Vanik chief out, NDB boss in

The Sri Lanka Association of Securities and Investment Analyst (SLASIA) held their Annual General Meeting on October 13th 1999. Justin Meegoda, Chief Executive Officer of Vanik stepped down as president of SLASIA to be succeeded by Mr Ranjith Fernando, General Manager of the National Development Bank. "I plan to have a comprehensive programme to improve education and ethics this year," Mr Fer-nando told The Sunday Times Business.

Mr James Nethercott a volunteer expert from the International Executive Services Corps Technology Initiative for the Private Sector made a presentation on corporate governance at the AGM. He said investors have a role to play in encouraging good corporate governance and should be willing to pay a premium for corporates with good corporate governance

"Institutional investors are not going to AGMs and voting against bad corporate governance,' bemoaned Subcommittee Member, SLASIA Mr Chandra Jayaratna. However Mr Neth-ercott felt voting against management was a serious issue and investors could choose to register dissatisfaction publicly.

Central Finance profits slide

A top company CEO has pointed out that debt recovery laws do not extend to the recovery of debts in lease and hire purchase agreements. "Existing civil court procedures are cumbersome and do nothing to expedite the recovery of defaults," Managing Director, Central Finance Company , E H Wijenaike complained, voicing industry concerns to shareholders in his annual report. Debt recovery law was enacted in 1990 with the intention of placing an effective mechanism to recover debts.

Central Finance Company's (CFC) profits declined by 21% to Rs. 196 mn for the year ended 31 st March 1999. Profits were Rs 250 mn the previous year. "This was almost entirely due to the loss of Rs 28.1 mn attributed to the company from its associate E B Creasy & Co," Chairman, CFC, C Wijenaike said in his annual report. He said a loss of Rs 18.1 mn from its subsidiary Central Securities also contributed to the decline in profits.

On the brighter side the company was able to credit Rs 589 mn to an unrealised income reserve after an undertaking by the general treasury to settle outstanding dues by the Peoplised Bus Companies.

The company had previously written off this debt.

The performance of its subsidiary Central Industries improved substantially. Profit after tax of Rs 15.3 mn were realised in comparison to Rs 2.5 mn the previous year. This was due to declining raw material prices and a sustained cost control programme. The year saw Central Industries pioneer the manufacture of HDPG subducting for telecommunications installations and introduce several new pvc products.

The performance of subsidiary CF Insurance brokers also improved with its non life business growing by 31.62% in comparison to the 15.7% growth in the insurance market.

"The silver lining in a disappointing year was our investment in Nations Trust Bank," Mr E H Wijenaike said. The company acquired a 20 % stake in Nations Trust Bank at Rs 100 mn. It also acquired a 20 % stake in Balangoda plantations for Rs 190.6 mn.

The group's turnover increased by 17 % to 5.8 bn. Capital expenditure during the year was Rs 6.1 bn. Earnings per share declined by 17% to Rs 30.93. Dividends per share was Rs 3.50. Net assets per share was Rs 392.86.

The company's price earnings ratio was 5.26.

"It is encouraging that a substantial fleet of expansion is taking place in the goods transportation sector with a 21% increase in registration and a 59% increase in passenger car registration in the first half of 1999," Mr Wijenaike told shareholders, outlining future prospects for the company. 44% of all vehicle acquisitions are financed through Non Bank Financial Institutions and specialist leasing.

NAMAL step ahead in IT technology

National Asset Management Ltd., (NAMAL), the pioneer Unit Trust Manager in Sri Lanka has invested in an advanced Information Technology system to cater to the needs of those who invest in the company's unit trust products and schemes, says a news release.

The new IT system, "Flexcube Investor Services System" has been developed by CITICORP Information Technology Industries Ltd., of India. It will enable Namal to design innovative schemes to expand its range of funds, gain a high degree of operational control through on-line transaction services to investors, and help the company expand its investor base.

"The new IT system with its many features has been installed to provide a better service and other investment options to investors. The cost incurred in implementation of the new technology will have no bearing on investors", Namal's General Manager S. Jeyavarman said. T

he new IT system is a comprehensive Y2K compliant, windows based progra-mme which comprises of three modules the Fund Manager Module, the Agency Branch Module and the Registrar Module.

These modules contain activities relating to the handling of multiple Funds, enhanced on-line inquiry, confirmation of units for transactions, automatic end of day operation reports, transfers between Funds and management of intermediaries.

Got the money for the call

By The Business Desk

Sri Lanka's third fixed access operator Lanka Bell has clinched the funds needed to embark on the second stage of its expansion programme.

Lanka Bell's existing shareholders have dipped in and committed US$ 40 mn to get the second phase off the ground, a top company official said.

"Profitwise we made turn around in June this year," the official said. Our expenses as at December 1998, was 94% above revenues, we have now turned it around to 24% below revenue, the official said declining to disclose further financial information.

Earlier this year, Lanka Bell announced it was engaged in a major project financing effort to raise more than US$ 120 mn from international lending institutions to finance its expansion programmes.

Lanka Bell has invested US$ 140 mn todate, but have been on the look out for additional funding.

Funding has been hard to come by due to the East Asian financial crisis and the unstable regulatory environment in Sri Lanka.

Lanka Bell has so far provided 35,000 connections and hopes to touch the 50,000 subscriber mark by end 1999. Lanka Bell and its rival Suntel are required by law to provide 100,000 connections (including rural areas) by end year 2000, or face a penalty fee.

The second phase will include a combination of a gateway and a VSAT network.

VSAT's can cover small areas, and will be used in rural areas.

Lanka Bell shareholders include: Transmarco (60%), AIDEC (30%), Nortel (7%), and minority (3%).

Bank Islam buys 10% of Amana Investments

Bank Islam Malaysia Berhad recently bought a 10 percent stake in Amana Investments Limited, Sri Lanka. The Malaysian bank paid nearly Rs. 500 million for the stake in Amana Investments.

Company officials said the strategic alliance between the two banks would infuse a dynamic element into the financial scene in Sri Lanka and to the South Asian Region.

Amana Investments has been in business in Sri Lanka for the past few years engaged in Islamic Banking.

Bank Islam Malaysia is engaged in Islamic Banking, Family and General Takaful business and provides stock brokering stock broking and related services.

Coming up: The tea pill

HVA Lanka Exporters launched their Heladiv range of teas in Sri Lanka recently. Soon to follow in their fast expanding range include a Tea Pill for the "quick and easy" tea drinker and flavoured iced tea tetra packs.

The company started off by exporting pure Ceylon tea and in 1998 launched their flagship brand. The company over the years has diversified into other agricultural products that the company feels has great potential in the market.

HVA is looking into the prospect of exporting other commodities as well in the near future. The company has already exported items like Dessicated Coconut, Spices in addition to many others.

A company release said the teas would be sold in all supermarkets and leading stores initially and a countrywide distribution would follow.

McLarens: Shipping to Shopping

Diversification helps promote growth and development of any business organisation. If McLarens stands tall today in the corporate sector, the credit must go to the decision makers in the hierarchy whose policy decisions in choosing the path of diversification has benefited the corporate body in achieving greater economic stability and viability.

Its flagship company, J.D.McLarens, which got off the ground in 1944 when a group of pragmatic entrepreneurs led by J.D.McLaren pooled their resources and talents to launch on a Shipping Agency.

In 1947 McLaren tied up with a number of international shipping lines to provide agency services and the services of a Coal Depot in Colombo Port for bunkering facilities to the steam powered vessels of that era

Growing in strength and stature under the stewardship of Hubert de Silva it soon became a well knit diversified group of companies with their perspectives clear and functioning efficiently under the name and title of McLaren & Interocean.Subsequently, Mac Ocean Shipping Ltd. was incorporated to handle additional shipping related business.

Securing a larger number of liner shipping agencies in the eighties, McLarens was able to branch out in different directions. A partnership with the Swedish Gulf Agency enabled the company to offer unique services to vessels crossing Sri Lankan waters off Galle Port.

This was one of its kind in regional shipping and the demand for such services gradually increased.

Today McLarens is playing a lead role in the world of shipping with the accent on freight forwarding and it has positive plans to make its strong presence felt in this area in the next millennium.

In their search for new horizons, McLarens has identified manufacture of fertiliser as one of the key projects in their diversification program. With a turnover of Rs.460 million in the year 1998/99 it is confident to make a significant turnaround by the next millennium.

Their target is Rs.550 in fertiliser turnover. According to Sarath Silva, Joint Managing Director, Fertiliser Division,the total fertiliser requirement of the country for a year is 450,000 metric tons and in this McLaren's market share is 12 to 15%.

He said plans are afoot to expand the manufacturing process and thereby a marked increase in the rate of production would be a certainty. Working towards this goal, McLarens is planning a vast network of dealership throughout the country by entering into hitherto unexplored regions of paddy cultivation. Explaining further Mr.Silva said their major share is in paddy fertiliser.

Discussing the role played by their dealers in pushing the McLarens fertiliser, Mr Silva was very articulate in saying that McLarens doesn't believe in high calibre advertisements in the media to promote their product.

Their strategy is to maintain a close rapport with their dealership network and reach the end user at grassroot level. This method has brought out rewarding results according to Mr.Silva.

He added that all the dealers are invited with their families for an annual convention where they are allowed to mix freely with officials of senior management level in a spirit of camaraderie. They are given free accomodation overnight in the 4 star hotels managed by McLarens with the best of food and beverage which gives them the holiday feeling.

Highly pleased with the hospitality extended to them by the management, they get back to their locations and start working with more commitment and dedication. That is the secret of McLaren's enormous success in the competetive field of fertilisers. Rohan de Silva, Managing Director of McLaren Holdings, is a committed corporate boss who is systematically overseeing the many faceted diversified business activities with his fingers correctly placed on the buttons. Talking to him was a revelation. He had an impeccable knowledge and understanding and knew throughly every side of the business undertaking.

Mr. de Silva identified shipping and hoteliering as their core business while manufacturing, trading and property development as their diversified business. He however focused on the manufacture of Polyethelene foam products. He said these products consisting of non cross linked polyethelene foam is made up of innumerable cells formed by thermally expanded low density polyethelene resins.

McBolon Polymer (PVT) Ltd. which is a Joint Venture with Alliance Finance, manufactures these products with Korean technology and are marketed under the brand names of McFoam, McFoil and McWrap.

McFoam polyethelene is a multi functional product and can be extruded in sheet, hose, net or rod forms to suit individual user requirements. Apart from its excellent characteristics of Thermal inslulation, elasticity and shock absorption, McFoam has a very strong chemical resistance and is weather and waterproof.

McFoam can be widely used in many fields such as packaging, civil engineering and architecture, agriculture, fisheries, sports and leisure, insulation, sundry goods etc.

McFoam is an amazingly flexible product in a range of colours at an unbelievably competitive price.

McFoil products are made from polyethelene foam laminated with aluminium foil or metalized polyester to ensure greater insulation properties. Both products share common characteristics of excellent elasticity, shock absorption, thermal insulation and are weather proof.

McBolon also manufactures bubble wrapping (McWrap) material through an extrusion process of low density polyethelene.

All these products have virtually an unlimited range of applications and is of particular significance to the Architectural, Civil Engineering, Air Conditioning and Leisure Industries.

McFoam, McFoil and McWrap products used in various applications.

McFoam Net - is a versatile product. It is not manufactured by any other organisation in this country. It's a flexible polyethelene foam product which can cushion the impact of shock while in transit. The McFoam Net is so scientifically made it is a very useful packaging material for papaw and similar fruits as it will withstand all the shock when the fruits are in transit and thereby it will greatly reduce the post harvesting loss which is in the region of 60% at present.

McFoam Net- will therefore add value to the fruits transported and increase the profit margin of the cultivator. It's being tried out on trial basis in Hambantota,Embilipitiya and Wellawaya through Sarvodaya. 60 farmer companies in the Southern Development Authority are now using this packaging material for transporting their produce.

McFoam Mat- is yet another product which is handy and very useful when you are on a piligrimage or a picnic. It's water resistant, easily washable, easy to carry and marketed in attractive colours at affordable prices.

Bubble Wrap which is marketed under the brand name McWrap is manufactured by McBolon Polymer (Pvt) Ltd. to meet stringent international quality standards. Bubble Wrap packaging gives your products total protection from damage in transit or rough handling.

This packaging is useful to safeguard computer components, compact discs, video cassettes, and a host of other fragile items.

In the event of any item packed is dropped, the impact is taken up by the bubbles in the Bubble Wrap and nothing happens to the product inside the packaging.

McFoil is a revolutionary breakthrough in heat insulation. It acts as a double action radiant heat barrier for roof insulation. McFoil is roof insulation sheets manufactured by laminating thermally expanded Low Density Polyethelene resin extruded in sheet form with Aluminium or Metalised Polyester foil.

The non-cross linked Polyethelene foam sheets consists of innumerable closed cells. McFoil also has vehicle sun shades which protects your vehicle interior from heat.

Roof Insulation sheets are manufactured in 3mm, 8mm, and 12mm thicknesses with a width of 100cm and in standard lengths of 100 and 50 metres. The double action heat barrier is achieved by the reflection of radiant heat on the Aluminium. (Aluminium Foil reflects nearly 90% of radiant heat and light) and the low thermal conductivity of polyethelene foam.

Another recent acquisition of McLaren Holdings is the Joint venture between McLarens and Mobil Oil Corporation USA which will entitle McLarens-Mobil Ltd. to market automotive, industrial,, marine and aviation lubricants and also other petroleum based products manufactured and marketed by Mobil affiliates worldwide.

NAMAL step ahead in IT Technology

National Asset Management Ltd., (NAMAL), the pioneer Unit Trust Manager in Sri Lanka has invested in an advanced Information Technology system to cater to the needs of those who invest in the company's unit trust products and schemes, says a news release.

The new IT system, "Flexcube Investor Services System" has been developed by CITICORP Information Technology Industries Ltd., of India. It will enable Namal to design innovative schemes to expand its range of funds, gain a high degree of operational control through on-line transaction services to investors, and help the company expand its investor base.

"The new IT system with its many features has been installed to provide a better service and other investment options to investors. The cost incurred in implementation of the new technology will have no bearing on investors", Namal's General Manager S. Jeyavarman said.

Low calorie sweetener in market

EQUAL a low calorie sweetener is now available at leading supermarkets and chemists, says a company news release.

Equal is a clean, naturally-tasting sweetener, closest in taste to sugar. Being aspartame-based, it has no bitter after taste that's characteristic of other artificial sweeteners. This singular reason makes Equal an ideal alternative to sugar and helps a diabetic to comply with his prescribed diet regimen.

Equal which holds over 30% of the American market is recommended for diabetic patients, weight watchers and health conscious people. Equal can be used instead of sugar in tea, coffee, milk, soft drinks, desserts or any other preparations.

Equal has been proven safe in over 200 studies during the last 30 years. It has been approved and recommended by the American Diabetes Associaion, the World Health Organisation, American Medical Association, Joint Expert Committee on Food Additives of United Nations Food Agriculture Organisation, and the American Academy of Family Physician's Foundation.

CIC Fertilizers is ISO 9001 certified

CIC Fertilizers (Pvt) Ltd. - the company which markets a range of fertilizers under the brand name - 'CIC Pohora' - achieved ISO 9001 Certification, creating yet another historic landmark as the first Fertilizer Company in Sri Lanka, ever to reach this high standard, according to a company release.

The ISO 9001 Certificate for quality systems from Sri Lanka Standards Institution, is an endorsement of the Company's commitment and capability to maintain internationally accepted standards in design/development of balanced fertilizer mixtures, production of blends and sale/marketing of blends as well as straight fertilizers. It encompasses all relevant aspects of the business, such as, market research, identification of customer needs, formulation of blends, sourcing of quality material, production processes, quality assurance, packaging, distribution and storage, sale/marketing, human resource development, document and data control, adds the release.

The distribution centres of "CIC Pohora" are located in Kurunegala supplying the plantation industry, tea sector in the hill country and coconut sector in the Western Province. Peliyagoda caters to the Western, Eastern and Southern Provinces, and Maho centre services the paddy sector in the northern part of the country in Wayamba and Rajarata Provinces.

These locations are supplemented by distribution centres in Kekirawa, Thalawa, Dehiattakandiya, Polonnaruwa, Hingurakgoda, Mahiyangana, Nuwara-Eliya and Weligama to ensure the ready availability of the product throughout the Island.

"CIC Pohora" has achieved a sales growth of 150%, since its incorporation and now enjoys market leadership in the fertilizer business in Sri Lanka. The company pioneered the use of computerized blending technology and introduced the concept of "Balanced Plant Nutrition" by the addition of micro nutrient fertilizers on a scientific crop need basis.

The Company functions as the holding company for CIC Group investments in Agri Business. CIC Fertilizers has made investments over Rs.100 million in its subsidiary Companies.

Container Asia 99 Convention

Container Asia 99 supported by PSA Corporation Ltd. will hold a convention at the Raffles City Convention Centre, in Singapore, on October 19 and 20. It will be the 5th Pan-Asian Container Shipping Ports & Transport event, conducted by PSA.

The convention will discuss: A comprehensive review of shipping line strategy and Port and Terminal management. Shipping Line Mergers and aquisitions and how they effect world shipping, new generation of container ships and their implications for the future.

The opening ceremony will start off with a keynote address, by the Director General of Maritime & Port Authority of Singapore, Chen Tze Penn, which will be followed by the official exhibition opening. The sessions proper will then start off, with the Shipping Line Strategy as the topic.

The day's programme will end with an address by Parakrama Dissanayake, Chairman, Institute of Transport and Executive Director, Pership (Shipping) Ltd. Sri Lanka followed by a reception for conference delegates.

Sessions on Day 2, will start off with an address on Port Police and Terminal Management and close with the final address by Paul Ng, Managing Director, Electronic Seal Pvt. Ltd, S'pore, on Container Tracking systems for lessors and lines.

Kuwait Airways expands its wings

Since its operation to Sri Lanka for two decades Kuwait Airways has made their presence very firm in the Sri Lankan market. Kuwait Airways presently operates 4 flights weekly and with the diversified mix of traffic to Saudi, Middle East, major European destinations will increase their frequencies to five flights from November 99, says a company release.

With new innovative facilities to their passengers the demand for seats is on the increase. The airline cannot support to the demand for cargo with the present capacity. After a feasibility study the airline had priorities to increase the frequency from November 99 from four flights to five.

This additional flight will envisage the slow and steady progress of the airline in Sri Lanka. It will give much needed capacity and opportunities to increase tourist arrivals to the country specially with excellent connections and minimum transit timing to all European and USA destined passengers mainly from London, Rome, Paris, Frankfurt, Geneva, New York and Chicago and vice versa.

The airline offers very unique facilities to their customers such as transportation to and from BIA Airport, firm upgrading to business class on economy class fares. Minimum transit hours at Kuwait, choice of over 42 varieties of food on board, special check-in facilities at BIA for their European bound passengers are few to speak of.

Kuwait Airways acknowledge with gratitude the valued contribution made towards the development of its services in Sri Lanka by the travel agents, freight forwarders and the exporters, without whose support the airline would not have scaled such heights in its overall operation in Sri Lanka.

The relationship with the agents will be strengthened more and more was the confident envisage by the Director of the GSA, Eustace Silva who mentioned that he would do the utmost to motivate them further to patronise Kuwait Airways which indeed will strengthen ties for mutual benefits.

Mr. Silva's concern was to make Kuwait Airways the best Middle Eastern airline in Sri Lanka and the Maldives, and firmly believes together with agents and the airline, they will make the difference in the millennium.

ECU-Line opens in Ireland

ECU-LINE opened its own offices in Ireland on October 1. Out of Dublin, consolidation services are offered to and from world-wide destinations, says a news release.

ECU-LINE Ireland is based on a joint venture agreement with I.L.C.S., an Irish company specialising in multimodal transport.

The dynamic team of ECU-LINE IRELAND is based in Dublin, but very soon they also will open a port office in Cork.

ECU-LINE IRELAND's company policy is to complete the European network, offering a more complete serivce to the customers.

EVA Air reports profit for '98

EVA Air, Taiwan's leading independent airline, reported 1998 revenues of NTD 42.93 billion (USD 1.28 billion, 1:33.42), showing growth of 11 percent compared with 1997, and after-tax profit of NTD 75.39 million (USD 2.26 million).

These results are even better than the previously forecast NTD 62.59 million (USD 1.92 million, 1:32.5 ), and represent the fourth consecutive year of profitability for the steadily growing carrier, says a company release.

EVA Air's financial report shows a turnaround for the carrier, which had predicted that Asia's economic crisis, combined with overall instability in markets such as Indonesia and a decline in tourism throughout the region, would seriously impact its financial performance for 1998. After showing a loss for the first half of the year,the carrier recovered profitability by successfully implementing a series of strategic countermeasures. EVA Air is one of the few Asian carriers to sustain a profit in 1998's adverse economic environment.

"EVA Air strengthened and expanded international cargo operations, and increased air freight business by 32 percent last year," said K.W. Nieh, deputy senior vice president for EVA Air. "Passenger revenues also began to recover during the second half of 1998, helping offset the earlier loss. Other factors, including increased value of the Taiwanese dollar and lower fuel prices, benefited EVA Air by lowering operating costs."

EVA Air is forecasting steady growth of around 7.9 percent for 1999, and revenues of an estimated NTD 46.3 billion ( USD 1.42 billion, 1:32.5), which will produce an approximate after-tax profit of NTD 480 million (USD 14.76 million).

SLPA moves to stop the decline of ships calling at Colombo port

There is a decline in the number of ships calling over at Colombo now. Ships that used to call here almost weekly earlier, are now reported to be bypassing Colombo and sailing to Salala Port.

Consequently, there is none to take responsibility of the loss of billions of precious foreign exchange that used to flow into the coffers, when foreign ships called over here.

Meanwhile, a delegation from the SLPA is to leave shortly, in a bid to increase Port revenue.

The aim of the delegation in visiting these countries is to promote the Port of Colombo it is said.

To arrest the decline of foreign ships calling over here, the delegation hopes to meet owners of Shipping companies to thrash out the issue.

Chairman of the Ports Authority Admiral Mohan Samarasekera, will lead the delegation scheduled to visit China, South Korea and Taiwan, where they hope to meet and discuss top officials of the main-line shipping companies in those countries basically on business promotion.

Though several consultants of the port development ministry were listed to go on the mission, it is reported that this decison was later changed.

It is reported that the consultants themselves thought that it was inopportune that they participate. Many speculate that such a dicision, though coming late, was a step in the right direction.

Meanwhile, a CASA spokesperson says, that it is not the accepted procedure to meet owners, bypassing agents in Colombo.

Evergreen adds new service to Los Angeles

Evergreen International Airlines has introduced a new weekly B747 freighter service between Los Angeles and Hong Kong which complements the airline's recently inaugurated twice-weekly service from San Francisco to Hong Kong and Taipei. Evergreen has served the eastbound Hong Kong market for ten years but only recently began offering westbound flights.

Most of the carrier's westbound flights operate under partnerships with Qantas and Air New Zealand. Presently eight flights a week are provided from Hong Kong, three from Taipei and one from Jakarta to San Francisco, Los Angeles, Columbus and New York.

To allow pick-up or delivery of palletised freight in both northern and southern California areas to connect with the new service to Hong Kong and Taipei, Evergreen is also offering a trucking service under an agreement with Forward Air.

The truck trailers, which move air freight between Evergreen's new terminals in San Francisco and Los Angeles, can each carry five airline size pallets and allow loading and unloading directly from planeside.

SriLankan Airlines eyes cargo

SriLankan Airlines, the new look AirLanka, is investing $1 billion on a new fleet of Airbus aircraft and intends to place increased emphasis on cargo operations.

G T Jayaseelan head of commercial operations, was quoted as saying the emphasis is now shifting toward a situation where cargo gets "its due consideration" because it plays a very important role in the bottom line.

The airline sees particular potential in cargo services to Australia and India, and hopes to raise cargo to 15 per cent of revenue to the 10 to 12 percent of the last three years when tonnage carried averaged 35,000 tonnes per year.

The airline earned about $30 million in cargo revenues in the last financial year.

Transport analyst should try and check out what's really cooking in the industry

The recent crash of one of its passenger MD-lls at Hong Kong's Chek Lap Kok Airport has unfortunately overshadowed earlier announced plans of China Airlines to significantly expand its freighter operations with the purchase of 13 new B747-400 freighters and, as far as bellyhold capacity is concerned, seven A340-300 passenger jets with a total value of US$5.45 billion.

The crash has put the carrier back on the front pages just as it was coming out of a period dominated by bad publicity and preparing celebrations for the 40th anniversary of its cargo division.

While we do not want to play down the accident, the recent disaster has also side-lined some most unusual statements by a financial analyst who following China Airlines' announcement queried whether the order for 13 new freighters was actually justified.

In a couple of comments the transport analyst wondered how effective dedicated freighters actually are in a market already well-served by passenger aircraft, which also carried cargo.

"Whether there is a role for all-freighter aircraft within an airline that is aimed at passengers has been a debating point in the industry for a long time," Ian Wild, a transport analyst at S. G. Securities was quoted as saying in a recent Reuters report. Mr Wild continued with: "Most airlines have chosen not to attempt to operate all-freight aircraft."

We have no way of checking if Mr Wild was correctly quoted by the wire service, but if he was, his bizarre statements which put his specialism into question, must have prompted a few puzzled cargo executives at leading combination carriers, such as Singapore Airlines, Japan Airlines, EVA Airways, Korean Air, Asiana and Thai Airways International, just to name a few and leaving out their European and North American rivals to keep the focus on the Asia-Pacific region.

In the same context, it would have been interesting to have Mr Wild question the recent decision by Malaysia Airlines to add three dedicated freighters to its fleet and expand its global network with several new destinations.

A decision which has been praised by Mr Wild's colleagues at Salomon Smith Barney, who forecast in a recent report on the combination carrier that cargo would account for 43 percent of total revenue growth. Based on a couple of other, and in some cases related factors, the Salomon Smith Barney analysts expressed confidence that MAS would be rerated.

Still on the China Airlines acquisition of new freighters, Mr Wild even managed to berate the carrier by saying that it should concentrate on cargo rates rather than on market share and sheer volume.

"Let the volume drive up rates first and then think about adding more capacity," he was quoted as saying, and.... the air cargo market has never been a market that anyone's been able to make a great deal of money out of."

We really don't know if this Mr Wild is a fiction, or if he has been living on the moon for the past few years. But maybe it would help if he would try and check out what's really cooking in the airline industry before making senseless comments which are so utterly unrealistic that they are almost hilarious.

The truth of the matter is that if most Asian carriers hadn't had full freighters in their fleet during the recent economic crisis, the red ink would have been even more abundant than it already was.

In short, freighters basically averted a number of airlines from going under, and with the recession in retreat, airline cargo managers, freight forwarders and shippers are scrambling to get freighter capacity, without having to drive up the volume, because the volume is already there and growing.

(Courtesy Payload Asia Ed.)

Return to Business Contents