EC to look at airline pricing practices
Responding to what it describes as an increasing number of consumer complaints, the European Commission Friday said it had written to 18 European airlines "asking each of them whether it charges different prices for exactly the same ticket depending on the country of residence of the client, and if so, why."    

Air Canada splits RJ order between Bombardier, Embraer
Air Canada announced it had reached "agreements in principle" with Bombardier and Embraer to purchase 45 50- and 74-seat CRJs and 45 93-seat Embraer 190s with "a decision on a further 15 aircraft [to] be made following further negotiations."    

KLM sold two 747-300s, including spares, to Holiday Airlines. The aircraft will don Phuket Airlines livery and operate international services out of Thailand. Phuket Airlines is part of the same group as Holiday Airlines. The new owners contracted KLM Engineering & Maintenance for MRO of the aircraft. KLM completed the phase-out of its 747-300s early this month and is replacing them with 777-200ERs and 747-400ER freighters. Three of its seven remaining 747-300s will be returned to the lessor. Others are KLM-owned and up for sale, with British-based Cabot Aviation acting as an agent as it did with the 747s sold to the Thai company.

SAS will begin three weekly flights between Copenhagen and Pudong from March 28 using an A340

Lufthansa Systems announced plans to implement its advanced baggage reconciliation, tracking and tracing systems for JetBlue Airways. The two-module system comprises BagScan and BagTrail, a premier baggage information monitoring system. In addition to the software and to supplement JetBlue's existing wireless infrastructure, LH Systems will provide consulting services on the purchase of all BagSuite-related wireless and nonwireless equipment.

Lufthansa Technik's Maintenance Management Services unit in Hamburg has developed a special MRO support package for no-frills carriers called Quick-2-air. The customized system, of which germanwings is an early user, bundles services designed specifically for the needs of low-fare carriers with fast airport turnarounds and high aircraft utilization. "By pursuing sustained cost-reduction programs and using PMA parts for engine overhauls, we can significantly reduce maintenance-specific costs of no-frills carriers," asserted LHT's Ralf Noether. He said in Lufthansa Technik magazine Connection that LHT is focused on offering tools necessary to enhance the expected growth in market share of such carriers. The company said it tailors Quick-2-air maintenance plans to the requirements of each carrier, geared to minimize costs and maintenance-induced downtimes.

Air Berlin said it is in talks with both Airbus and Boeing about a proposed order in spring 2004 for up to 60 single-aisle aircraft to renew its fleet over five years. The privately owned, closely held carrier does not release earnings or operational results but said it expects its 2003 revenues to come in at nearly eur900 million ($1.08 billion) compared with eur696 million last year. Its current fleet comprises 31 737-800s, five 737-400s and two 737-700s.

Ryanair yesterday girded itself for a negative decision on Brussels South Charleroi Airport as it announced a significant network reshuffle involving suspension of 14 routes from Jan. 14 and launch of nine new ones.

Air Malta Chairman Lawrence Zammit announced at a press conference in Luqa that the carrier will launch low-cost, no-frills services branded as Fare 4U with thrice-weekly 737 summer flights from March 29 between Valletta and London Stansted.

Austrian Airlines Group, in a preview of its summer 2004 schedule, said it intends to expand by 25% with 15 additional flights to Asia and Australia. Plans call for integrating services to Shanghai, Singapore and Almaty (Kazakhstan) into the timetable. "This strategy," said CEO Vagn Soerensen, "will allow us to exploit new opportunities in both the Pacific Rim and Central Asia, the two fastest-growing and most strategically important regions in the world." New thrice-weekly Shanghai services start April 28 and Beijing flights will be doubled to six weekly from May 25. Services to Bangkok will operate daily nonstop for the first time. Three new weekly flights to Singapore will be integrated into the network, continuing to Melbourne, while Sydney still will be served six times a week via Kuala Lumpur. As the only continental European airline to fly "down under," Austrian Airlines Group offers connections via Australia to Auckland, Wellington and Christchurch in cooperation with Star Alliance partner Air New Zealand. Daily flights to New York and Washington will continue unchanged, while nonstop services will operate to Toronto up to five times a week and four times a week to Montreal.

British Airways will launch new service from London Gatwick to Algiers Jan. 5. Flights will operate thrice weekly using 737s. In addition, owing to changes to the bilateral air agreement between the UK and Libya, BA will increase its weekly frequencies between London Heathrow and Tripoli from three to four from Nov. 30.

Lufthansa Cargo, battling chronic cargo-market overcapacity and growing price pressures in a weak economy, is hazarding a fall in yields by implementing "appreciably lower charges" in a campaign aimed at recovering German market share that has dipped from 30% two years ago to 25%.    

Air Algerie signed a contract with Airbus for five A330-200s to renew its widebody fleet. Deliveries will begin in Jan. 2005. The transaction is eligible for financial support from European Export Credit Agencies. The carrier also intends to purchase three 737-800s in 2004, Chief Executive Tayeb Benouis said. Since the demise of privately held Khalifa Airways earlier this year, Air Algerie faces no competition on its domestic network. Air France and Aigle Azur offer international services from France.

Monarch Scheduled launched three new routes from Manchester to Barcelona, Gibraltar and Tenerife using 180-seat A320s. The Barcelona and Tenerife services are daily; fights to Gibraltar are thrice-weekly.

Ryanair taunted easyJet after that carrier decided to enter the German market by launching flights from Berlin Schoenfeld, its next European base (ATWOnline, Nov. 6). "More competition will give German consumers more choice over the high-fare services already offered at Berlin by Air Berlin and Lufthansa," Ryanair Communications head Paul Fitzsimmons said. "However, easyJet's high fares will not, now nor at any time in the future, offer real competition to Ryanair's low fares and punctuality."

Lufthansa Cargo's executive board approved plans this week to restructure the company's sales operation. Erwin Obladen, until now senior VP-worldwide sales, will be responsible for the strongly growing Asian market, reporting directly to the LHC executive board. The company said a successor has been appointed to succeed Obladen but deferred disclosure of who it is. In a transitional period before the new executive takes up the post, board member Andreas Otto will act as caretaker for sales worldwide. LHC said the restructuring measures "principally involve the integration of Sales Germany with Sales Europe/Africa into a single sales force." The board appointed Peter Pullem to head the new Germany/Europe/Africa sales unit effective Jan. 1. Georg Sahler, previously VP-sales-Germany, was appointed sales manager of LHC's recently formed Cargo Counts subsidiary.

DBA, the former British Airways subsidiary Deutsche BA, returns Nov. 10 to the UK market with the launch of thrice-daily 737-300 services between Berlin and London Gatwick. A leased aircraft will operate the route for the first four days. The carrier is independently owned since CEO Hans Rudolf Woehrl's Intro Verwaltungsgesellschaft acquired all the shares from BA in June. Woehrl is a German department store magnate but also has prior airline industry experience with a forerunner of Eurowings. DBA said it will enter the UK market with a simplified one-way fare structure starting from £38 ($64) one way plus taxes and charges. For the business traveler it is offering fully flexible and refundable fares from £122 one way plus taxes, which it claims is approximately 60% below BA's unrestricted fare to Berlin from London Heathrow. DBA will offer assigned seating and provide a range of snacks and refreshments including sandwiches, soft drinks and alcoholic drinks under its Jet Set cafe brand. Passengers traveling on fully flexible tickets will be offered vouchers exchangeable for beverages or snacks. Unlike other airlines serving the UK-Germany market, DBA pledges to pay two rates of travel agent commissions: 5% on restricted/discounted fares and 10% for fully flexible refundable business fares. There will be a £10 service charge for all bookings taken over the telephone. Currently, 40% of DBA's passengers book online at its website, the company said. Half of the flights on its German domestic network are booked through travel agents. After Gatwick, the carrier said, it would like to add services to other major cities in Europe.

KLM decided to make a U-turn on its decision to stop operating its Amsterdam-Eindhoven route from Dec. 19 and will continue the service "at the request of its customers." Flights will be operated by KLM cityhopper with an F50. There will be four flights per day on weekdays and two daily flights on weekends.

Lufthansa board member Stefan Lauer told employee newspaper Lufthanseat that the company, reacting to mounting expansion of budget airlines that threatens its share of the German market, will cut more than the previously announced 2,000 jobs from the payroll in the next few years in a bid to increase productivity. "Nobody can say what the final figure will be," declared Lauer, the board member responsible for personnel. "We must expect that this [2,000 jobs announced in Oct.] figure will increase further." LH plans to unveil Nov. 12 a new wide-ranging efficiency program and restructuring of its domestic and continental European flight operations during a press conference that also will focus on the aviation group's nine-month financial results (ATWOnline, Oct. 31). The airline is targeting a 20% cost reduction in European operations and reportedly intends to implement a rapid-turnaround "ping-pong strategy" of dedicated shuttle flights between key destinations to shorten time on the ground, reduce flow-through delays and increase aircraft utilization.--

Embraer yesterday confirmed that financially beleaguered Swiss International Air Lines has asked the manufacturer to "consider the postponement" of its Embraer 170 and 195 firm orders and that the companies are in discussions "about alternatives."    

JAL Group will launch a daily charter service between Tokyo Haneda and Seoul Kimpo Nov. 30. The move follows an earlier decision by the Japanese Ministry of Land, Infrastructure and Transport to permit charter services between the capitals. Four airlines, two Japanese and two Korean, each will have one daily flight. Japan Airlines and ANA will operate from Japan while Korean Air and Asiana will operate from Korea.

US Airways and Lufthansa will begin their codeshare relationship that includes reciprocal frequent-flier mileage accrual Oct. 26. US Airways will add its code to Lufthansa flights between Frankfurt and Berlin, Boston, Duesseldorf, Hamburg, Philadelphia, Nuremberg and Stuttgart as well as flights between Munich and Berlin, Duesseldorf and Hamburg. Lufthansa will add its code to US Airways flights between Philadelphia and Albany, Baltimore/Washington International, Elmira, Greensboro, Hartford, Manchester (N.H.), Pittsburgh, Providence, Raleigh-Durham, San Juan, Reagan Washington National Airport, West Palm Beach, White Plains and Wilkes-Barre/Scranton. Lufthansa also will codeshare on US Airways flights between Pittsburgh and both Frankfurt and Boston, Philadelphia and both Frankfurt and Munich, and between Charlotte and Frankfurt.

Finnair will serve Miami again for the first time in three years with twice-weekly services during the winter season and onward connections to Central and South America with oneworld alliance partner American Airlines. All-economy service is being introduced on flights to Budapest, St. Petersburg, Prague, Riga, Tallinn, Warsaw and Vilnius. In addition, connections to four destinations in Lapland will be available from Paris, Zurich, Milan and Amsterdam.

Boeing said its new 777-300ER completed the longest engine-out demonstration on a 13-hr. flight from Seattle to Taipei in support of ETOPS certification when it flew more than 5 hr. with one of its two GE90-115B engines shut down.

Air France took delivery of its first GE CFM56-5B-powered A318 on Oct. 9. Airbus launched the CFM56 engine on the airframe when AF ordered 15 firm and 10 option aircraft in 1999. It will take four more A318s this year.

SriLankan Airlines said that with the addition of two A340s, it is boosting its weekly services to London from nine to 11 while Paris goes from three to four weekly and Frankfurt receives an additional weekly frequency for a total of three.

Austrian Airlines flew 1.85 billion RPKs in Aug., down 4.6% compared to the year-ago period. Capacity fell 4.7% to 2.33 billion ASKs and load factor inched up 0.1 point to 79.3%. For the eight months ended Aug. 31, RPKs declined 0.9% to 11.64 billion, ASKs gained 2.4% to 16.42 billion and load factor dipped 2.4 points to 70.9%.
Separately, the airline inked an agreement with Lufthansa Technik to provide maintenance during the next five years for five A321-100s/-200s and six A320-200s. The contract encompasses 5- and 10-year structural checks, which will take 27-32 days depending on the work package.

Iberia said its Aug. load factor increased 1.6 points compared to the previous year to 81.2%, "the highest level in the company's history." Traffic rose 5% to 4.09 billion RPKs on a 2.9% capacity increase to 5.04 billion ASKs. The airline noted this was the highest increase in ASKs since Oct. 2001, mainly owing to the growth of capacity on domestic and South Atlantic routes. Domestic traffic advanced 5.5% on a 1.5-point rise in capacity and load factor improved 1 point to 76.5%. International medium-haul load factor was up 2.4 points to 78.4% on 3% traffic growth. Long-haul traffic rose 5.7% while capacity was ahead 3.9% and load factor gained 1.5 points to 84.8%. Passengers increased 5.3% in Aug. to 2.4 million; domestic passengers rose 7% and international passengers 3.5%.

LSG Sky Chefs will acquire the assets of airline catering operator Abela at London Gatwick, Heathrow and Stansted. Under terms of the deal, LSG is purchasing the fixed assets of Abela's catering operations at Stansted and Gatwick as well as its halal facility at Heathrow. Price was not disclosed. Abela employees immediately become part of the Sky Chefs organization, LSG said.

Austrian Airlines has added roundtrip flights between Vienna and Zurich for eur110 ($121) and Geneva for eur190--plus taxes and other fees--to a low-cost tariff concept introduced earlier this year. It applies to more than 20 cities in Germany and Austria plus Dublin, London and Venice.

Vereinigung Cockpit, the German pilots' union, strongly reiterated its criticism of LTU International Airways as "recklessly irresponsible" for operating weekly A330-200 flights between Duesseldorf and Kabul because its aircraft have no protection from shoulder-fired missiles. "There is acute risk of terrorist attacks," Cockpit warned, adding that the German air force declined on security grounds to operate its A310s from the Afghan capital's airport. LTU, which suspended the flights briefly after criticism following the Aug. 5 launch, operates the charter service on behalf of a Hamburg tour operator, Nur-Air Travel Services GmbH, in cooperation with Afghan Project Partners International Consulting Ltd. of Kabul. LTU spokesperson Marco Dadomo told German radio the criticism was one-sided and arbitrary, stressing that LTU believes "the security system in Kabul is of a standard that allows us to operate this flight."

KLM will begin two daily services from Amsterdam Schiphol to Riga and one daily flight from Schiphol to Kristiansand March 28. KLM cityhopper will operate the flights using F70s.

Lufthansa and Air-India, which already codeshare between Frankfurt and both Mumbai and New Delhi, signed an MOU to intensify and broaden cooperation on various levels. Working groups of both airlines will examine potential areas of collaboration

TUI AG posted group net profits of eur501.6 million ($546 million) in the April-June quarter, up from eur152 million in earnings a year earlier. The improvement was owing to a one-time eur769 million gain from divestment of a noncore energy division. A slump in its poorly performing core travel business sent TUI's group revenues down 4% to eur5.3 billion. Earnings before tax and amortization in the tourism division sank to eur51 million from eur152 million in 2002. "Against the backdrop of expected economic recovery and increased consumer confidence, tourism will return to a growth path next year," Chairman Michael Frenzel declared in a prepared statement. He added that bookings "improved significantly" for the summer period through the end of Sept. CFO Rainer Feuerhake said he expects TUI's no-frills airline Hapag-Lloyd Express to break even by the end of 2004 instead of in 2005, but cautioned that the group may terminate that business segment if HLX does not break even by then. Feuerhake said HLX has grown faster than anticipated in the original business plan, leading to additional expansion costs. He indicated that the carrier, launched at the end of 2002, should be able to achieve up to eur20 million net earnings in the medium term. If it has to be shut down, the loss to TUI would be mainly for startup costs; aircraft and crews could be assigned elsewhere within the group, he said.

TAP Air Portugal said it generated operating profits of eur15.1 million ($16.4 million) in July, down from eur15.9 million in July 2002 but its best performance this year since Jan. Net earnings reached eur15.2 million for the month, up sharply from eur7.3 million. The airline carried 565,602 passengers systemwide

TAP Air Portugal cut net losses in the first half of 2003 to eur35.7 million ($41 million), 6% better than budgeted and 45% better than the eur64.6 million loss recorded in the same period last year. Operating losses of eur36.8 million were up from eur32.6 million in 2002. Despite generating "significant cost reduction," TAP said it was impacted by the effects of the economic crisis. Revenues reached eur544.8 million, slightly below the eur555.7 million in last year's same period. EBITDAR of eur29.8 million was close to 2002's eur31.4 million.

British Airways and three of its trade unions reached an agreement yesterday that will end their dispute over the airline's plans to introduce an electronic clocking-in system to monitor staff duty times.

Continental Airlines will use the Amadeus Electronic Ticket Server Interline Gateway for interline e-ticketing with other carriers. The first of these will be Hawaiian Airlines, Amadeus said.

Iberia Airlines selected ARINC to deliver a package of satellite communications services for passengers and crew on its entire fleet of long-haul aircraft, including new A340-600s.

Odette Airways, a small Zurich-based charter operator, aims to commence operations this fall to 10 European points with a fleet of 10 F100s being acquired from American Airlines and US Airways through cooperation with Germania Express, according to press reports. Until now, Odette has operated MD-83 charters to Kosovo.

Bmi british midland is launching Nov. 8 what will be the only direct daily services from London Heathrow to Tenerife with flights to Reina Sofia Airport in the south five days a week and Los Rodeos Airport in the north twice a week.

VLM Airlines said it will continue to offer thrice-daily weekday services between Luxembourg and London City Airport independently upon termination by mutual consent of its codeshare operation on the route with Luxair.

Berlin Brandenburg Flughafen Holding, the joint federal- and state-owned company that runs the German capital's three airports, said it will close Tempelhof at the end of Sept. 2004 as part of plans to build a new international airport on the site of outlying Schoenefeld. Tempelhof opened in 1923 and became a lifeline for half the city when the Soviet Union blockaded West Berlin in 1948. Overcrowded Tegel is Berlin's primary airport.

Munich Airport's New Terminal 2 put the largest solar energy plant at any airport worldwide into operation last week. The system, whose investment totaled eur2.7 million ($3.1 million), will generate enough electricity to power about 155 households.

Iberia Cargo implemented a new IT system that will allow the continuous tracking of mail shipments carried on Iberia aircraft.

Lufthansa said it reduced its fuel consumption to 4.5 liters per 100 passenger km. The improvement was achieved through more efficient aircraft utilization, deployment of a modern fleet and "intelligent, flexible management," the airline said.

British Airways' schedule from Oct. 26 includes new service from London Gatwick to Turin, going to double-daily in Dec. From April a new service will operate thrice-weekly from Gatwick to Dubrovnik. A new twice-daily service will be launched from Manchester to Copenhagen. Additional frequencies from Gatwick to the Caribbean start in Dec., with flights to Antigua to grow from 7 to 10 weekly and to Barbados from 8 to 10 weekly. Flights to Bilbao will switch from Gatwick to Heathrow, while services from Gatwick to Bremen and Brussels will be suspended from Sept. 1 and the flight linking Gatwick and Duesseldorf will be suspended from Oct. 1. Service between Heathrow and Zagreb will be suspended from Sept. 14 and flights between Heathrow and San Diego will be suspended from Oct. 26.

Finnair said advance bookings show signs of slow recovery, especially in Asia traffic, after SARS "caused a dramatic plunge in demand" in April, May and June on Asian and European routes. Results also were affected by an illegal aviation workers' two-day strike, which caused cancellation of all domestic and some European flights. Capacity is being returned gradually to Asia routes. Finnair carried 567,700 passengers in June, 11.6% fewer than the year before. RPKs declined 11.7% while ASKs decreased 3.8%, resulting in a passenger load factor including leisure flights of 71.4%, 6.4 points lower than in June 2002. Cumulative Jan.-June RPKs were 7.4% below 2002 levels on a capacity dip of 0.2% and passenger load factor was off 5.2 points to 67.1%. Total number of passengers carried was 3,348,700, down 6.4%.

Bmibaby will launch flights from its new base at Teesside Airport to Belfast International on a daily basis and Geneva and Malaga on a weekly basis from Oct.

SR Technics said it estimates that up to 500 employees in its MRO operations could lose their jobs following Swiss International Air Lines' decision to downsize its fleet. The company said the estimate is based on a first broad analysis conducted immediately after the announcement.

Emirates SkyCargo will launch five weekly services from Dubai to Moscow Domodedovo July 1 using A330-200s with 15 tonnes of cargo capacity.

Qatar Airways, as expected, confirmed orders, options and leases for 34 Airbus aircraft worth $5.1 billion at the Paris Air Show yesterday.

Thomas Cook Group, the travel company jointly owned by Lufthansa and German retail giant KarstadtQuelle, reported Tuesday an adjusted loss before interest, taxes and amortization of eur292.5 million ($345 million) for the fiscal first half ended March 31. Revenues declined 8.3% to eur2.35 billion as the number of vacationer customers dipped marginally to 3.6 million. Losses before interest, taxes and amortization climbed to eur349 million compared with eur301 million in the 2002 period. The Thomas Cook brand comprises five jointly marketed European leisure carriers, the largest of which is Condor Flugdienst GmbH operating as Thomas Cook Airlines "powered by Condor."

Hapag Lloyd Express will stop its Cologne/Bonn-London Luton service July 1, citing too much competition on the route.

Boeing's proposed 7E7 will be able to beat most noise curfews, opening up new opportunities for airlines, according to Mike Bair, senior VP-7E7 program. Bair said here that the new aircraft will be exceptionally quiet, with its 85db footprint virtually confined to the runway. And for passengers, in addition to the quiet the cabin will be more comfortable, with cabin altitude down from 8,000 ft. to 6,000 ft. and humidity up from 5% to 20%. But he said the 7E7 will not be "too quiet" on the inside, as passenger studies have shown that "library quiet" is too quiet; "Passengers don't want their conversations overheard."

Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum announced that in addition to the 22 A380s ordered earlier, the carrier is purchasing 21 more A380s, plus two A380-800Fs to be leased from ILFC. In addition, it will buy 18 A340-600s in a new high gross weight version, plus two A340-500s and two more A340-600s to be leased from ILFC. Al-Maktoum said Emirates is the launch customer for the A340-600HGW. An ILFC official said the deal is his company's first A380 operating lease. A380 orders now amount to 125, halfway to the 250 the company has said is its breakeven point.

Russian Regional Jet being developed jointly by Sukhoi Civil Aircraft and Boeing is expected to make its first flight in early 2006, company officials said here yesterday. Russian manufacturers AKO Ilyushin and OKB Yakovlev also are working on the program. The new line of RJs will be offered in both baseline and long-range versions, with the RRJ-60, dash 75 and dash 95 models carrying from 60 to 98 passengers.

Boeing's proposed 7E7 will be able to beat most noise curfews, opening up new opportunities for airlines, according to Mike Bair, senior VP-7E7 program. Bair said here that the new aircraft will be exceptionally quiet, with its 85db footprint virtually confined to the runway. And for passengers, in addition to the quiet the cabin will be more comfortable, with cabin altitude down from 8,000 ft. to 6,000 ft. and humidity up from 5% to 20%. But he said the 7E7 will not be "too quiet" on the inside, as passenger studies have shown that "library quiet" is too quiet; "Passengers don't want their conversations overheard."

Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum announced that in addition to the 22 A380s ordered earlier, the carrier is purchasing 21 more A380s, plus two A380-800Fs to be leased from ILFC. In addition, it will buy 18 A340-600s in a new high gross weight version, plus two A340-500s and two more A340-600s to be leased from ILFC. Al-Maktoum said Emirates is the launch customer for the A340-600HGW. An ILFC official said the deal is his company's first A380 operating lease. A380 orders now amount to 125, halfway to the 250 the company has said is its breakeven point.

Russian Regional Jet being developed jointly by Sukhoi Civil Aircraft and Boeing is expected to make its first flight in early 2006, company officials said here yesterday. Russian manufacturers AKO Ilyushin and OKB Yakovlev also are working on the program. The new line of RJs will be offered in both baseline and long-range versions, with the RRJ-60, dash 75 and dash 95 models carrying from 60 to 98 passengers.

Lufthansa will launch an entirely revamped long-haul business class in Oct. when its first A340-600 joins the fleet. Details are being closely held but the product, not to be regarded as a substitute for LH's first-class service, is known to include new Recaro seats with widely expanded pitch and a new IFE system.--

Alitalia remains a price-maker as low-fare carriers struggle to enter the Italian market, Italy's Competition Authority DG, Giuseppe Tesauro, said. He told parliament that Alitalia is benefiting from a still-inefficient slot allocation process that restricts market entrance by budget airlines.

EasyJet said it will begin hedging its jet fuel costs and dollar exposure to make it less vulnerable to swings in foreign currency and oil markets. "This new policy is now appropriate given the increased size of the easyJet airline business," the carrier said. It added that dollar payments relating to the purchase of aircraft will not be included in its new policy for now.

CSA Czech Airlines will start codesharing with Aeroflot in June on flights between Prague and Moscow. Aeroflot is regarded as a potential candidate for membership in SkyTeam, to which CSA belongs.

Delta Air Lines will begin selling food before flights in June in a test program at a few boarding gates at Cincinnati/Northern Kentucky International Airport, according to the Associated Press. The report said the airline is working out specifics of the program.

CEOs of 30 European carriers, meeting Friday in Brussels as the Assn. of European Airlines Presidents Assembly, demanded that the EU ensure a level playing field after the US decision this month to reimburse US carriers with $2.3 billion for added security costs incurred after 9/11

The tiff between United Airlines and its Washington-based United Express partner Atlantic Coast Airlines took an ugly turn last week when United sought and received a restraining order to prevent the Regional from terminating its codesharing operations on behalf of UA.    

Swiss International Airlines will suspend its scheduled services to Beijing between May 29 and Aug. 15 owing to the SARS outbreak. The carrier said the decision was based on economic reasons. Load factors on the flights have been below 20% for the last two weeks and advance bookings "offer little prospect of recovery in the short-term future."

Austrian Airlines Group reported a pre-tax loss of eur53.3 million ($60.6 million) for the first quarter ended March 31, up slightly from a pre-tax loss of eur51.5 million in the year-ago period.

Air France will launch thrice-daily service from London Gatwick to Bordeaux May 19. It will be operated by AF subsidiary Brit Air using a 50-seat CRJ

Czech Airlines unveiled a 737-500 with a special paint design to mark the company’s 80th anniversary.

Cargolux reported a net profit of $49.3 million for the year ended Dec. 31, more than double its 2001 result. Operating revenues increased 10.5% to $807.5 million, with 98% of revenues coming from the sale of airlift and related transportation services. Operating expenses rose 7.7% to $705.8 million. As a result, operating profit totaled $55.7 million, up 150% compared to the prior year.

Lufthansa Technik acquired a 50% stake in Airfoil Services Sdn. Bhd. from MTU Aero Engines. A joint venture with MTU Maintenance Malaysia, the company concentrates on LPT blade overhaul on GE, CFM and V2500 engines as well as compressor blade overhaul for the V2500. It employs 100 staff, a number that is expected to reach 280 by 2008.

Air Tahiti Nui will operate one weekly flight to both Papeete and Paris from Los Angeles this summer.

British Airways said revenue and forward bookings have been impacted by the threat and outbreak of war with Iraq. It added that while the reductions are in line with company expectations, "there is currently limited forward visibility on revenue and traffic reflecting the war, economic uncertainty, competitor activity and the impact of SARS." The latter already has affected bookings, in particular on Far East routes.

Virgin Express and Air Luxor signed a codeshare agreement on the Brussels-Lisbon and Brussels-Faro routes. The privately held Portuguese airline will buy capacity on Virgin Express aircraft. VEX currently operates 142-seat 737-300s on the routes but noted that it will operate 737-400s in a 164-seat configuration or add extra flights on peak days if demand justifies more capacity. The agreement will enter into effect May 1.

EasyJet will close its Stansted call center that housed 114 employees as part of a series of measures designed to cut costs by increasing the use of its website to sell tickets. "Taking the decision to close the Stansted call center was a difficult one, as easyJet appreciates the significant impact this will have on the lives of so many former Go employees and their families, not to mention the local Stansted community," CEO Ray Webster said. In other moves, the airline said it soon will reduce the telephone "booking window" from one month to seven days and improve the "range of services and functions" available through its website in order to eliminate a "large proportion of customer service calls."

EasyJet said it was disappointed that it was awarded only 7,300 slots at Paris Orly, enough for 10 return flights per day, after applying for 20,000.

Air France Industries and Alitalia Engineering & Maintenance signed a cooperation agreement under which AFI will be responsible for component repair and spares pooling on Alitalia's 777s for seven years while under a five-year contract Alitalia will handle repair and overhaul of APUs on AF 747s.

Alitalia Express has taken delivery of its sixth ATR 72-500, bringing its total ATR fleet to 10 including four ATR 72-210s and six ATR 72-500s.

Fairchild Dornier 328JET program purchased
Aircraft services provider AvCraft Aviation, headquartered in Leesburg, Va., announced Wednesday in Oberpfaffenhofen, Germany, its acquisition of bankrupt Fairchild Dornier's entire 328JET program and its worldwide customer support operations in addition to other assets.    

Swiss International Air Lines revealed completion of the restructuring of its top management. Ulrik Svensson was named MD-finance effective May 12. Manfred Brennwald will become MD-operations on April 1 replacing Karel Ledeboer, who also has been COO and head of engineering and flight operations on an interim basis since Aug.

KLM and China Southern Airlines have expanded their partnership. Weekly codeshare flights between Amsterdam and Beijing will increase from six to eight on March 30 with the addition of two China Southern flights. From June 17 two more services, which will be operated by KLM, will be added to the route, raising the total number of codeshare flights between the cities to 10.

CAE sold an A330-300 full flight simulator to Lufthansa Flight Training and a 737-800 simulator to US FAA. Value of the contracts was put at C$35 million ($23.8 million).

Dragonair signed an agreement with ILFC for a new A330, which when delivered in March 2004 will become the 10th operated by the carrier.

French Parliament approved a bill to privatize Air France after its first reading. Opponents argued that there was no point in privatizing a thriving business for the sake of "ultra-liberalism." The legislation now will go back to the Senate for a second reading. It proposes reducing the French state's stake in the airline from 54.4% to about 20%, with AF employees being allowed to acquire up to 15% of the shares put on sale. Transport Minister Gilles de Robien indicated the government will go ahead with plans to sell its shares when market conditions are right without confirming an initial target date of the second half of this year.--

BAE Systems Controls and Hispano-Suiza received a contract to develop the full-authority digital engine control for the Pratt & Whitney/GE Engine Alliance GP7200 for the A380. Delivery of the first development unit is scheduled for Aug.

Qantas and Virgin Blue are still in Boeing's sights to help launch the 737-900X, but uncertainty over the duration of the pending Iraq war has business negotiations on hold. Boeing VP and GM-737/757 Programs Carolyn Corvi told ATWOnline that no business proposals are on the table yet as final technical issues are being worked through. Qantas insiders, however, indicated yesterday that the airline is bullish on the dash 900X and expects to launch the model soon after the international situation settles. Sources said a Qantas order for 20 aircraft will kick the program off.--Geoffrey Thomas

British Airways will suspend flights to and from Tel Aviv and Kuwait until further notice starting tonight following a warning by the Foreign Office advising against all travel to Israel and Kuwait. BA's flights to Bahrain, Doha, Jeddah, Dubai and Riyadh will continue to operate via Larnaca. Flights to Muscat will remain suspended temporarily. Service will recommence from London via Larnaca to Abu Dhabi with effect from today.

Swiss International Airlines will suspend two of its six weekly connections between Zurich and Cairo Thursday owing to a "sharp drop in demand."

Germania plans to base the 17 Rolls-Royce Tay 650-powered F100s it acquired from US Airways in Berlin, Hamburg and Munich and gradually use them beginning in July to challenge low-cost carriers Hapag-Lloyd Express and Lufthansa/Eurowings clone germanwings. Envisaged are both no-frills point-to-point services to cities such as Rome, Milan, Zurich, Moscow and Vienna that will appeal to business travelers as well as flights to tourist destinations such as Palma de Mallorca, Lisbon or Nice. One-way ticket prices will range from eur77 to eur99 ($82-$105).

Swiss International Air Lines posted a net loss of Sfr980 million ($725 million) for 2002, its first full year of operation.
Results are net of one-time charges totaling Sfr322 million. The successor to Crossair and Swissair reported total operating revenues of Sfr4.2 billion. Operating loss before interest and taxes was Sfr909 million.
The company incurred Sfr180 million in one-off costs deriving from its transformation from a European Regional airline into a global carrier and its introduction of the new swiss brand. But overall results "were better than originally envisaged," it said. Detailed financial figures will be released March 25.
Swiss spokesperson Manfred Winkler denied rumors that the company may need fresh capital in the face of the loss and recently announced schedule, aircraft and staff reductions (ATWOnline, Feb. 26). "We haven't ever thought of anything like that, also given that the government has made it very clear it won't provide any more money," he told Dow Jones. Shareholder equity stands at Sfr1.71 billion, or 36.6% of the balance sheet total. --LH

Luxair will launch one weekly Brussels-Bastia service April 26 using a 737-500.

Ryanair CEO Michael O'Leary said the deadline for buzz staff to accept the terms of Ryanair's purchase offer or face closure of the airline will be extended by two days to March 14 to give them time to respond. "The decision on closing down buzz will not be within our control, it will be entirely within the control of the 200 or so people who are offered jobs," O'Leary said. He confirmed that Ryanair is sending letters to the 600 staff at buzz informing them who will be staying on. Last week Ryanair said it will ground the loss-making KLM unit it is purchasing for at least a month and will cut staff by up to two-thirds in a bid to stem losses (ATWOnline, Feb. 27).
Separately, Ryanair announced seven new routes from London Stansted to Ostend, Groningen, Leipzig, Palermo, Bergerac, Rodez and Blackpool. The routes, representing 105 flights per week, will commence May 1 and bring Ryanair's network up to 115 routes across 16 countries.

Swiss International Air Lines signed codeshare agreements with Japan Airlines covering the Zurich-Tokyo route from April 1 and with Qantas covering daily Zurich-Sydney flights via Frankfurt and Singapore beginning with the summer timetable. Swiss said the airlines plan to expand the arrangement to include domestic flights, Japan-Asia flights and flights from Zurich to other cities in Europe. Additionally, Swiss aligned its frequent-flier program with Qantas and said it will do the same with JAL in the near future.

Luxair will purchase two winglet-equipped CFM56-7-powered 737-700s, with options for two additional aircraft, under an agreement signed with Boeing. The airline currently operates two 737-400s and three 737-500s.

SAS Group confirmed its interest in taking a holding in Lithuanian Airlines. It apparently is the sole potential buyer since Finnair dropped out, according to the Lithuanian transport ministry. Lithuania wants to sell a 34% stake to an investor who will commit to raising that to 66%, valued at $3.9 million, with the state retaining 34%. The airline carried 300,000 passengers in 2002 on routes to 13 countries from Vilnius with a fleet of seven aircraft. Final bids are due by June 27 and the deal is expected to be concluded by Aug.

Lufthansa, citing a "sharp increase" in oil prices, said it is forced to implement a 4.5% increase in ticket prices "as soon as possible."

Spanair reached an agreement with union representatives over a proposal to cut the working hours and salaries of employees in the event of a war on Iraq, according to Expansion. The carrier estimates that a war will result in a 20% drop in traffic. In order to avoid a workforce adjustment plan, salaries of its personnel will be reduced 5% while those of pilots and directors will decrease 20%. Spain’s combative pilots union Sepla, however, said it rejected the proposals and is planning alternatives.
Separately, the carrier is placing all MRO and materiel supply for its fleet of 32 MD-80s with fellow SAS Group member SAS Technical Services from May. The accord runs through 2007, when Spain's second-largest airline plans to have phased out its MD-80s. Specific areas of cooperation include engineering support, planning, component maintenance, materiel supply through access to a stock of rotables, engine and APU maintenance, C checks, field assistance and support during outphasing. Value of the contract was not revealed.

Airbus plans to reduce its cost base by almost 10%, or about eur1.5 billion ($1.61 billion), from 2006 to remain profitable against a weak dollar. A spokesperson confirmed the plan and said the firm is covered for exchange rate risk until 2005. Airbus, whose cost base totaled eur20 billion, or eur15 billion excluding engines, said the cuts mainly will hit suppliers, who account for eur10.4 billion of the cost base after accounting for engines, labor, tax, depreciation and amortization.

Air Berlin will launch twice-daily 737-800 services April 6 between Munich and its expanding hub at Palma de Mallorca. Connections will be offered to Madrid, Barcelona and Malaga as well as to Ibiza on five days. In addition, Alicante, Malaga and Ibiza will be served thrice weekly nonstop from Munich.

Lufthansa Technik and Rolls-Royce will form a 50-50 joint venture entitled N3 Engine Overhaul Services specializing in repair and overhaul of Trent 500, 700 and 900 engines for the A340-500/-600, A330 and A380 respectively. The investment of the two partners totals more than eur100 million ($108.1 million). Subject to approval by the relevant competition authorities, the company will start operations in 2007 offering MRO services to customers in Europe, the Americas and Africa. N3 will have the capacity to handle 200 engines a year and expects to overhaul about 50 engines in its first year. Rolls said up to 40% of N3’s workload will come from servicing the Trents in the Lufthansa fleet and a similar work volume is expected from engines covered by Rolls-Royce Total Care agreements. Rolls said the JV workforce will grow to around 250 by the end of the first year of operations and is expected to increase to around 450 after three years.

Finnair earnings jump in 2002
Finnair yesterday reported a hefty increase in earnings for 2002.
Against a backdrop of uncertainty over prospects for 2003, the airline said capacity adjustments and cost-cutting helped propel it to net income of eur36.8 million ($39.5 million), up sharply from income of eur7.1 million the year before. Revenues rose marginally from eur1.63 billion to eur1.64 billion while operating profit soared from eur13.3 million to eur60 million. Pre-tax earnings increased from eur8.9 million to eur54.4 million.
"The airline industry is contending with bleak conditions. Tense anticipation of war continues, demand is falling and the heated market situation is weakening earnings prospects [for 2003]," President and CEO Keijo Suila said. "Viewed in this light, our 2002 results can be considered reasonable"
      For the quarter to Dec. 31, the company overcame grim market conditions to generate net profits of eur6.2 million, up from a year-earlier loss of eur13 million. Revenues rose 13.2% to eur429.5 million and operating profits of eur12.6 million compared with a eur21.6 million quarterly loss in 2001.
Strong cash flow made possible repayment of eur100 million in debt, leaving Finnair Group with virtually no net debt. The gearing ratio has fallen from a little under 35% to 3% and the equity ratio rose to almost 45%. At the end of the financial year, the group had liquid cash reserves of eur300 million.
Finnair adds a fifth MD-11 to its fleet this week and will launch thrice-weekly flights in Sept. between Helsinki and Shanghai to become the only oneworld carrier to serve the Chinese business/financial center. Weekly Beijing frequencies will rise from five to six in June and go daily from Sept. Hong Kong is served thrice weekly.

Fiji-based Air Pacific will acquire two A330-300s and took options on two more to be delivered in 2005. The airline will use the A330s, which will be configured with 24 business-class seats and 292 in economy, on routes to Australia, Japan and New Zealand. A factor in the order was local support for the A330/A340 family as Aircalin, Air Tahiti Nui and Qantas all operate the types. Air Pacific operated 747-200s on lease from Qantas and prior to that flew DC-10s from ILFC.

Iberia flew 3.15 billion RPKs in Jan., up 6% compared to the prior-year period. Capacity remained flat at 4.58 billion ASKs and load factor improved 4.1 points to 68.8%. Domestic traffic rose 3.5% against a 0.4% increase in capacity, medium-haul traffic was up 1.5% on 8.4% growth in capacity and long-haul traffic rose 8% on a 4.7% capacity reduction.

Asiana enters Star as 15th member
Executives of all 14 Star Alliance carriers formally welcomed Asiana Airlines in Seoul on Monday as the grouping's 15th member effective March 1. Alliance CEO Jaan Albrecht said Star, with the addition of Asiana, "is taking a major step forward in North Asia and establishes a firm foothold in Korea, one of the world's fastest-growing markets." Asiana serves a network of 18 domestic and 53 international routes with a young fleet of 64 aircraft.

Bmibaby chose Manchester as its third UK base. Bmi british midland’s low-cost spinoff started operations last March from East Midlands and added Cardiff as its second base last Oct. Two new aircraft will be based at Manchester from May 1, operating to a number of destinations in the UK, Ireland and mainland Europe with one-way fares starting at £12.50 ($20.16). Bmibaby currently flies to 26 destinations in 12 countries in the UK, Ireland and Europe with 11 aircraft and 266 staff.

KLM intends to implement a share purchase program to buy up to a maximum of 4.5 million of its common shares. “At current share price levels, taking into account KLM's strong financial position and robust cash flow, purchasing some of our shares represents a favorable opportunity for KLM to enhance shareholder value,” CFO Rob Ruijter said. Legally, KLM is allowed to purchase 10% of its issued capital, including those shares already held for employee stock options. The airline stated the shares will be purchased with cash on hand and effects on its cash position will be very limited.

Air France’s privatization bill was presented to the French Senate yesterday, outlining the process to reduce the 54.4% stake actually held by the government to around 20%. However, the government also is looking at ways of rescuing the planned privatization in the event of a prolonged war against Iraq, Le Figaro reported. It then will not place 30%-40% of its shareholding on the market as planned but about 5%, consequently reducing its interest to 49.4%. This will make AF a private company and thus allow it to build partnerships in the European air sector. One probable scenario, the French newspaper added, is a commercial and financial alliance with KLM.

Sabena’s bankruptcy was the result of actions--and inaction--by Swissair, the passive attitude of the Sabena board and management and the lack of concern by the Belgian government in defending its interest in the carrier, concluded the parliamentary commission that investigated the failure of the Belgian national airline. “The direct and immediate cause” that led to the bankruptcy, the report noted, was the failure of Swissair to fulfill its commitments toward Sabena. Also cited were “the rapid fleet expansion, the agreements with City Bird and Virgin Express and a number of external circumstances.” The Belgian state last year initiated legal action to claim eur500 million ($539.4 million) in damages and payment of committed funds from Swissair Group.

KLM said Thursday it will pay Alitalia eur171.5 million ($184.7 million) by Jan. 31 as part of a court-ordered settlement of damages from failed merger plans. KLM spokesperson Hugo Baas said the cash payment won't affect talks between KLM and SkyTeam, which includes Alitalia.

Swiss International Air Lines opened a business lounge at Moscow Domodedovo, the first time any airline has had a lounge for itself in Russia.

Separately, SAA received its first A340-600, marking the beginning of a 41-aircraft, 10-year fleet modernization program. The airline will operate the aircraft on routes from Johannesburg to Frankfurt and Hong Kong.

Air France’s privatization bill will be introduced in Parliament by the French government next month. “The bill is ready, and I will defend it in the National Assembly on Feb. 12,” Transport Minister Gilles de Robien stated. He said once it has been approved by the Senate, “We will have complete freedom to launch the privatization. However, we’ll have to wait till the financial markets pick up to initiate the process.” He reiterated the government’s plans to reduce its shareholding in the airline by 30%-35% and retain around 20%. About 20% will be offered to AF employees.

Bmi regional will launch four daily services between Aberdeen and Norwich March 31 operating an ERJ in a two-class configuration. The addition of Norwich brings the number of UK airports served by bmi regional to eight.
Separately, bmi announced that it is investing £4.2 million ($6.8 million) in moving its entire engineering base from East Midlands to Aberdeen this summer.

Lufthansa
Contract talks break down; work disruptions threatened
Bruising wage talks between trade union ver.di and Lufthansa Group involving 52,000 LH ground staff and flight attendants were suspended by the union Tuesday after 3 hr. of abortive negotiations (ATWOnline, Jan. 14).
No date was set for resumption after collapse of the fourth round of bargaining. Union negotiators underscored the imminent possibility of "warning strikes" to press demands for a 9% salary hike that LH terms vastly exaggerated in view of the difficult trading environment impacting airlines negatively worldwide. Lufthansa pilots managed to squeeze the company for a 28% pay increase early last year after a series of painfully costly warning strikes. That arbitrated settlement and the militant manner in which it was achieved by pilots union Cockpit was deeply controversial with other staff, who now seek a significant raise as well

Bmibaby will add Paris Charles de Gaulle as its 10th destination from Cardiff on March 30. British Airways announced last month that it will abandon the route.

Lufthansa and South African Airways selected the Java-based Sabre Qik Developer Tool as a component of their new customer service tools.

Northwest Airlines retired its last 727 from scheduled service this week, 39 years after it began operating the type. 

United Airlines' pilots, represented by the Air Line Pilots Assn., voted to approve a 29% interim pay cut that will remain in effect until it is replaced with a new agreement or is altered under a Section 1113(c) filing by the airline.    

Gulf Air to start economy airline in mid-2003
In a move it said will meet "the specific needs of leisure and expatriate employment segments," Gulf Air unveiled plans to launch what it described as the region's "first ever full-service, all-economy airline" in June.

Swiss International Air Lines said banks have provided "pre-delivery facility" financing for 12 A340s on order. Financing also has been secured for ownership of seven ERJ-145s to be transferred to a leasing company on a sale/leaseback basis. Swiss said it will gain an additional Sfr450 million ($317 million) in liquidity through the new financial arrangements.

SAS moves to 'net fares' in home countries Jan. 1
Effective Jan. 1, the airline will offer so-called "net fares" that do not include agency commissions. At the same time, SAS Group and travel agencies will begin charging for their services to customers. "This means that the price of a ticket will vary depending on the customer's choice of sales channels and service level," the airline said. "At SAS, it will be less expensive to book a ticket on the Internet than through ticket sales." Although US airlines may charge a few dollars less for tickets booked via their websites, they advertise these offerings as representing discounts off the standard fare rather than stating that customers will pay more if they do not book online.
SAS said it concluded cooperation agreements with Bennett BTI and American Express, which it described as being among the largest travel agency chains in the Nordic region.