Austrian Airlines Group To Reduce Management Positions

The Austrian Airlines Group announced on Friday that it is reducing the number of vice presidents who manage different business segments in the company, from 24 to 14.

The 14 remaining vice presidents, together with the company’s 14 senior directors who manage staff functions and selected specialist divisions, will make up top management of the Austrian Airlines Group.

The company will be decreasing the number of managers employed at all levels, which is currently 347, by 45%.

This new management structure is part of a restructuring programme through which the Austrian Airlines Group plans to improve its competitiveness in the long term. The group has already restructured its Sales, Network Planning, Ground Operations and Controlling Divisions.

By mid-2010, the Austrian Airlines Group stated that it will have reduced its staff by 1,000 to around 6,500 full-time positions.

Air China Says Parent May Buy Small Wuhan Carrier

Flag carrier Air China said on Tuesday that its parent group was starting preliminary talks on the possible acquisition of East Star Airlines, a small private carrier based in the central city of Wuhan.

The group may buy all or part of East Star, but it is not yet clear whether any agreement will be reached, Air China said in a brief statement.

Air China, which owns well over 150 planes, dwarfs East Star, which has just nine planes, according to the official Securities Times. But the acquisition could help Air China expand its coverage of central China, where it is relatively weak.

Slumping air traffic has made it hard for China’s small private airlines to compete with state-owned giants such as Air China, China Eastern and China Southern.

Since December, China Eastern and China Southern have announced plans to receive a total of 10 billion yuan ($1.5 billion) in cash injections from the government to help them ride out the slump. Private carriers do not have such support.

Last month China’s first private airline, Okay Airways, which was founded in 2005, said it would indefinitely halt its passenger services because of the global financial crisis.

Suit Filed Over Airline Deicer Incident

A passenger who was gassed with deicing fluid while aboard an Alaska Airlines flight on Christmas Eve has sued the Seattle-based carrier, claiming the blast of ice remover has caused persistent headaches.

On Dec. 24, Arianna Morgan boarded an Alaska flight at Sea-Tac International Airport expecting to fly to Burbank, Calif. Instead, she and 140 other people aboard were forced to abandon the plane when deicing fluid mist began filtering into the plane’s interior.

In an initial account, airline officials said passengers suffered from eye and respiratory irritation but did not require medical care. Morgan, in recounting the incident, describes a more chaotic scene.

She was seated in the first-class cabin when a white mist began puffing out of the overhead vent system. Immediately, she said, passengers around her began coughing and tearing up due to the fumes.

“We really didn’t have any idea what was happening,” Morgan said. “I could tell something wasn’t right.”

The plane, a Boeing 737-800 series, was rushed back to the gate, where passengers piled onto the concourse wheezing from the fumes, Morgan said. Several people, including her, began to vomit uncontrollably; several began sucking air from oxygen tanks provided by paramedics.

Weeks have passed since the incident, but Morgan said she still feels the effects of the incident. Her headaches are nearly constant, she said, and waves of numbness wrack her body.

Complicating maters, she says she’s not even sure what chemical she was exposed to. While Alaska Airlines asserts the passengers were exposed only to a relatively harmless deicing fluid, Morgan wonders if she wasn’t hit with a more-reactive version also used in aviation.

“I’d really just like an answer to what I’ve been exposed to,” said Morgan, speaking from Hollywood, Calif. “I feel poisoned.”

Reached for comment Monday, airline spokeswoman Caroline Boren declined to discuss the suit in detail.

Boren, though, insisted that passengers were not exposed to ethylene glycol, a toxic substance used in antifreeze. She said the deicing crew was applying a nontoxic compound, propylene glycol, which also is used in toothpaste and as a food additive.

“The welfare of all our passengers is of the highest importance to us,” said Boren, reading from a prepared statement. “We just received the complaint and are reviewing it.”

A National Transportation Safety Board investigation into the incident is ongoing, investigator-in-charge Joshua Cawthra said. It has not yet been determined how the mist was able to breach the cabin.

Morgan’s complaint was filed Monday in U.S. District Court in Seattle, said Alisa Brodkowitz, her attorney.

While many plaintiffs wait months or years before filing suit, Brodkowitz said her client wants to hear definitively which chemical she was exposed to so she can obtain proper medical care. Brodkowitz said the information might help others who were aboard the plane and still feeling the effects of the incident.

“It’s terrifying to know that she sat next to a 4-week-old baby who was exposed to the same chemicals,” the Seattle attorney said. “We want Alaska Airlines to tell the passengers what they exposed them to.”

No passengers were hospitalized after the incident. Morgan said she would have sought medical attention but, concerned about the holiday rush and bad weather, didn’t want to miss her chance to get home for Christmas.

Alaska has 20 days to respond to the lawsuit. Morgan is seeking unspecified damages.

American Airlines Steps Up Efforts To Woo JAL

American Airlines on Thursday stepped up efforts to save its partnership with Japan Airlines, the troubled carrier that is the lynchpin of its Asian network, by promising a $1.1bn investment to support the group.

The investment – much of which would be provided by US private equity group TPG – exceeds a rival offer from Delta Air Lines, which is trying to lure JAL away from Amercian’s OneWorld alliance.

Last month Delta and its SkyTeam partners offered to inject $500m of new equity into JAL and to extend another $500m in asset-backed financing and compensation for the cost of switching teams.

Delta responded to American’s announcement on Thursday by saying it, too, might find an outside financial investor to bolster its offer.

JAL’s strong links to China and other Asian destinations have made it an attractive ally for US carriers in spite of its financial problems. JAL lost more than Y130bn in the six months to September and is struggling to manage one of the industry’s heaviest debt loads.

American and Delta expect ties with JAL to become even more valuable once a long-awaited “open skies” deal between Japan and the US is completed, likely next year. The deal would pave the way for full-scale joint ventures between US and Japanese carriers that could be exempted from US anti-trust rules.

American declined to say how much of the promised investment would come from TPG and how much would come from American and its OneWorld partners, which include British Airways. The US carrier said the total present value to JAL of remaining in One World was $1.8bn once projected revenue gains from an American-JAL joint venture were factored in.

In addition to wooing JAL management, American and Delta are fighting to win over the Japanese government, which has taken over efforts to revive the former state-owned airline. The Enterprise Turnaround Initiative Corporation, a government-backed investment body, is working on a restructuring plan that it expects to announce early next year.

Both US airlines have dispatched high-ranking lobbyists to plead their case.

Yesterday Norman Mineta, the former US transportation secretary, argued for the American Airlines side that a Delta-JAL joint venture would be too dominant to win approval from US regulators.

Together the two carriers would control about 60 per cent of US-Japan traffic.

Delta – backed by its own ex-government specialists – counters that joint ventures with higher market shares have won so-called anti-trust immunity in the past, and that the US has never rejected an application for immunity from airlines based in countries covered by “open skies” deals.

source : Financial Times

Air France-KLM and Delta Air Lines Partner to Bid 51 percent stake in Virgin Atlantic

Air France-KLM and Delta Air Lines are said to have partnered up for a potential bid on a 51% stake in Virgin Atlantic, the carrier owned by British entrepreneur Sir Richard Branson. The SkyTeam alliance members have reportedly appointed Goldman Sachs to advise them on a possible approach.

Sir Richard’s 51% stake is valued from £500 million to £1 billion by analysts. He hired Deutsche Bank to examine the airline’s strategic options after British Airways and Iberia completed their £5.2 billion merger, as well as made a transatlantic pact with American Airlines. The other 49% of Virgin Atlantic is owned by Singapore Airlines, after the carrier purchased it in 1999 for £600 million.

Air France and Delta teamed up last year to invest £1.3 billion in Japan Airlines. The Asian airline rejected the offer in favor of continuing its membership in the Oneworld alliance with British Airways and American Airlines.

Other airlines around the world have been consolidating and forging partnerships recently so that they can survive the recession and other factors, like the rising price of oil. However, Virgin Atlantic hasn’t become a member of any big alliances, and a review of the carrier’s position found several possible outcomes. These include a codeshare deal, selling part of Singapore Airlines’ stake to a 3rd party, joining an alliance and for Sir Richard to give up majority control as part of a bigger transaction.

Another airline interested in a bid on Sir Richar’s stake is Etihad Airlines. Chief executive James Hogan wrote to Deutsche Bank, expressing his interest in a deal, and he has hired Bank of America Merrill Lynch for advice.