.
Qantas Increases Its Air Pacific Shareholding
Qantas has increased its equity in Fiji’s Air Pacific to 17.5%. Qantas has purchased the 7.5% holding (almost two million shares) in Air Pacific that were held by Japanese company Sea-Com Corporation for an undisclosed sum.
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