30 / 100
EuroWire – September 2008
28
Transat lant ic Cable
“We are focused on improving Volvo’s business results.” In an interview
with Ward’s in April, Ford President and CEO Alan Mulally did indeed
assert that the “main strategy on Volvo is to improve and fix the
business.” However, as Mr Pope noted in June, much had changed in
recent weeks, including the emergence of billionaire Kirk Kerkorian as
a major investor in Ford. “Mr Kerkorian, who holds a 6.49% stake in the
auto maker, has said he may offer business suggestions from time to
time,” observed Mr Pope. “His top lieutenant . . . has publicly stated Ford
should divest itself of its Volvo subsidiary.”
Other automotive news . . .
Chrysler, the third-largest US-based auto maker, said on13
th
June that
it would raise prices an average of 2% on all 2008 model-year cars
and trucks because of rising costs for steel and other commodities.
Chrysler, whose sales fell 19% in the first five months of this year, said
the increase will bring its prices in line with those of its competitors
General Motors and Ford. In December, GM raised its per-vehicle prices
as much as $1,500, citing higher commodity expenses; and, on 22
nd
May, Ford’s chief executive Alan Mulally said that commodity costs
were among the reasons his company was forced to abandon a 2009
profit goal. Chrysler spokesman Stuart Schorr said, of his company’s
price increases, “Today’s economic conditions and forecasts indicate
unrelenting pressure as to commodity prices, specifically steel, which
have forced our hand.” (Bloomberg News)
Aviation
The European Union on 26
❈
❈
th
June announced a landmark
agreement that would cap emissions from aircraft. Beginning in
2012, all airlines operating flights into or out of airports in the EU
would be required to buy pollution credits: the emissions-trading
technique that treats pollutants like commodities on the open
market. Europe’s inclusion of aviation in the system previously
confined to heavy industry raises the pitch in an increasingly
contentious transatlantic confrontation over global regulation of
greenhouse gases.
The immediate response of US officials to the new requirements
was to question their legality under the convention governing
international civil aviation. In Brussels, a spokesman at the United
States Mission to the European Union said, “The mandatory
application of the European Emissions Trading System to US
airlines and airlines of other non-European countries is, we think,
both contrary to international law and ultimately unworkable.”
“The US [airline] industry is facing its biggest challenge since the
❈
❈
inception of commercial air travel,” analyst Mark J Schulte told a
25
th
June luncheon meeting of the International Aviation Club, in
Washington, DC.
Citing the $61 billion that US air carriers are projected to pay for jet
fuel this year – up $20 billion from a year earlier, and double what
they paid in 2004 – he said that options open to cash-strapped
executives included selling off assets, taking on more debt, and
selling ownership stakes to foreign rivals.
American Airlines, the largest US carrier, is hoping that a deep
❈
❈
round of service cuts will see it through the emergency. On 25
th
June, American announced that it was shrinking the number of its
flights from NewYork’s LaGuardia airport and eliminating service to
four smaller US cities: Albany, New York; Providence, Rhode Island;
Harrisburg, Pennsylvania; and San Luis Obispo, California.
The cuts, which go into effect in October, follow an announcement
in May that the airline would slash its US flying capacity by as much
as 12%. In November, American will cease flying from LaGuardia to
Reagan National Airport, in the Washington area.
Emirates, the largest airline in the Middle East, said in June that it
❈
❈
would start daily nonstop service between Dubai and Los Angeles
on 1
st
September; and, on 26
th
October, between Dubai and San
Francisco. The airline already offered daily non-stop service from
Houston, Texas, to Dubai.
The largest customer of the Airbus A380, Emirates had previously
announced the launch on 1
st
August of the first service to the
United States with the new European-built superjumbo jetliner:
nonstop flights between Dubai and New York’s John F Kennedy
International Airport.
Sheikh Ahmed bin Saeed Al-Maktoum, the chairman and chief
executive, said on 9
th
June that the US represents a key focus area
in Emirates’ route development plans.
Dorothy Fabian
USA Editor