Boeing on Wednesday reported a quarterly loss as it took USD$1.1 billion of previously announced charges to settle government investigations into its defense unit and to cover the costs of delayed surveillance aircraft.

Boeing, which is outselling its European commercial aircraft rival Airbus more than two-to-one this year, cut its full-year earnings forecast to account for the charges, but raised forecasts for next year on strong plane sales.

Boeing reported a loss of USD$160 million for the second quarter, compared with a profit of USD$566 million in the year-ago quarter.

Revenue rose 2 percent to USD$15 billion.

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A German court ruled on Thursday that Germany wrongly subcontracted its airspace control to a private firm and was liable for a 2002 crash between a Russian passenger jet and a cargo plane that killed 71 people.

The ruling came in a lawsuit filed by Bashkirian Airlines over the mid-air collision involving a Bashkirian plane and a DHL cargo aircraft over the German village of Ueberlingen close to the Swiss border.

The court said Germany breached its constitution by subcontracting airspace control to private Swiss firm Skyguide and Germany was responsible for compensation for the crash.

"The sovereign task of securing air space has never been effectively transferred to Switzerland," the court said in its ruling.

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Saudi Arabian Airlines will privatize five units next year, some through public listings, to pave the way for the flotation of its core transport business, company and banking sources said on Sunday.
The sources said the government had given the flag carrier's board the green light to turn its catering, handling, cargo, pilot training and technical and maintenance units into independent firms.
"Some of these firms can be listed, mainly catering and cargo, but others will probably need to be managed by the private sector, or outsourced," a source from French bank BNP Paribas said.
The bank is helping plan the privatization of the airline, one of the largest in the Middle East.

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Delta Air Lines is buying rights to fly between New York and London from rival United Airlines for up to USD$21 million, a Delta spokeswoman said on Monday.

Delta plans up to three flights a day between New York's John F. Kennedy Airport and London's Gatwick Airport, with the first expected to start in the autumn, spokeswoman Betsy Talton said.

It plans to add up to two more flights a day next year, Talton said.

Atlanta-based Delta, which is operating under bankruptcy protection, would pay USD$13 million to United Airlines once the deal closed, with additional payments of USD$2 million per year, unless an "Open Skies" agreement were reached.

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Airbus on Monday confirmed a German news report that it had modified part of the rear fuselage on the A380 superjumbo but said this would not lead to further production delays or cost overruns.

Citing internal Airbus documents, weekly Der Spiegel reported that section 19 of the fuselage, made in Spain from high-tech composites, had been modified following flight tests.

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International air passenger traffic rose 6.7 percent in the first six months of 2006 compared with the same period last year, the International Air Transport Association (IATA) said on Thursday.

Cross-border air freight, a prime indicator of the health of world trade, rose 5.2 percent in the first half of this year.

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Airbus parent EADS posted a 6 percent rise in first-half operating profit on Thursday, but warned design and manufacturing problems could spill over to hit 2006 earnings.

The company said it expected full-year profit to come in at the bottom end of its previous forecast as it grapples with problems with the A380 superjumbo, a costly redesign of another model and losses on the sale of its Sogerma maintenance business.

Earnings before interest and tax (EBIT) before goodwill and exceptional items rose to EUR1.6 billion euros (USD$2 billion) from EUR1.5 billion (USD$1.9 billion) a year ago.

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US Homeland Security officials proposed on Wednesday making airlines transmit passenger names and other information to the government before an international departure, a change designed to keep suspected terrorists off US-bound flights.

If approved, the security initiative would reverse the current policy of requiring that manifests for flights originating in foreign countries be transmitted shortly after takeoff.

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Boeing said on Wednesday it expected the global airliner market to require about 27,200 new planes by 2025 with the most valuable slice of the USD$2.6 trillion total coming from twin-aisle models.

The Boeing 777 twin-aisle plane sharply outsold the rival Airbus A340 last year. That, combined with brisk sales of the 787 due in 2008, has Airbus looking to offer a new twin-aisle plane.

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Air France Chief Executive Jean-Cyril Spinetta will be summoned next week before a judge who is investigating suspected misappropriation of funds at a security firm that worked with the airline, his lawyer said on Wednesday.

The lawyer, Jean-Pierre Versini-Campinchi, said Spinetta denied any role in the affair.

Air France declined to comment on the matter.

The founder of Pretory, the security firm in the case, has been placed under official investigation for possible illegal employment, aggravated money-laundering and fraud.

Pretory clinched a contract with Air France to provide private security agents for the airline's flights after the September 11, 2001, attacks on the United States.

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Pakistan said on Wednesday it would not use Fokker planes for passenger flights after an F-27 crashed, killing all 45 people on board.

The Fokker F-27 turboprop, operated by state-run Pakistan International Airlines (PIA), crashed on Monday on the outskirts of the central city of Multan two minutes after takeoff.

"Fokkers will not be used for commercial flights. They will be used for cargo and other purposes," Information Minister Mohammad Ali Durrani told reporters after a cabinet meeting.

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The year's biggest air show opens near London next week, with all eyes on planemaker Airbus and its secretive plans for a new, mid-sized plane to challenge resurgent rival Boeing.

The two planemakers waged a feisty battle at the biennial event last time as the biggest winners in USD$21 billion worth of business deals announced.

This year, Airbus faces mounting pressure to reveal its mystery plane, which analysts say could cost USD$10 billion to build.

Industry sources and analysts say Airbus's top salesman, John Leahy, will be working hard to sell the concept and could have deals to announce at the Farnborough air show, which opens on Monday.

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The co-head of European aerospace firm EADS admitted its Airbus unit had underestimated Boeing and said its priority was to fix problems at Airbus, which is trailing its US competitor in aircraft sales.

Airbus's mid-sized A350 model, which is being redesigned to compete with Boeing's bigger-selling 787, had to be a superior aircraft, Tom Enders told a briefing restricted to Stuttgart-based journalists late on Tuesday. His comments were embargoed for publication on Wednesday.

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Grand China Airlines may take its Hainan Airlines unit private before floating its own shares in Hong Kong next year, Caijing Magazine said on Monday.

Grand China Air, which replaced billionaire George Soros as the biggest shareholder in Hainan via a private share placement in June, is considering buying out the publicly traded shares of the unit, the semi-official magazine said, citing unidentified sources.

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A Pakistan International Airlines (PIA) passenger plane has crashed on a domestic flight, killing all 45 people on board, officials say.
The twin-engine Fokker aircraft crashed soon after take-off from the central city of Multan and burst into flames.

Rescuers could not save those inside. Officials said senior members of the military and judiciary were on board.

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Richard Branson's Virgin Atlantic Airways said on Sunday it was not about to sell its stake in National Air Traffic Services after a report said seven airlines, including Virgin, had put their stakes up for sale.

NATS was privatized in 2001 with the Airlines Group -- a consortium of seven carriers including Virgin, British Airways, bmi, easyJet, MyTravel Airways, Monarch and Thomsonfly -- owning 46 percent. This was later reduced to 42 percent.

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A Russian airliner veered off the runway after landing in Siberia on Sunday, ran into nearby buildings and burst into flames, killing at least 122 people, emergency officials said.

More than 50 others were injured, many suffering from burns.

Sibir airlines flight 778 from Moscow to Irkutsk, an Airbus A310, overshot the runway at around 2:50 a.m. Moscow time (2250 GMT on Saturday).

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The Bush administration plans to move ahead this summer with its proposal to ease restrictions on foreign investment in US airlines despite strong congressional opposition, Transportation Secretary Norman Mineta said on Thursday.

Mineta, who has resigned from his post after 5-1/2 years and leaves office on Friday, told reporters he may have underestimated the strength of lawmaker sentiment on the politically sensitive plan to give foreign investors some say in day-to-day airline operations in exchange for equity.

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Airbus expects 20 orders for its USD$300 million A380 superjumbo this year, including two new customers, its chief salesman said on Thursday.

John Leahy, Airbus's Chief Operating Officer - Customers, made the comments to BBC Radio 4 in an interview from Singapore. Leahy said he expected these to come from two new customers and two existing ones.

So far Airbus has 159 orders for the plane from 16 customers but none has been announced this year.

And with 105 orders for other aircraft so far this year compared with 445 for its rival Boeing, Airbus risks losing the annual orders race for the first time since 2000.

But Leahy said the planemaker expected to beat Boeing on aircraft production in 2006 with deliveries of 430 aircraft.

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Dubai airline Emirates said on Thursday it had signed a USD$261 million financing agreement with the US Export-Import Bank for two Boeing 777-300ER aircraft.

The deal, arranged by Citigroup, is a 12-year supported loan with commercial funding and carries a weighted average cost of funds of 0.66 percent over three-month LIBOR (London Interbank Offered Rate), Emirates said in a statement.

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Planes operated by major US airlines are fuller than ever this summer, and the embattled carriers are seeing stronger revenues as a result, analysts said on Wednesday.

The record-high load factors bode well for airlines if they can keep the number of empty seats to a minimum. The industry has been weakened by high fuel prices and competitive pressures that make it hard for carriers to keep ticket prices high enough to cover costs.

But recent cuts in capacity have enabled airlines to raise fares to bolster revenue.

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The US Transportation Department on Wednesday proposed lifting antitrust immunity for an international trade group that sets airfares and air cargo rates between the United States and Europe.

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Britain's BAE Systems ordered an audit of Airbus on Wednesday, pushing back its possible sale of a 20 percent stake in the European planemaker into September at the earliest.

BAE was set to sell the stake to 80 percent owner EADS using a put option but a lower-than-expected valuation of EUR2.75 billion (USD$3.52 billion) on the stake by investment bank Rothschild, brought in to arbitrate between the two sides, threatens to put the sale on hold.

"BAE Systems expects that the audit will assist its board in assessing whether or not to recommend that its shareholders vote in favor of the proposed disposal," BAE said in a statement.


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Authorities have raided British Airways as part of a trans-atlantic investigation into an alleged cartel over airfares and fuel surcharges which saw BA suspend two senior executives.

American Airlines, United Airlines and Richard Branson's Virgin Atlantic said they were also involved in the probe, which is being conducted jointly with US authorities, but were not direct targets.

Those four airlines are the only carriers allowed to fly direct between Heathrow Airport and the United States under bilateral treaties.

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