Industry News May12

Extended Briefs:

Hawker Files For Bankruptcy Protection

Hawker Beechcraft has reached an agreement with a significant number of its senior secured lenders and senior bondholders on the terms of a financial restructuring plan that will strengthen the company for the future and eliminate approximately $2.5 billion in debt and approximately $125 million of annual cash interest expense. As part of the prearranged restructuring, Hawker Beechcraft obtained a commitment for $400 million in Debtor-in-Possession (DIP) financing, which will enable it to continue paying employees, suppliers, vendors, and others in the normal course of business. The company will comply with all Department of Defense acquisition and maintenance contracts, as well as agreements with international air forces including, but not limited to, the recently announced sale of T-6C+ trainer aircraft to Mexico. It is also committed to moving forward with its bid to provide the U.S. Air Force with the AT-6 in support of the Light Air Support contract.

Delta Air Lines Pays $150 Million For Oil Refinery

Delta Air Lines wholly-owned subsidiary, Monroe Energy LLC, has reached agreement with Phillips 66 to acquire the Trainer refinery complex south of Philadelphia. As part of the transaction, Monroe will enter into strategic sourcing and marketing agreements with BP and Phillips 66. The acquisition includes pipelines and transportation assets that will provide access to the delivery network for jet fuel reaching Delta's operations throughout the Northeast, including its hubs at LaGuardia and JFK. Jet fuel production is expected to begin during the third quarter, and changes to the plant infrastructure to increase jet fuel production would be complete by the end of the third quarter, resulting in expected 2012 fuel savings of more than $100 million

Briefings

ACI-NA — America’s commercial airports are a powerful economic engine, generating 10.5 million jobs and $1.2 trillion in total economic impact, according to a new study released by Airports Council International-North America. The Economic Impact of Commercial Airports in 2010 quantifies the contributions of 490 commercial airports in the U.S., dubbed “Airports, Inc.” The analysis, prepared by CDM Smith, concludes that in addition to the broader impacts, airports also are powerful economic multipliers in communities and states nationwide.

ACSF — Air Charter Safety Foundation has received approval from FAA as an aviation safety action program (ASAP) manager and to conduct a demonstration program for on-demand charter operators. The program will begin with two charter operators under the jurisdiction of the FAA Minneapolis Flight Standards District Office (FSDO), and will eventually expand to other charter operators in the FAA Great Lakes Region that are interested in participating in the program.

CABAA — Chicago Area Business Aviation Association has been selected as the 2012 recipient of the Illinois Aviation Hall of Fame (IAHF), Spirit of Flight Award. The Spirit of Flight Award is given annually to an organization that has made substantial contribution to aviation in Illinois, is based in Illinois, and exhibits a high degree of excellence in all accomplishments.

CESSNA — signs a strategic agreement with the China Aviation Industry General Aircraft Company Ltd., (CAIGA) and the Shijiazhuang Municipal Government. The agreement is a progression stemming from the strategic framework that Cessna entered into with CAIGA parent company, Aviation Industry Corporation of China (AVIC), in March 2012. The step forms a cooperation framework for an eventual joint venture whose purpose will be the final assembly, sales, and customer support for the Cessna Caravan in China.

CLEAR CHANNEL AIRPORTS — A nationwide Scarborough research survey found that business frequent flyers are 83 percent more likely than all American adults to be the first to try or buy new products and services. The custom study was commissioned by Clear Channel Airports; the survey results highlight the value to advertisers of targeting frequent travelers while they are in transit in airports.

DALLAS LOVE FIELD AIRPORT — Two joint ventures led by travel retailer Hudson Group have been selected by the City of Dallas in a recent competitive bid process to provide both retail and food services in the newly renovated Love Field Airport (DAL). The award ranges over eight retail and two food & beverage packages and includes: three newsstands, a bookstore, 11 specialty retail concepts, and five food & beverage locations, totaling nearly 16,000 sq. ft.

DELTA AIR LINES — Baggage handlers were accused in a $500,000 drug conspiracy at Atlanta’s Hartsfield Jackson Airport. The plot by three Delta workers to smuggle a bag filled with heroin and methamphetamine into the U.S. was foiled when the baggage ended up on an unclaimed luggage carousel.

DFW — announces the start of new service from Spirit Airlines to the cities of Tampa, Denver, and Myrtle Beach. Spirit offers daily service between Denver and DFW with a second daily flight starting May 17. Spirit has also added four non-stops per week between DFW and Tampa, as well as seasonal nonstop service with three flights per week between DFW and Myrtle Beach. With the newly added flights, Spirit now serves 11 destinations from DFW.

ECLIPSE AEROSPACE — announces a specific timeline to restart manufacturing an upgraded version of its very light jet, the Eclipse 550, with the first deliveries planned for the second or third quarter of 2013.

NYC AREA AIRPORTS — Collisions between birds and airplanes have risen 31 percent at the New York City area's major airports in the past two years, according to federal government statistics. Despite calls for improved wildlife management after a bird strike caused the "Miracle on the Hudson" water landing of US Airways Flight 1549 in 2009, collisions have climbed nearly 40 percent at Kennedy Airport, according to the FAA Wildlife Strike Database.

PINNACLE AIRLINES — files for bankruptcy protection to deal with its mounting debt. The Memphis-based airline says its current business model is not sustainable; it had tried for months to cut costs at its operating subsidiaries and recover from lost business with major airlines due to flying cutbacks.

PIPER — grew its new aircraft deliveries and sales revenue during the first quarter of 2012. Airplane deliveries increased more than 40 percent to 37 aircraft in the first quarter of 2012, from 26 airplanes during the first quarter of 2011. New aircraft sales revenue grew more than 20 percent to $31,578,203, when compared to sales of $26,159,703 during the same period the previous year.

PRIMEFLIGHT AVIATION SERVICES— a national ground handler accused of wage standards violations last year, will lay off some 64 people at San Antonio Int’l Airport after losing a contract with Delta Air Lines. The company also expects to lay off 276 employees at Bush Intercontinental Airport after United Airlines replaced it with another contractor there. 

RALEIGH-DURHAM INT’L AIRPORT — will provide free wireless Internet service for travelers starting this summer. Boingo, which operates Wi-Fi service at 60 American airports, will go online at RDU by July 2. Between 10,000 and 20,000 travelers now pay AT&T for Wi-Fi at RDU each month at $7.99 for a 24-hour session. When Boingo takes over, RDU customers will have the option of free Wi-Fi with video advertising or a premium, ad-free service for $7.95.

SPIRIT AIRLINES — says that beginning November 6 it will charge $100 for fliers who pay for a carry-on bag at the boarding gate up from the current $45 fee.

UNITED AIRLINES — order for at least 100 Boeing Co 737 narrowbody jets potentially worth dollar $10 billion at list prices could increase to as many as 200 jets if United exercises some 100 options to buy other narrowbodies. The deal will feature mainly Boeing's upcoming 737 MAX, an upgraded, fuel-efficient version of the company's best-selling 737.

US AIRWAYS — building labor support for a possible bid for American Airlines, envisions 42 percent fewer job cuts among Transport Workers Union members than the bankrupt carrier is proposing. Under a US Airways agreement with the TWU, the airline would cut 450 jobs at American's maintenance base in Tulsa and grant two-year furlough protection to the 4,500 workers who remain.

U.S. CONGRESS — A dozen associations representing a cross-section of aviation stakeholders is urging Congress to continue its support of FAA's Contract Tower Program, the public-industry partnership that has provided air traffic control tower services to hundreds of U.S. communities for 30 years. The associations have asked Congress for $136.1 million for the fully funded contract towers as well as $10.35 million authorized for the continuation of the Contract Tower Cost-sharing Program.

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