TPT July 2009

G lobal M arketplace

But Open Skies, created to foster US-European harmony, has brought its own complications to the transatlantic air lanes. The projected pairing-up of a US and an Irish carrier to outsource pilots on overseas flights — written up in the Chicago Tribune this spring — provides a case in point. ‘Incendiary’ labour issues Tribune reporter Julie Johnsson observed that other US carriers and their unions were closely watching a venture conceived by Chicago- based United Airlines and Dublin-based Aer Lingus that would use non-union crews on new international flights. The move to outsource some flying between Washington-Dulles International Airport and Madrid was, she predicted, “likely to spark an uproar” when United next entered contract talks with its pilots. (“Clipping Union’s Wings,” 16 March) As outlined by Ms Johnsson, the Europe-based partnership sees United as contributing marketing muscle and passengers from Dulles, its second-largest hub. Aer Lingus would contribute three new Airbus A330 jets and recruit pilots who are employees of neither airline. Service on the Chicago-Madrid route would commence in March of next year, with two other cities to be added in 2011. Analysts consulted by the Tribune noted that the venture, if successful, could encourage United to seek partnerships with larger European players, including Germany’s Lufthansa. With its implicit promise of lower labour costs, it would also serve as a model for other airlines. Most notably, the outsourcing of transatlantic flying threatens to diminish the powerful influence of unionised pilots in airline operations. This last aspect caused one aviation observer to describe the labour issues raised by the plan as “incendiary”

Its other furnace, Number 6, was operating at about 75% capacity, BlueScope CEO Paul O’Malley said. “We want to ensure there is sufficient demand to require us to run two blast furnaces, even if at minimum levels,” Mr O’Malley told reporters in Melbourne. “What we don’t want to do is turn on No 5 blast furnace and turn it back off again.” In the previous week the company said it saw signs that steel de-stocking cycles in China and the US, which have cut demand for raw material, are ending. Sales in Australia were steady through March and April though at a lower level than a year earlier, Mr O’Malley said. “The hardest question to answer is what is the right inventory level relevant to demand,” he told Ms Keenan. “And at the moment we can’t see out much more than a month. We think our de-stocking is well underway but still [has] some way to go.” Elsewhere in steel . . . › Citing higher costs of materials and energy, AK Steel (West Chester, Ohio) has begun imposing a $10 per ton surcharge on shipments of its electrical steel products. The company, the only full-line US producer of energy-efficient electrical steels, said it expected second-quarter shipments of its carbon, stainless, and electrical steels to be approximately 800,000 tons, slightly higher than in the first quarter. › Seven American steel makers and the United Steelworkers union have filed a complaint with the US government accusing China of flooding the American market with subsidised welded and stainless steel pipe products. Companies filing the complaint, which centres on oil country tubular goods (OCTG), include Evraz Rocky Mountain Steel Mills (Pueblo, Colorado), United States Steel Corp (Pittsburgh), and Maverick Tube Corp (Chesterfield, Missouri). Spurred by Beijing’s $586 billion stimulus plan, Chinese steel makers are producing at an even faster rate than last year. ‘Open Skies’ Labour issues complicate US-European moves toward cooperation on transatlantic air travel The proposed combination of two separate joint ventures that would put Delta Airlines, of the US; Air France; and KLM in command of approximately 25% of total transatlantic capacity is not the only instance of US and European air carriers joining forces for cost- and revenue-sharing advantage. But such efforts have a chequered history. A pending bid by American Airlines and British Airways, now under study by antitrust examiners, demonstrates that such ventures are not launched quickly or easily. American and its partners argue for antitrust immunity for their alliance (oneworld) on grounds that two competing alliances already have it: Star (composed of Lufthansa, United, and, beginning later this year, Continental) and SkyTeam (Delta, Air France-KLM). American also cites the “Open Skies” treaty, signed since a previous, failed, attempt at a BA-American alliance. The 2008 trade agreement that allows European and US carriers to offer international flights between their regions has lifted many restrictions and meant more vigorous competition at BA’s busy Heathrow hub.

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