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Monday, November 7, 2005

Quick Takes

  • Instead of seeking legislation, DOT wants to change the administrative rules that limit foreign investment in U.S. airlines. The proposed rule would give foreign investors a larger voice in the operations of a carrier. However, foreign ownership would still be restricted to no more than 25 percent of the equity. The foreign investors would be able to take an active role in marketing, route management and fleet planning. Current rules require foreign investors to be passive partners. DOT hopes the change will make ailing U.S. carriers more attractive to foreign capital. The proposed rule would grant the expanded rights to the foreign investors only if their home country has an Open Skies agreement with the United States. DOT is seeking comment for the next two months. Docket: OST-03-16759.
  • Bankrupt Mesaba Aviation [MAIR] reports that it received a semi-monthly payment of $10.5 million from bankrupt Northwest Airlines [NWACQ] on Oct. 26. The check covered post-petition expenses Mesaba incurred from Northwest, but it did not include $6 million due from before Northwest filed its Chapter 11 petition on Sept. 14. In the filing with the U.S. Securities and Exchange Commision (SEC), Mesaba reported that it will record a reserve of about $31.9 million owed to it by Northwest. Mesaba did not say how its parent, MAIR Holdings, would treat the reserve as it prepares its third quarter financial report. Fellow Northwest AirLink partner, Pinnacles Airlines [PNCL], reported a third quarter loss of $21.3 million after taking a similar write-off.
  • The Federal Aviation Administration (FAA) has proposed new policy guidelines designed to end any confusion over the prohibited practice of Part 135 carriers "wet leasing" aircraft from non-certified operators. In theory, the rule applies to passenger and cargo operations - both scheduled and non-scheduled carriers. However, the greatest impact will be on the 1,600 on-demand carriers, the FAA said. In the wake of the Feb. 2 runway overrun incident at New Jersey's Teterboro Airport involving a Bombardier [BBD] Challenger 600, the FAA launched a survey of Part 135 operators to ascertain their leasing arrangements. In the Teterboro incident, there was confusion as to who controlled the corporate jet that failed to liftoff and then ploughed across a highway and into a warehouse. The company that arranged for the charter was determined not to be certified while the actual aircraft owner and operator was. In the survey last summer of 130 operators, the FAA found a wide variety of lease arrangements - some determined to be "very inventive" and potentially in gray areas of the current rules. The FAA's propose rule changes attempt to provide greater guidance in situations it considers could illegally transfer control of an aircraft and crew to a non-certified business. Docket: FAA-05-22765
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