BUSINESS

Q a n t a s w a r n s o n
c o m p e t i t i o n
PAUL PHELAN/SYDNEY
Q
ANTAS HAS warned that
increasingly desperate com-
petition from rivals in the region
will make it difficult for the
Australian airline to sustain the
record profits it has just declared
for the 1997/8 financial year.
Operating profit was up 13.6%
on the previous year at US$282
million, on revenue that rose by
3.8% to $4.8 billion. Earnings in
the domestic market were largely
responsible for the improvement,
rising by 26. 8% to $126 million
before interest and tax. Revenue
from international operations
remained static at $160 million.
After-tax profit amounted to a
record $ 180 million.
Aside from domestic market
growth, the carrier attributed its
improved performance to several
factors, including redeployment of
former Asian capacity on to
European and US markets, a debt
reduction programme, and cost
savings worth a further $280 mil-
lion, including $89 million in pro-
ductivity improvements.
Chairman Gary Pemberton,
however, warns that the results
may be unsustainable as regional
competitors resort to increasingly
"desperate measures" in the face of
falling revenues and yields. "The
reactions of other carriers in terms
of prices and capacity as a result of
conditions in Asia have been well
documented, and will lead to more
market volatility and uncertainty in
market conditions in 1998/89," he
says, adding: "In the light of that
uncertainty, we are not making
specific profit predictions for this
year, but we have signalled that it
will be difficult to maintain this
level of profitability ahead."
Managing director James
Strong says Qantas plans more
aggressive moves to improve its
position, having committed a fur-
ther $148 million investment in
product improvement, along with
the acquisition of three Boeing
747-400s from Asiana and another
Asian carrier. Although Strongwill
not disclose details, the proposal to
buy two Malaysia Airlines aircraft
i may have stalled on price.
Ayres hopes that the L-610G will find a launch customer at the Farn borough show
A y r e s t a k e s o v e r L e t K u n o v i c e
ANDRZEJ JEZIORSKI/MUNICH
A
FTER ALMOST a year of
talks, US agricultural and util-
ity aircraft manufacturer Ayres has
completed die purchase of 93.6%
of Czech regional aircraft produc-
er Let Kunovice.
The US Company says that it has
taken over Let's long-term debt as
part of die cjeal, but declines to dis-
close die amount paid for its stake.
Ayres has acquired shares belong-
ing to Aero Holding and the state-
owned Konsolidacni bank, while
die remainder stays in the hands of
small shareholders, each owning
less than 1 % of the company.
Ayres says it initially saw Let as a
good partner for the production of
components of its LM-200
Loadmaster utility aircraft, but
realised that Let's own products -
the 19-seat L-410/ 420andt he40-
seat L-610G twin turboprops -
"complement" the Ayres aircraft.
"The L-420 and L-610G, when
combined with the LM-200
Loadmaster, will provide us with a
great product line of rugged utility
aircraft," says Ayres director of
international sales Tex Guthrie.
The US company plans to man-
age product support, sales and mar-
keting activities for Let products
from its site in Albany, Georgia, to
speed up response times and
improve spares support. Company
president Fred Ayres says, however,
that he will also maintain marketing
capacity at Kunovice, and does not
plan any job cuts.
Let now employs 1,700 people,
and its assets total some $110 mil-
lion. Ayres estimates that the com-
panies' combined revenues should
exceed $ 100 million. Let president
Zdenek Pernica will remain.
Ther e are some 1,000 L-410s in
operation in over 40 countries, and
its newer stablemate, die Western-
ised L-420, received its US
certification in May. The General
Electric CT7-powered L-610G is
now expected to gain US Federal
Aviation Administration certi-
fication within a year.
Fred Ayres says that the L-610G
will be on display at the Farnbo-
rough air show in early September.
"We hope to leave the show widi a
launch customer," he adds.
Ayres plans to incorporate the
L-410 fin and the L-610 horizontal
stabiliser into the LM-200 design,
saying they are close to the designs
originally planned for the Load-
master. Windtunnel tests incorpo-
rating the components are to be
carried out at the end of August.
Manufacture of die first three
Loadmaster prototypes is under
way at Albany, with the wing,
empennage and certain fuselage
elements being manufactured by
Let. A new plant will be built in
Dothan, Alabahama, for full-scale
production.
P a n A m A c a d e m y i n v e s t o r h u n t e n d s i n B o s t o n
P
AN AM International Flight
Academy (PAIFA) has been
acquired by a US investment firm
which has agreed to at least double
the size of the Miami, Florida^-
based independent training com-
pany over the next three years.
PAIFA was purchased by private
Spanish investors in 1992 from die
estate of defunct Pan American
World Airways. The Academy has
since expanded to include 15 com-
mercial and business aircraft flight
simulators. Chief operating officer
Vito Cutrone says that the need to
expand rapidly to meet growing
demand for pilot training led to the
hunt for new investors.
The search resulted in die selec-
tion of J W Childs, based in
Boston, Massachusetts. Cutrone
says that die firm has agreed to back
an aggressive business plan that
calls for the Miami centre to be
expanded and new training bases to
be established "in the near future".
The first step is an agreement
with FedEx to build and operate a
simulator centre for the new Ayres
Loadmaster at the package carrier's
Memphis, Tennessee, hub (Flight
International, 19-25 August).
Cutrone says PAIFA is looking at
four different US locations for
additional training centres, each of
which would have at least one
anchor customer.
While most of the growth will
come from pilot training for air-
lines, he says that the Academy also
plans to expand its business aircraft
simulator fleet. J
20 FLIGHT INTERNATIONAL 26 August - 1 September 1998