PlaneBuzz

This week's issue of PlaneBusiness Banter is now posted.

Last week on the airline side the news was headlined by Republic Holdings, which went on a little bargain basement buying spree last week, as you all know.

Now that Frontier Airlines (pending bankruptcy court approval which we are certain will take place) and Midwest are going to be under the "Republic Holdings Umbrella" what does this mean for the domestic US airline market? Frankly, the land grab raises a lot more questions than we have answers for -- at least this week.

Then there is Boeing.

What a mess. What a complete and total mess the 787 program is. Or at least it appears to be that way.

If things had gone according to the much delayed and revised plan, we should have had a 787 in the air before the end of June.

Yes, well, it's the end of June, and as you all know at the very last minute last week -- Boeing canceled the 787's first flight.

It's one thing to announce yet another delay. That is bad enough. But don't do it just days after your executives have been glad-handing everyone in Paris, including analysts, telling them that the flight was still on schedule.

On the continuing diminished liquidity front, we had a lot of news last week. First, American was successful in restructuring more than $400 million in debt. But it cost the airline money upfront in fees and it will continue to cost the airline in increased interest costs.

United also pulled the emergency ripcord last week, as it sold a little less than $200 million in secured notes. But at what yield? Oh my. My heart just stopped. This was a very expensive way to pick up some cash, as I talk about in this week's issue.

Guess this means neither Airbus or Boeing are too interested in some kind of liquidity/aircraft order tango with United. Yes, well, both companies have their own problems.

Sir Richard was out on an airplane wing grabbing a gorgeous woman again this week. What was his excuse this time?

Meanwhile, Lufthansa's march to world domination continues -- the BMI deal is done.

All this, including a slew of reader letters, and more in this week's issue of PlaneBusiness Banter.

If you are a subscriber, you can access this week's issue here. If not, you can learn how you can become a subscriber by clicking here.

Posted by Holly at 12:08 PM | Permalink | Comments (0)

It's Friday. It's already 85 degrees here in Big D. And it's not even 10 o'clock yet.

Not a good sign.

My trusty Apple iPhone weather app informs me that it will be 103 later today.

Hmmmmm.

You know it's really hot when the cats pant.

I've written before about this.

We all know dogs pant all the time. But have you ever noticed how cats, being the more discreet and elegant animals that they are, are not that enthusiastic about showing public displays of pending heat stroke?

So when you open the door to a little face that has a jaw dropped and a little tongue furiously darting in and out -- cats really do look funny when they pant -- you know it is friggin' hot outside.

So there you go. Looks like another "Cat Pant Heat" day for us, in addition to much of the rest of the country.

Posted by Holly at 8:58 AM | Permalink | Comments (0)

I'm sure glad the general public got to see a slew of those stupid "at the airport live" reports yesterday dished out from a local reporter -- stationed at their local airport. The occasion? Rising air fares.

CODE RED. CODE RED. Beep. Beep. Beep.

Oh my god Ethel, grab the children, bring them inside and make sure the doors and windows are locked.

Is there any other industry that all of us utilize on a fairly regular basis that has its prices examined so closely by the media?

Seriously.

Why is this?

I mean, how would other industries fare if every time they raised a price, we were treated to a live, on-the-scene report with the local newshounds?

Rental car companies for example.

Cable television companies.

Hotels.

Cat and dog food manufacturers. (Can you tell I was at PetSmart yesterday?)

Oh, and then there is ice cream. As my father commented the last time I visited with him, "If they make the Breyer's package any smaller, you are going to have to put your glasses on to find it in the damn freezer at Safeway."

You know the game that packaged goods companies play. They keep "downsizing" the package size, while also raising the price. In effect -- netting a double increase in price in some cases.

And on it goes.

But do we see local and national news stories about these types of price increases. Not really. We see them, but there is never a unified "Code Red" alert put into effect that causes reporters and news outlets to attack the story as if it were a matter of national importance.

But on the heels of two airfare increases that have been put into effect over the last week -- now the fact that airfares are RISING is right up there on the top ten news story list of the day. No, actually, the top five.

No matter that air fares were, before the increases, and still are, in many cases, at rock-bottom levels. Levels so low that airlines are in a fight for survival because of the fact.

But here's the deal. There is no "voice" for this industry of that nature. No credible "voice" that is out there constantly getting this, and other messages out.  

PlaneBusiness Banter subscribers know that I have been doing a continuing series of columns over the last few weeks on the "perception" problem that plagues this industry in the U.S.  The industry needs to create, support, and foster an entirely new way of positioning itself with the general public in this country. Not to mention with those on Capitol Hill.

And no, the Air Transport Association is not the answer. Far from it.

Lee Moak, the head of the Delta Air Lines' ALPA MEC and I talked this spring about how the pilots in this industry suffer from much the same problem. A huge problem of perception. I agreed 100% with him. He talked to me about some of the activities that he has been involved with -- with the Delta pilot group -- that no one ever hears about. No one knows about. But positive community projects that reflect the fact that hey -- pilots are not just greedy bastards who fly airplanes and chase nubile young women around their hotel rooms at night.

Well, not all of them.

Seriously. Lee understands how the perception game is played. He understands that the old "PR" rules no longer apply. So do others in this industry. Unfortunately, while positive strides have been made in some quarters, the enlightened types are still outnumbered by members of the "old guard" who are not enlightened and who continue to hold sway in this industry.

Yeah, I know. As more than one subscriber has written me over the last couple of weeks, maybe this needs to be a project that I take on. Personally.

Dunno. I think I value my sanity too much.

Posted by Holly at 8:53 AM | Permalink | Comments (1)

Posted by Holly at 9:32 PM | Permalink | Comments (0)

Whew. For a couple of innings tonight I suffered some ugly thoughts of having to wear that Orange Pimp Suit. And of having my picture made while wearing it. And of having said picture then posted here on PB.

However, LSU was successful tonight in beating the University of Texas Longhorns 11-4 to take the NCAA College World Series National Championship.

One of the big reasons was that guy right here. Chad Jones. In his other life, he plays safety for the Tiger football team. But in this tournament, he was fantastic in the role of relief pitcher.

Then there was Jared Mitchell, the tournament's most valuable player.

Texas played a great series. But in the end, LSU played a better one.

I will keep all of you posted as to the "pay up" of the bet between myself and Mr. Parker. Heh. Tomorrow I will start putting together the appropriately atrocious LSU fan attire that I am going to force Mr. Parker to model.

I can't wait. ;-)

Posted by Holly at 8:03 PM | Permalink | Comments (0)

I knew somebody was going to take up the challenge.

Jim Parker, former general counsel and CEO at Southwest Airlines and devoted, er, obsessive University of Texas alum, has entered into a bet with me on the outcome of the College World Series. (The second game of which is now on hold because of a rain delay.)

If LSU wins, he has promised that he will allow himself to be photographed wearing some outrageous LSU attire. Of my choosing. I had suggested that he be forced to fly an LSU flag outside of his house for a week, but he declined, explaining, "I am not sure if Pat [Jim's wife] would shoot me or divorce me first if I ever allowed an LSU flag to be hung on our house for a second, let alone a week.   I am pretty sure she would do both, I am just not sure in what order."

If Texas wins, I am going to be forced to wear what we have dubbed, "The Orange Pimp Suit." You may have seen them. LSU has a purple and gold version. Texas has an outrageous orange colored one with black and white zebra stripes. The only place I've ever seen them sold was on Bourbon Street.

Anyway, Jim's son has one that he wore to the Texas-USC National Championship game a few years back.

Take my word for it. It's atrocious.

So if Texas wins, I have to go get the Orange Pimp Suit and have my picture recorded for historical purposes. Although I do promise that I will wear more than just my underwear underneath it. Ahem.

Maybe instead of the Orange Pimp Suit, I could just wear this Bevo Hat. Nah, I'm not going to have to wear anything. I'm eagerly anticipating seeing Jim Parker in a purple and gold lame jumpsuit with matching tiger tail. Or something close to it.

Posted by Holly at 4:43 PM | Permalink | Comments (0)

While this is technically "breaking news," we've all suspected something like this for months. Especially after the last TPG/Republic cash infusion given to Midwest.

This afternoon, Republic made it official. It is buying the remains of Midwest Airlines. I say, "remains" because what constitutes Midwest Airlines these days is a far cry from what most people think of when they think of "Midwest."

Republic announced that it will acquire 100% of the equity in Midwest, in addition to TPG's $31 million secured note from Midwest.

According to the airline's statement,

Consideration will be $6 million in cash and a $25 million, five-year note, which may be converted to RJET stock at $10 per share. In addition, TPG will have the right to nominate a member to the Republic Board of Directors.

Under the agreement, Midwest will become a wholly owned subsidiary of Republic Airways, with the Midwest brand continuing. Midwest’s Boeing 717s will be replaced with Embraer 190 aircraft, enhancing Midwest’s ability to offer nonstop service to key destinations important to its frequent flyers."

Well, how 'bout that?

It looks like the gang that started out with Chicken Taco has decided to add chocolate chip cookies to the mix.

So how does this help Republic? The airline has now announced that it is going to buy both Frontier Airlines and Midwest AIrlines in the span of two days. What I continue to have a problem with, and even more so now that the Midwest part has been added to the mix -- how can Republic continue to operate as a regional carrier when it will now be a major entity in operations that go up against major players?

Then there is the AirTran marketing agreement with Frontier -- what is going to happen to this?

My bet is that we are going to hear more about all of this before the week is over. You have to think that there was a reason the announcements were stair-stepped, and that they both came immediately on top of one another. A defensive play against another potential deal that was about to go down? That would be my guess.

Posted by Holly at 2:37 PM | Permalink | Comments (0)

Former Southwest Airlines CEO Jim Parker is cursing me somewhere right now.

And Gerard Arpey.

And Gary Kelly.

I don't care.

Go Tigers.

(Yes, they are all Texas alums)

Posted by Holly at 9:50 PM | Permalink | Comments (0)

I may live in Texas now, but that doesn't mean my allegiance to the Southeastern Conference has changed. At all.

11th inning in the NCAA College World Series.

LSU 7, Texas 6.

One out from a win.

Go Tigers!

Posted by Holly at 9:17 PM | Permalink | Comments (0)

Just never know what news is going to come across the wires these days.

Hi guys.

It's good to be back.

Yes, moi has been a bit offline over the last month or so. No, I still love you. It was not because of anything you said. Or did. Or didn't do. Stop it.

Without going into detail, maybe this analogy will help explain. If someone is a pilot, then it's pretty hard to also work the back of the plane, sell the tickets at the counter and make sure the engine is functioning properly.

Moving, new website drama and delays, exhaustion. I just had to step back and concentrate on our flagship operation -- PlaneBusiness Banter for a bit.

But hey -- as I told PBB subscribers today -- it's time to get back into the swing of things.

And what fortuitous timing for our coming out party!

This afternoon the newswires were literally abuzz with the news that Republic Holdings is buying Frontier Airlines.

As we all know, Frontier has been trying to put together a financing deal that would allow it to exit bankruptcy protection.

We also all know that Republic had already stepped up its financial involvement with Frontier as part of its current bankruptcy process.

Yes, well -- this afternoon Frontier announced that it has entered into an agreement under which Republic will serve as the equity sponsor for Frontier's reorganization plan.

But the big newsmaking kicker is this: Republic will then purchase 100% of Frontier's equity for $108.75 million

Under the agreement, Frontier Airlines Holdings Inc. would become a wholly owned subsidiary of Republic.

Frontier Airlines and its short-haul unit, Lynx Aviation, will keep their current names and operate as they do now.

A hearing on the proposed deal is now scheduled in bankruptcy court for July 13.

Frontier’s reorganization plan calls for general unsecured creditors to get $28.75 million.

It said an additional $40 million of the sale proceeds would repay outstanding “debtor-in-possession” financing from Republic Airways Holdings.

If approved by the bankruptcy court, Frontier’s current equity “would be extinguished and holders of that equity would not receive any recovery,” the airline’s statement said.

Okay, so while this is great news for Frontier Airlines -- I think a very real question is this one -- what happens when Republic, which does a chunk of regional flying for United Airlines, essentially becomes the new owner of Frontier -- a major thorn in the side of United?

Stay tuned. This one should be fun to watch.

Posted by Holly at 8:11 PM | Permalink | Comments (0)