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The Air Bulletin
Wednesday November 10, 1999
In this issue :
EgyptAir FDR reveals puzzling information
Crashed Mexican dc-9 said to be unsafe
Onex withdraws bid for Air Canada
Bidders line up for Thai
Air Holland on the edge
El Al decision a surprise
Aircraft orders
Short notes
EGYPTAIR FDR REVEALS PUZZLING INFORMATION
A preliminary look at EgyptAir flight 990's Flight Data Recorder (FDR) shows
an uneventful
flight before an apparently controlled descent, further deepening the
mystery of the crash at
sea that killed all 217 people on board. US National Transportation Safety
Board chairman
Jim Hall said analysis of the FDR, showed the auto-pilot disengaging about
eight seconds
before the Cairo-bound plane began going down.
“The first event we note is the auto-pilot disconnecting," Mr. Hall told a
news conference,
adding, “about eight seconds later (…) the airplane begins what appears to
be a controlled
descent.” Mr. Hall refused to say whether the auto-pilot self-disconnected
or was
disengaged by the action of one of the pilots. Even if the plane’s descent
was controlled, it
still happened at a very high speed that may have induced temporary
weightlessness
among the passengers. The EgyptAir flight recorder data was consistent with
radar data
showing a descent from 33,000 feet (10,000 metres) to about 19,000 feet
(5,800 metres).
Data from the FDR also laid to rest speculations that an un-commanded thrust
reverser
deployment had caused the crash. “There is no evidence of thrust reverser
deployment in
the data we have," Mr. Hall told a press conference. Concerns that the
deployment of a
thrust reverser was at the cause of the accident were fuelled both by the
fact that an un-
commanded thrust reverser deployment is the cause of the only previous
accident of a 767
and the eerie coincidence that the EgyptAir plane was manufactured next to
the Lauda Air
767 which crashed when a reverser deployed accidentally. Mr. Hall also said
the plane
probably didn’t reach supersonic speed during its descent, contrary to
earlier reports.
The NTSB says there is another ten seconds of data to analyse on the tape.
The recording
ceased at the same time radar recorded the last transmission from the plane,
a sure sign
that electrical power was out in the aircraft. Investigators are hoping the
Cockpit Voice
Recorder will provide them with clues, either conversation between the
pilots or warning
bells in the cockpits, explaining why the aircraft went into a steep
descent.
CRASHED MEXICAN DC-9 SAID TO BE UNSAFE
Mexican pilots and flight attendants claim they had warned authorities about
the poor
safety record of the DC-9 that crashed on November 9 and of the airline that
operated it but
the carrier responded the plane had undergone a recent overhaul and met all
safety
standards. Taesa’s flight 725 crashed minutes after take off from Urupan
(Mexico) en route
to Mexico City, killing all 18 people on board.
Eyewitnesses say the plane was on fire during take-off and exploded in
mid-air, but
investigators have not confirmed this chain of event yet. However,
authorities have
announced that the pilot of the DC-9 had notified the airport’s control
tower of an
unspecified emergency on board before crashing in an avocado grove.
A flight attendants' union alleged the 29-year-old plane that went down was
famous for oil
leaks from its engines. The pilots union reiterated its charges of lack of
safety concerns
against the airline. In September 1999, it had published a report accusing
Taesa and three
other airlines of flying “junk planes,” adding the aircraft’s safety was so
neglected it would
not be allowed to fly in the United States.
Investigators have recovered the plane’s Flight Data Recorder (FDR) and
Cockpit Voice
Recorder (CVR) and will be analysing their content before making any public
statement.
Taesa operates low cost flights on domestic flights within Mexico and
between Mexico and
select destinations in the US.
ONEX WITHDRAWS BID FOR AIR CANADA
Onex has withdrawn its bid to take over Air Canada shortly after a
provincial court ruled the
proposal was illegal. The dramatic events left Air Canada victorious in
staving off the hostile
take-over attempt by Onex, which planned to merge it with rival Canadian
Airlines to create
a single national carrier linked to the Oneworld alliance led by American
Airlines.
“Onex is disappointed in the Quebec court's conclusion that shareholders
cannot accept
our offers,” Onex chairman Gerry Schwartz told a news conference, adding the
company
had instructed its counsel to withdraw their offer and their resolution for
a scheduled Air
Canada shareholder meeting immediately. Air Canada shareholders were to meet
November 8 to decide whether to accept Onex proposals to replace the Air
Canada board of
directors and create a new class of limited voting shares as a prelude to
presentation of the
full Onex offer.
The new limited voting shares were intended to allow Onex to side-step a
federal law
prohibiting any single party from owning more than 10% of a national
airline. In his ruling,
Quebec provincial justice court judge Andre Wery said Onex's proposal to
temporarily
convert its Air Canada voting shares to non-voting shares while at the same
time replacing
the Air Canada directors was illegal. Without the side-step, Onex would
never be able to
defeat the opposition of Air Canada’s directors.
Upon the withdrawal of Onex’s offer, Air Canada cancelled the November 8
meeting but said
its proposals would be presented at another shareholder meeting. To thwart
the Onex take-
over bid, Air Canada had offered to buy back a large enough bloc of shares.
Under its plan,
Air Canada would purchase Canadian Airlines and run it separately while
staying part of the
Star Alliance of US carrier United Airlines and Lufthansa of Germany. “Air
Canada has not
made any commitment it will not fully comply with,'' Air Canada president
Robert Milton
said, adding “we will actively attempt to acquire Canadian Airlines, and
should we be
successful in doing that we will protect the interest of those employees as
well.”
Both rivals had engaged in an increasingly bitter campaign as the
shareholders' meeting
approached, raising their offers and running full-page newspaper
advertisements that
accused the other of lying and serving the interests of foreign airlines
seeking to dominate
the Canadian market. Onex’s bid was financed mostly by American Airlines
which had also
signed an agreement with Onex specifying heavy fines should the new airline
borne out of
the merger of Air Canada and Canadian Airlines failed to become a member of
the
Oneworld alliance or purchase operational and administrative services from
American
Airlines, parent company AMR or computer reservation system Sabre. Air
Canada’s
counter offer, estimated to be worth CAD 930 millions (EUR 600 millions -
USD 631
millions) was mostly financed by Lufthansa and United Airlines in exchange
for a 7%
shareholding in the carrier each.
BIDDERS LINE UP FOR THAI
Three world-wide alliances and one airline have announced they were
interested in acquiring
a stake in Thai Airways when the Thai government is to sell 23% of the
carrier in 2000. The
newly formed alliance between Air France and Delta is favoured to win the
competition for
the stake, but the Star Alliance, of which Thai Airways is a member, is a
closed second.
Air France and Delta are probably the best suited partners for Thai Airways
because the
two carriers have a strong presence on their own continent and numerous
flights to other
destinations. Furthermore, Air France and Delta have no Asian partner yet,
which would
grant Thai a larger role in the alliance than it currently has in the Star
Alliance, where it is
considered a minor partner next to Singapore Airline. The Oneworld alliance,
which has
also expressed interest in Thai, also counts a strong partner in the region
with Cathay
Pacific Airways.
Nevertheless, officials from Singapore Airlines, German carrier Lufthansa
and the US’
United Airlines have already held talks with officials from Thai Airways in
order to discuss
the future of the carrier if the three Star Alliance members jointly acquire
a stake in Thai.
Thai’s main attractiveness is as a an alliance member and the interest of
the three Star
Alliance carrier is motivated by the desire to keep Thai from joining
another alliance, for it is
certain that if another airline acquires a stake in Thai, Thai will leave
the Star Alliance.
American Airlines, British Airways and Australia’s Qantas have also made
representations
of interests with the Thai government on behalf of the Oneworld alliance.
However, Thai’s
entrance in this alliance would not affect the position of minor partner as
it would still be the
smaller of the two airlines covering South Asia. Swissair is also interested
in acquiring a
23% stake in Thai Airways but the Swiss carrier may be the worst bet for
Thai in the short
run. Swissair is the leading airline in an alliance of several European
carriers which also
include Sabena of Belgium, France’s AOM and TAP Air Portugal, but the
alliance has no
partner in the US since Delta terminated its Quality Excellence Alliance
with Sabena and
Swissair to ally itself with Air France. Swissair might pursue talks with
Continental but the
airline is likely to join the KLM – Northwest alliance since Northwest
acquired a 14% stake
in Continental.
In the long term, however, any alliance between Thai and Swissair may amount
to Thai
joining the Oneworld alliance since the Swiss carrier is said to be
entertaining the
possibility of associating itself and its European alliance with American
Airlines and the
Oneworld alliance.
AIR HOLLAND ON THE EDGE
One of the few remaining independent Dutch airlines, charter carrier Air
Holland, has
suspended all payments, in order to try to save the airline. The airline
came into trouble at
the end of September, when losses became bigger and one of the stockholders
wanted to
part company with the airline.
Air Holland management quickly tried to save the airline by approaching
several companies.
One was the Dutch aviation company Schreiner, which nearly took over the
airline, but both
parties could not agree on the leasing contract of the seven Boeing aircraft
in Air Holland’s
fleet. "The financial costs of these leases are to high", according to
Schreiner chairman Jan
Röben,
With this blow for the management of Air Holland, the airline tried to find
another suitable
candidate. A new one was found with Sudtours, already a stockholder of the
company. This
deal was also nearly complete, but was cancelled of on the last moment.
During its
struggle to survive, the airline was more than once approached by the
English low-cost
carrier EasyJet. The board didn't consider this option seriously, because
EasyJet only
wants the slots of Air Holland at Amsterdam’s Schiphol airport to compete
with KLM. Air
Holland is now sitting on the ragged edge. Air Holland has about 500
employees and sales
this year were almost EUR 115 millions. The carrier also faced bankruptcy in
1991 but
pulled through. – By Anton Homma
EL AL DECISION A SURPRISE
El Al’s decision to split its order for long haul aircraft came as a
surprise to all analysts and
suggests that politics may have played as much a part in the order as
commercial
considerations. The Israeli carrier has announced it will order three
777-200ERs from
Boeing, but it also said it was considering the purchase of three or four
Airbus A330s
pending a final study on their economics and affordability.
An El Al official said the airline thought the 777-200ER was the best
aircraft in its class,
implicitly better than the A340-300 from Airbus, while the A330-200 had a
better seating
capacity than Boeing’s 767. While the claim may be true, no analyst is ready
to agree with
El Al’s finding that it has chosen the best combination to maximise savings.
The A330 and
A340 are very similar planes, different only in the number of engines, two
and four
respectively, and they share the same cockpit design, allowing an airline to
train its pilots
to fly both aircraft, resulting in major savings in the number of cockpit
crews needed to
operate both planes. The similarity between both models is also an advantage
for
maintenance costs since they share most spare parts, reducing the inventory
and cost of
training maintenance technicians.
Even if the 777-200ER is more economical for El Al’s network, any advantage
the plane has
over the A340 is more than matched by the cost savings achieved in operating
a fleet of
A340s and A330s. The same reasoning doesn’t hold true for a fleet composed
of 777s and
767s because the two aircraft are far from having the same compatibility the
A330 and
A340 do and the costs of operating a fleet of both aircraft families from
Boeing are only
slightly lower than for a fleet of 777s and A330s. El Al’s decision to fill
its fleet requirements
with aircraft from both Airbus and Boeing might make sense if it operated a
larger number of
aircraft, but not if it orders three aircraft from each manufacturer.
Analysts say El Al’s mix-and-match order suggests the Israel carrier found
the Airbus
aircraft better suited to its needs for any number of reasons but decided
against buying an
all-Airbus fleet due to political pressures coming from the United States.
Israel and the US
have a long standing relation between the two countries and the US has never
hesitated to
use the funds it gives Israel for its defence as an incentive to encourage
Israel to buy
American. In fact, the Israeli airline has always filled its fleet
requirements from US made
aircraft, sometimes after heavy political pressures.
In its last aircraft purchase, El Al chose Boeing’s Next Generation 737 over
Airbus’ A320
after heavy pressure coming from the Israeli military and US government
officials, according
to many sources, despite a better financing packaged offered by the European
aircraft
manufacturer. Airbus officials said the dice were stacked so much in favour
of US firms
in Israel that they would quote El Al list price for any future order and
not enter
into fruitless negotiations when it was evident that Boeing would will all
orders.
Boeing officials were aware of the situation as well and did not offer El Al
a very
interesting discount on their 777s when the airline began evaluating the
aircraft on offer to
renew its long haul fleet. It took a veiled threat to buy from Airbus for
Boeing to offer a better
discount to the state-owned airline, but Airbus officials are said to have
refused to match it
at first.
Eventually, the symbolic significance of receiving an order from El Al
prompted Airbus to
actively compete for the order, probably offering a deeper discount than it
would another
airline for such a small number of aircraft. If Airbus receives an order
from El Al, it will
probably break the last market locked in by Boeing and will show other
countries around
the world that depend on the US that their political relationships do not
have to interfere in
their commercial decisions. However, El Al does not realise, or does not
want to
acknowledge, that is it not as subject to pressure from the US as it may
seem.
Despite the close relations between Israel and the US, El Al, or Israel for
that matter, is
very unlikely to be punished for buying from Airbus instead of Boeing
because the pro-Israel
lobby based in the US is both very powerful and very forgiving and
politicians cannot afford
to ignore its views, especially as the US is about to enter a presidential
election year. The
strong relation between Israel and the US came under the toughest test when
a spy for
Israel’s secret service was arrested in the US and sentenced to a long jail
term. Still, the
US didn’t inflict the slightest reprisal on Israel because of the opposition
of the pro-Israel
lobby. If this lobby can force the politicians to forgive Israel its spying,
it can convince them
that buying from Airbus is not worse. Nevertheless, El Al may not buy from
Airbus this time
either despite announcing it would acquire “three or four” A330s. The board
meeting which
was to approve the purchase and set the final number of aircraft has been
postponed
indefinitely by the carrier amid some analysts’ claims that El Al is now
about to use every
excuse possible to avoid ever holding that meeting.
AIRCRAFT ORDERS
Belgian regional airline VLM (VG) has signed a Letter Of Intent (LOI) with
British Aerospace
for two Avro RJ85s regional turbofan aircraft. VLM will operate the planes
alongside its
Fokker 50 both to open new services out of London’s City airport to
destinations in Europe
and to replace the Fokker 50 on strong growth routes. The carrier also
studied the Fokker
70 and Fairchild Aerospace’s 728JET but both aircraft were eliminated
because they were
not readily available. The RJ 85s will be delivered before the end of
1999. – Reported by
Anton Homma
SHORT NOTES
Israel has granted Air Canada’s request for an additional three weekly
flights, increasing its
service between Tel Aviv and Toronto to a daily flight. Israel had
previously refused Air
Canada’s request unless Canada granted El Al the right to prolong its
flights to Canada to
US destinations and pick up passengers in the US bound for Israel [The Air
Bulletin Vol. 4
No. 5]. The Canadian government had refused the Israeli government’s request
on the
grounds that the transport of passengers between Canada and the US was
regulated by a
treaty between both countries to which Israel was no party. Canada also
claimed that Air
Canada’s request should have been accepted automatically under the aviation
agreement
signed by Canada and Israel in 1987. In view of Israel’s repeated refusals,
the Canadian
government banned all overflights of its territory by Israeli aircraft on
November 9, 1999,
effectively adding at least 30 minutes to all El Al flights between Israel
and the US. The
Israeli transportation ministry threatened to cancel the aviation treaty
unless Canada
recanted, but Israeli Prime Minister Ehud Barak intervened and granted Air
Canada’s
request for three additional weekly flights. Canada immediately cancelled
its ban on
overflights.
Tail bolts on hundreds of Boeing 767 aircraft may not have been properly
tightened,
according to the manufacturer, but the problem poses no flight safety
threat. Boeing
officials are still trying to determine how far back the problem dates and
could not say if the
EgyptAir 767-300 that crashed on November 1, 1999 might have had faulty tail
bolts. An
unidentified airline notified Boeing that two of the 16 bolts that hold the
vertical stabiliser to
one of its 767s were undertorqued. Boeing said the plane carried number 700,
which
indicates it was delivered to American Airlines in 1998. In response to the
report, Boeing
said it has replaced all the tail bolts on its 767s still in production.
Boeing blames the
combination of two tools for the undertorquing and has changed its practices
immediately.
The manufacturer recommends that all 767 operators check tail fins until
Boeing can
determine exactly which aircraft are affected but no decision on a retrofit
has been made
yet.
American Airlines has agreed to give its partner Canadian Airlines some
relief from the
financial difficulties that are threatening the future of Canada’s second
largest carrier.
American Airlines and its parent company, AMR, have agreed to postpone for
an
unspecified number of months the monthly payment owed them for services
rendered to
Canadian Airlines. Canadian Airlines spends an estimated CAD 17 millions
(EUR 11.1
millions – USD 11.6 millions) every month on operational and administrative
services
provided by American Airlines and for the use of the electronic reservation
system of Sabre,
an AMR subsidiary. Canadian Airlines, which is rumoured to have less than
CAD 88
millions (EUR 57.8 millions – USD 60.1 millions) in its bank accounts, says
the agreement
will give it twelve months to find a partner or restructure its organisation
to ensure its long
term viability. American Airlines’ decision is not a charitable move,
however. The US carrier
owns 25% of Canadian Airlines’ share through an investment that hasn’t paid
off yet.
Furthermore, Canadian Airlines is an important Oneworld alliance partner for
American
Airlines because it feeds numerous passengers to American flights to
destinations across
America not served by Canadian Airlines. Canadian Airlines had announced
previously it
would shut down in the spring of 2000 if no remedy were found for its dire
financial situation.
US low cost carrier Kiwi International Airlines, grounded since March 1999,
could fly again
soon as a charter airline. Ground handling company Executive JetPort has
submitted to the
bankruptcy court a proposal to buy the carrier’s name and its aircraft
operator certificate
(AOC) for USD 6 millions (EUR millions). Executive JetPort intends to
operate a single 727
on charter flights to Las Vegas from a small airport near Philadelphia,
Pennsylvania for from
Kiwi’s old base in Newark, New Jersey. The airline went into bankruptcy in
March 1999
after the US Federal Aviation Administration grounded it due to flight
safety issues. The
FAA argued that Kiwi’s poor financial situation had affected its
infrastructure to the point
where, without constant monitoring from the administration, it was no longer
able to fly
safely.
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