Air Canada Continues Restructuring

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By Darren Shannon

Air Canada said it is ready to proceed with a fundamental restructuring of its business model following the ratification of a pivotal pension moratorium agreement by the carrier’s mechanics.

The vote, a second ballot on the deal, was approved by 60.3% of the International Association of Aerospace and Workers’ technical, maintenance and operational support members that voted on July 14. Almost 51% of the group voted against the agreement in its first ballot (DAILY, July 2).

Calin Rovinescu, the airline’s president and CEO, in a release noted, “The successful conclusion of the ratification process represents an important milestone in achieving the stability required to manage through this difficult economic period.

“It is an encouraging sign of our employees’ support for working together to build a stronger business in the current economic context.”

However, gaining ratification from the airline’s five unions is only part of Air Canada’s restructuring effort. “These are extremely challenging times for both the airline industry and credit markets and there remain many hurdles to overcome, including the necessary governmental approvals for the pension funding arrangement and securing new financing [of at least $600 million] to meet our immediate liquidity requirements,” said Rovinescu.

“If that is achieved, to return Air Canada to profitability will require a fundamental restructuring of our business. This will include the execution of a disciplined and significant cost-reduction program requiring participation by certain suppliers and stakeholders, as well as new revenue generation initiatives,” he added.

Air Canada must also gain approval of its non-unionized and retired work force.

Photo: Benet Wilson

Draft Tanker RFP Slips Into Fall

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By Amy Butler

A draft request for proposals (RFP) that will kick off the U.S. Air Force’s next attempt to procure a KC-135 aerial refueling tanker replacement could come out later than expected.

“This may go into the fall because we want to make certain we get this right,” Pentagon spokesman Geoff Morrell said at a press briefing there July 15. Defense Department officials had hoped earlier to release the draft RFP this month and award a contract early next year.

Morrell declined to comment on the specifics of discussions about what should be included in the RFP.

Defense Secretary Robert Gates also has not made a decision yet on which office in the Pentagon — the Air Force that will use the tankers or his own under secretary of defense for acquisition — will directly oversee the competition. Morrell says that decision will likely be released at the same time as the forthcoming draft RFP.

The so-called KC-X program has had multiple false starts. Boeing was originally expecting a lease of 767-based refuelers from the Air Force, but that was dashed amid admissions from former procurement official Darleen Druyun that contracts were unfairly steered to the company. Additionally, Sen. John McCain (R-Ariz.) investigated the deal and found it to be grossly overpriced.

A competition between Boeing 767 and Northrop Grumman/EADS North America A330 designs went to the Northrop team, but was quashed amid a protest from Boeing. The Government Accountability Office found errors in the procurement process that led to the decision.

The last competition was for up to 179 refuelers, estimated to have a procurement value around $35 billion. The Northrop team is likely to propose the A330 option while Boeing officials say they could offer a 767 design or one derived from the larger 777.

Photo: Boeing

Endeavour Starts 16-Day Mission

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Frank Morring, Jr.

STS-127 mission updates will be posted on the On Space blog.

Space shuttle Endeavour and its crew of seven are en route to the International Space Station, after launching through more of the same kind of weather that had kept it grounded through the weekend.

Liftoff from Pad 39A at Kennedy Space Center, Fla., came at 6:03 p.m. EDT, as thunderstorms and other weather that had threatened to violate flight rules earlier in the day backed away from the 20-mile range that would have prevented the launch. The mission had been scrubbed five times since June 13, twice for a gaseous hydrogen leak and then for weather.

“The weather is now cooperating, so it is now time to fly.” launch director Mike Leinbach radioed Endeavour’s crew as the countdown entered its final phase.

The 16-day STS-127 mission now underway will be one of the most complex ever in space. While docked at the ISS the Endeavour crew will deliver the final element of Japan’s Kibo laboratory module — a porchlike exposed facility — and outfit it with its first set of experiments.

Over the course of five spacewalks and carefully planned robotics operations they will also deliver three large spare parts to be used after the shuttle fleet retires next year, when the only spacecraft visiting the station will be too small to carry them. And they will replace the station’s oldest set of batteries at the far port end of the station truss.

The combined station and shuttle crews include representatives of all of the station partner-agencies for the first time. It will also be the first time a total of 13 space travelers will be in orbit together on the two docked spacecraft.

Photo credit: NASA TV

Garuda Allowed Back Into Europe

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Robert Wall/Paris

Airlines from Zambia and most from Kazakhstan find themselves barred from operating in the European Union, with restrictions lifted on several Indonesian carriers, including Garuda.

The EU blames safety deficiencies in the oversight of airlines in Zambia and Kazakhstan for the decision to impose a flight ban on those carriers, although Air Astana is allowed to operate, but under restrictions.

Also, the European Commission has cleared Angolan national airline TAAG to resume limited operations into the EU. The airline can fly into Portugal, but only with certain aircraft and under restrictions. The move was cleared after Angola and Portugal – countries with strong ties – signed a cooperation and assistance agreement between their respective civil aviation bodies.

The EU also says efforts Indonesia has taken since its airlines were first put on the aviation blacklist two years ago have resulted this time in the ban on Garuda, Airfast, Manda and Permiair to be lifted.

EU transport commissioner Antonio Tajani renewed his call for internationalizing the blacklist, first expressed in the wake of the crash of Yemenia IY626.

Photo credit: Garuda Indonesia

Senators Shelve F-22 Procurement Debate

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John M. Doyle

A parliamentary dispute in the U.S. Senate has temporarily sidelined a measure that would cap at 187 the number of F-22 Raptors the Air Force is authorized to buy.

Senate Armed Services Chairman Carl Levin (D-Mich.) this morning pulled his amendment to the Fiscal 2010 defense authorization bill – which would undo authorization of seven more Raptors that the Obama administration says it does not need – or want.

Levin said on the Senate floor that he was pulling the amendment temporarily because Senate leaders could not agree on when to bring it to a vote, and the issue was being waylayed by an unrelated, controversial move. Levin said the delay to a vote on the F-22 amendment was apparently precipitated Democratic leaders’ efforts to insert hate crimes legislation as another amendment to the defense bill, to which several senators objected.

“Why that should result in a denial of an opportunity to vote on the Levin-McCain amendment escapes me, I must say,” Levin said on the Senate floor. “We’re going to come back, obviously, to the Levin-McCain amendment,” he added.

Levin and Sen. John McCain (R-Ariz.), the senior Republican on the Armed Services Committee, introduced the amendment July 13 as expected as the Senate began debate on the $680 bill defense policy bill. It would delete a measure narrowly approved by their committee over Levin and McCain’s objections to divert $1.25 billion from military personnel and operations and maintenance programs to help pay for seven additional Raptors.

The balance of the expected $1.75 billion to fund the additional Raptors was to come from $500 million in expected department-wide savings from a recently enacted defense procurement reform bill, according to Sen. Saxby Chambliss (R-Ga.), an advocate of the F-22, which is assembled at a Lockheed Martin plant in his state.

In debate earlier this week, both Levin and McCain said little if any savings – but certainly not $500 million – was expected in the first year of the reforms, which were crafted as institutional changes to how the Defense Department acquires goods and services.

Meanwhile, the White House issued a statement that may amplify its veto threat over prolonging the Raptor program. President Barack Obama’s Office of management and Budget said “if the final bill presented to him contains this [SASC] provision, the President will veto it.” The statement was more absolute than the usual language proffered when OMB levies a veto warning, i.e., “the President’s senior advisors would recommend a veto.”

Indeed, the President, the Defense Secretary, the chairman of the Joint Chiefs of Staff and the top general and civilian in charge of the Air Force have all weighed in this week with new letters to the Senate in support of ending the program as planned at 187 Raptors. But Raptor supporters, such as the Air Force Association and Sen. Saxby Chambliss (R-Ga.), have maintained a steady drumbeat of opposition and counter-arguments.

Today, AFA’s magazine claimed conversations with Pentagon top spokesman Geoff Morrell that indicated research cited in defense of the 187 level – presented in congressional testimony this year as definitive analyses – were actually a melding of two “work products,” and were little more than recycled briefings in the end.

JCS vice chairman, Gen. James Cartwright, told Congress last week that a study the JSC and Air Force partnered on recommended 187 Raptors instead of the 243 that the Air Force earlier stated was a minimum.

Despite assurances by Cartwright to Levin that studies would be provided, AFA cited Morrell and said they have not been dispatched to Capitol Hill. Further absent is a response to a 2007 demand – that was to be provided within a year – for a comprehensive tacair plan that would specifically explain how the number of F-22s had been determined.

With David A. Fulghum in Washington

Photo credit: USAF

White House Strains For B61 Bomb Request

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By Michael Bruno

The Obama administration is making its mark with a desire to reduce nuclear weaponry, but it is running up against more help than it wants on Capitol Hill, with the White House now trying to defend its fiscal 2010 request for a major legacy U.S. nuclear bomb.

A White House Office of Management and Budget statement of administrative policy warned July 14 that a House Appropriations Committee move to cut $65 million for a B61 refurbishment study in FY ’10 would essentially end efforts toward replacing end-of-life components. The House of Representatives was expected to vote on the so-called energy and water appropriations bill, which includes funding for the National Nuclear Security Administration (NNSA) and nuclear warheads, starting the same day.

“Without refurbishment of these components, the sustainment of the B61 bomb family, a key component of our deterrence strategy, will be in jeopardy,” the White House claimed.

House appropriators acknowledge that the B61 is “particularly in need of a clearly articulated strategy.” But like many lawmakers across the Hill, they first want to see an overarching strategic weaponry strategy — a demand that Democrats in particular have been enunciating since before they started to take over Congress in 2006. Since the executive branch has not provided the Hill with such information, the committee said in its report accompanying the spending bill that it would not fund the requested the B61 Phase 6.2/2A Refurbishment Study.

“The committee will not support a major warhead redesign in the absence of clearly defined nuclear weapons strategy, stockpile and complex plans,” the appropriators said.

The B61 is in need of more work, nonpartisan congressional researchers agree, but it has also had a troubled history this decade. Although NNSA completed refurbishment of strategic variants of the B61 bomb — Mods 7 and 11 — on schedule in November 2008, the refurbished weapons still do not meet all refurbishment objectives, according to a March report from the U.S. Government Accountability Office (GAO). Moreover, NNSA refurbished less than one-third of the weapons in the original baseline for almost twice the unit cost.

NNSA and U.S. Strategic Command (STRATCOM) were able to meet new requirements only after the Nuclear Weapons Council slashed the definition of what was needed from a B61 stockpile by two-thirds, allowing for material from dismantled tactical warheads to be used in refurbishing others instead of NNSA having to provide alternative material.

Citing NNSA and Defense Department officials, GAO said NNSA established an unrealistic schedule and failed to fully implement its Phase 6.X refurbishment guidance. But blame is further shared by STRATCOM for taking two years to communicate to NNSA that an older requirement was no longer needed, as well as the fact that DOD’s testing conditions had changed. The Air Force’s lead project officer also was sanctioned for “poor technical and managerial expertise.”

NNSA said early this year that it completed the life-extension program for two versions of the B61 bomb, according to a February report from the Congressional Research Service. Yet GAO said NNSA has agreed to conduct more tests through 2009. “Importantly, these tests will be completed after all the B61 bombs now being refurbished are back in the stockpile,” GAO notes.

Photo: Wikipedia