Category Archives: PlaneMakers

Pardus Makes Bad Bet on Automotive stocks, United/Delta: Investors Locked Out

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Remember all the you-know-what that hit the fan in December, after a story was, well, I would say “placed” with the New York Times — concerning a certain New York hedge fund? That fund, Pardus Capital, just happened to have positions in both Delta Air Lines and United Airlines. And guess what the head of this hedge fund, Karim Samii, was writing in a letter to the management of said airlines?

Yep. You guessed it. He wrote, expressing his frustration at the fact that the two airlines had not yet consummated a merger agreement. The letter got heavy media attention.

As I said at the time, I wasn’t sure what planet this guy had been hanging out on, but there was not going to be a Delta/United deal. Period.

Fast forward to late yesterday, and guess what?

Pardus Group has stopped investor redemptions from its fund. Translation? If they have any of your money — you can’t get it.

“The actions we have taken will allow us to protect the funds and their investors from the external short-term pressure of the broader financial markets,” New York-based Pardus Capital Management LP said in an e-mailed statement. “The funds have been disproportionately affected by recent market volatility.”

The fund’s  holdings in United and Delta are rather small, compared to some of Pardus’ other holdings, including those in General Motors, Ford Motor Company’s  former division, the Visteon Corp., and Paris-based Valeo, an auto parts manufacturer.

Boeing May Have to Redesign 787 Wing Box; More Delays In the Works

Steve Udvarhazy

Leave it to ILFC’s head honcho Steve Hazy to let the rest of the world know what is going on with Boeing and Airbus airplanes.

This time it’s Boeing and the news is not good.

Hazy told investors in New York yesterday at the JP Morgan Chase Transportation Conference that he believes a design change is needed in the 787’s center wing box, a key piece that connects the wings to the fuselage.

As a result, he expects the first flight of the 787 will now be delayed until the fall. Boeing has said its goal is to have the first flight by the end of June.

The next “formal” delay announcement from Boeing regarding the 787’s maiden flight would be the fourth time the aircraft’s first flight has been pushed back.

Ticker: (NYSE:BA)

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Air Force Tanker Contract Goes To Airbus

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Stunning news out this afternoon, as the Air Force announced that Airbus and Northrop Grumman have been awarded the $40 billion Air Force tanker deal.

According to the Air Force, the contract is for the right to build up to 179 tanker aircraft, to be called the KC-45A, for the Air Force.

“The tanker is our number one procurement priority right now,” said Air Force Gen. Duncan McNabb in a press release about the deal. “Buying the new KC-45A is a major step forward and another demonstration of our commitment to recapitalizing our Eisenhower-era inventory of these critical national assets.”

The KC-45A is expected to be able to provide refueling to both Air Force and Navy planes, while its predecessor, the KC-135, must be configured for one or the other before takeoff.

It was widely believed that Boeing held the edge in these negotiations. As one report said tonight, “Boeing officials must be feeling a little bit like the New England Patriots.”

This award comes after a scandal involving  the revelation that a top Boeing official had conducted illegal job negotiations with an Air Force acquisition official who later joined the company broke in 2001 — scuttling what was widely believed to be, at the time, a slam-dunk contract for Boeing.

One thing is for sure. Stars aren’t the only thing falling on Alabama tonight. So are dollar bills. A big part of the Airbus pitch on this contract was the fact they would manufacture the aircraft outside of Mobile, AL.

American Airlines Investigating Similar 777 Incident as BA Flight

Flight International reported today that American Airlines is investigating an incident Thursday in which the engine on one of its Boeing 777-200ERs apparently failed to respond to throttle commands for several seconds during an approach into Los Angeles.

The incident, at this point, sounds somewhat similar to the problem that caused a British Airways 777-200 to land short of the runway at Heathrow recently. Both aircraft were equipped with Rolls-Royce Trent 800 engines.

According to the column,

“The incident involved American’s flight AA299 from Miami and occurred at a height of around 2,000ft as the aircraft was descending to Los Angeles.

In an information statement to members, the Allied Pilots Association – which represents American Airlines cockpit crew – says the aircraft experienced a “hang-up” of its left-hand engine.

“The auto-throttles were on and the left engine hung at approach idle as the right engine accelerated normally,” says the association.

“It is believed that the left engine would not respond to throttle inputs for 10-15 seconds before finally responding and accelerating to the commanded thrust.”

All of American’s 777-200ERs are fitted with Rolls-Royce Trent 800 powerplants.

Maintenance personnel have downloaded the flight-data recorder information and will examine the fuel tanks and engine fuel filters for possible contamination. Tests will also be carried out on the electronic engine control.”

Airbus Pushes Back Window on New Single Aisle Aircraft

Flight International is reporting today that Airbus is now looking at a potential 2017-2020 timetable before the airline will have a new single-aisle aircraft ready to roll.

This push back confirms what was being bandied around last year at the ISTAT conference. The problem is fuel consumption. Before Airbus and Boeing can guarantee that a new aircraft is 15-20% more fuel efficient — they are not going to put out a new airplane. And if  they can’t post at least that level of efficiency improvement, airlines are not going to want any of the new airplanes.

So — it all goes back to the engines.

According to the article,

“Airbus’s chief operating officer customers, John Leahy, says the development of new engine technology is dictating the pace of new narrowbodies from Airbus and Boeing. “The engine-makers say the technology won’t be around until 2015, so we’re looking at 2017-20 for the next-generation single-aisle,” he says.

This is later than Airbus previously indicated, having until now maintained that it expected the next-generation aircraft to be available from the middle of the next decade – a schedule with which its rival Boeing concurred last year.”

Trust me. Boeing doesn’t have a hot shot rocket engine parked on the back forty that burns 20% less fuel either.

Clearly one of the U.S. airlines most affected by this delay is American Airlines — which now finds itself in the unenviable position of sitting on an increasingly expensive fleet of older MD-80s it would like to get rid of sooner than later. But with no new single-aisle aircraft now on the horizon for possibly another 10 years from either Airbus or Boeing — this is going to leave American in the position of having to beef up its fleet with existing generation aircraft.

Bad timing.

British Airways 777 BellyFlop: Very Strange

As I’ve been writing on and off all day, I’m sure I’ve been no different than many of you other geeks out there who have been mulling over the details concerning the sliding  bellyflop landing of a British Airways 777 at Heathrow today.

The mishap is perplexing for a number of reasons.

I mean, what happened? The pilot has been quoted as saying he “lost all power” and basically glided the big jet to the ground.

But passengers who were on the plane don’t seem to have thought the plane had lost power. (Although that is not a reliable indicator.)

Wind shear? The weather did not look to be particularly prone to creating wind shear. Looked pretty calm.

Did the plane run out of fuel?

Did both engines really just shut down?

Bird strike?

Dunno. This one is one of those that makes you shake your head and wonder.

Thankfully no one was apparently seriously hurt. That is the best news.

But the more interesting question for those of us who love anything that has a wing attached to it is the question …..what happened?

This one will be interesting to follow.

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Continental Will Distribute $158 Million in Profit Sharing to Employees

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The Continental Airlines’ earnings call just began. It didn’t take long for a little “intra-Texas” two-step kick from CEO Larry Kellner, who was all too happy to thank his “co-workers” right off the bat — as he announced the airline will distribute $158 million in profit sharing checks to employees……on Valentine’s Day.

Post-Turkey Quote Of the Day Comes from Airbus

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I’m off to tidy up this week’s holiday week issue of PlaneBusiness Banter, but just couldn’t resist dropping in to convey the news from Airbus this morning.

In a nutshell, Airbus chief executive, Tom Enders  told Airbus employees in Germany yesterday that the sinking dollar is “life threatening” to the European aircraft manufacturer.

“The dollar’s rapid decline is life-threatening for Airbus,” he said in Hamburg. “The dollar exchange rate has gone beyond the pain barrier.”

As the Financial Post pointed out today in a story on the comments, “For every 10¢ the dollar falls against the euro, Airbus loses a billion euros in unfavorable foreign exchange. The euro now sits at US$1.48 against the dollar, up from US$1.35 at the beginning of the year. While the majority of Airbus’s expenses are in euros, aircraft are sold in U.S. dollars.”

Now while I am not sure that the drop in the value of the dollar is the biggest problem Airbus is looking at, there’s no question that its impact is not insignificant.

Having said that,  I think there might be an answer to this problem hidden in my previous story this week about the drama queen in Alabama. Follow me on this one. I mean, if BMW can manufacture automobiles in Alabama, why can’t Airbus make airplanes there?

I can see it now. “Proudly Manufactured in Tuscaloosa” on the side of an A320. Tuscaloosa, Toulouse….what the hey.

I would just make sure they didn’t hire St. Nick to do PR for them. That would mean his face would be on the front and back of every aircraft brochure. Just as it was this year on the University of Alabama’s football media guide.

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