Category Archives: PlaneBriefs

PlaneBusiness Banter Now Posted!

Good evening everyone. Long day here today, made even longer by the distressing news this evening concerning the Malaysian Airlines 777-200 that has simply disappeared somewhere between Kuala Lumpur and Beijing. Not a good sign when an aircraft such as the 777 is at cruising altitude and just drops off the radar screen. No call for help. No more transponder. No nothing.

Thirty minutes ago Malaysia Airlines Vice President of Operations Control Fuad Sharuji said on CNN’s “AC360”, “At the moment we have no idea where this aircraft is right now.”

I’m sure we’ll know more tomorrow. Er, rather, later today. (It’s already Saturday.)

In the meantime, we have lots to talk about in this week’s issue of PlaneBusiness Banter. This week we go in-depth to look at the 4Q13 earnings of Republic Holdings. Interesting call. But no surprise that a lot of the call dealt with larger industry issues — not the airline’s results.

Related to the future options for Republic’s regional operations, Friday the American Eagle ALPA MEC did a 180 degree turn and decided it was going to send out the last proposal that was made by American Airlines to the pilots directly — so that they can vote on the proposed deal.

Smart move.

Especially considering the airline, as it said it was going to do, had already sent out RFP’s to a group of regional carriers, including Republic, to operate the 60 Embraer jets promised to the American Eagle pilots if they accepted the proposal presented by the airline. As you may recall, the ALPA MEC decided not to accept the proposal. Now, American Eagle pilots will have an opportunity to vote on the proposal. As it should be.

The boys at USAPA were up to their old tricks again this week — filing law suits and denying jumpseats to American Airlines‘ pilots. It’s that Real Men of Genius gene. Can’t be altered.

We talk about all of that, and the joint letter that the president of APA and USAPA sent out on Friday in regard to both the seniority squabble and the unfortunate jumpseat incidents.

Boeing apparently has another problem with its problem child — the 787. Jon Ostrower had the story first Friday in the Wall Street Journal. Wings. Cracks. We’ll update you on all that.

We also review a lot of earnings this week — not just Republic. We talk about the recent results from IAG, parent of British Airways; Travelport; Amadeus; Embraer, and Volaris.

Oh, and how could we forget Delta Air Lines. The airline rolled out its new award chart this week for its revised SkyMiles program it announced the week before. You may recall the airline said it was going to do this “later this year.” Yes, well, that didn’t sit well with a lot of people. I have to say, I agree. The airline should have rolled out everything at once.

But the award chart really doesn’t answer a lot of questions, including those dealing with international travel. In addition, the airline has not said how it is going to increase or decrease award availability in each tier of the new program.

So — still very much a work in progress.

All of this and much, much more in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello earthlings. How was your week this week? It was a fairly comfortable one here in the Metromess weather-wise, although Verizon FIOS pushed me to the limits of my patience until late Wednesday, after a Verizon networking failure prevented me from accessing a lot of sites — including PlaneBusiness.com!

I just love IT failures.

Anyway, enough of my chit-chat.

This week we have a good issue. First, we take an in-depth look at the earnings reported last week by Spirit Airlines. Short and sweet? The airline posted great numbers, and 2014 is looking mighty fine. Wall Street obviously agreed, as shares of the airline that everyone claims to hate, picked up a nice double-digit gain last week.

Republic Holdings reported earnings this week. We give you the basics from their earnings report, while next week we’ll do our usual in-depth dive into the earnings call.

With that, the U.S. airline industry earnings season will officially be over.

This week we talk a lot about three hot topics — the pilot situation here in the U.S., Delta’s announcement about its new frequent flyer program that is based on amount spent, not miles; and United Airlines’ guidance bombshell the airline dropped after the close of trading Thursday.

Needless to say, we’ll give you our take on all three.

In other news, we give you a sneak peek at the fabulous new ad campaign for American Airlines’ new transcon service. We like it. A lot. As a retro fan that believes a company’s heritage and how it got to where it is is incredibly valuable — from a marketing standpoint — I think the blend of old and new used in the campaign is brilliant. It almost, ALMOST, makes me not hate the tail so much.

It was a good week for airline stocks last week, but this week is not going to end on such a positive note. As we talk about in this week’s issue, it remains to be seen how much of United’s bigger-than-expected revenue drop in January was due solely to weather, or if the airline is still having revenue management issues. We’ll begin to put the pieces together as other airlines begin to give better guidance for the quarter in the next two weeks.

All of this, and more, in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello everyone. This week’s issue of PlaneBusiness Banter is now posted.

This week we take a deep dive in the recent earnings calls at both WestJet and Hawaiian Airlines. We also give you earnings summaries for SkyWest and Air Canada. More on them in next week’s issue.

But clearly the big story this week concerns pilots. Regional airline pilots. Mainline airline pilots.

With the roll out of the new FAR 117 regs the duty regs are not the problem — it is the minimum 1500 hours needed in hand before a regional can hire a pilot that is the problem. The impact of a change in regs that was intended to improve the safety of regional airline flying has cast a very ominous light on a system that has been broken for years.

Layered over this is the news this week that the American Eagle ALPA MEC has refused to accept the tentative agreement put forth by American Airlines. The deal will not go to the general membership for a vote.

What’s next at Eagle and American? We talk about that more this week.

The company had already warned that a turn down of the deal would lead to American cutting back on the flying at the airline to the extent that American Eagle would become “Comair II.”

The American Eagle MEC pilots have drawn the line in the sand, saying they are not going to make any more concessions, and there are other jobs to be found in the industry.

Pulling back up to the 35,000 foot level, as I said previously, could the FAR 117 regs end up finally bringing massive change to a business model that never has been based on sound business practices, i.e., the regional airlines provide feeder service to the mainline airlines at low cost?

It’s a serious problem.

In other news, the airline sector enjoyed a pretty good week last week, Morgan Stanley analyst John Godyn ponders whether airlines need to hedge fuel or not (subscribers know where I stand on this) and Norwegian Air just obtained its operating license for its international operation in Ireland.

Then there are the December DOT numbers. As we alerted PBB subscribers to last month, Southwest Airlines suffered a systemwide operational meltdown in December. The DOT report for December merely affirmed this. Meanwhile, Delta Air Lines continued to lead the big boys pretty much across the four major DOT metrics in December, as well as for 2013.

All this, and much, much more, in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello everyone. It’s that time. This week’s issue of PlaneBusiness Banter is now posted.

This week we have a 51-page analysis of the recent American Airlines earnings call. Read it. You’ll learn a lot about how to do a merger in this industry.

We also talk about the recent 4Q13 earnings numbers from JetBlue and Allegiant.

Short and sweet? While I love to fly on JetBlue, as an investment the airline leaves a lot to be desired. CAPEX and costs are both looking to put intense pressure on margins in 2014.

In addition, pilots at the airline, who just received a 20% pay raise, filed authorization cards Monday with the NMB for a representational election with ALPA. (But you’ll hear nothing about this in the earnings call!)

As for Allegiant, there’s no wonder that shares of the airline dropped sharply after the airline’s call. It was, as one analyst put it, “horrible.” We’ll give you the details.

Last week was not a particularly good one for the airline sector, as most stocks we track lost ground. But one stock picked up a double-digit gain. That stock was American Airlines, AAL. It was up 10% for the week.

United Airlines announced over the weekend that it was shutting down its Cleveland hub. While most of the mainline service will remain, all the regional flights will be eliminated. Not surprised. United only had to keep the hub in operation for two years after the merger before it could make the decision that it was not financially viable. I doubt the hub ever hit any of the pre-agreed upon financial goals.

This move, according to Imperial Capital analyst Bob McAdoo will not only be good for United, but for American and Delta as well. We explain why.

Some of us AvGeeks also had fun Thursday afternoon. Led by Leslie Scott at Delta Air Lines and John Walton at Route Happy, a group of aviation nutcases began a Twitter conversation that started out as an airline geek version of Upworthy or Buzz Feed headlines. Hashtag is #buzzfeedthesky. Hopefully we can keep this going. It was a lot of fun. Especially when we morphed into AvGeek pick up lines. Unfortunately I was in final edits for PBB, so I didn’t get to contribute that much this afternoon.

All of this and much, much more in this mega-earnings edition of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello everyone! Yes, I come to you this afternoon from a not-so-lovely part of the world. Dallas Ft. Worth is now “entombed” as one of our subscribers put it today under about 5-6 inches of ice and sleet. The airport is a holding pen for tired passengers, most of whom aren’t going anywhere. As for me, I am going to consider myself lucky if I get out of the driveway and down the road to the big hoopla celebration Monday morning as the new American Airlines Group takes to the skies. You see, temperatures are just going to get lower all weekend. Not higher. Yep. It’s Super Bowl Week all over again. Solid as a rock out there.

Our apologies for being a day late this week. But the WWH lost power yesterday as a result of a tree falling across some power lines down the street. We were finally brought back on line earlier today. Yes, it’s been a little hectic around here.

Aside from this less-than-desirable state of affairs that Mother Nature has decided to throw in our direction, this week in PBB we are talking all kinds of things. First, there were some serious management shifts, departures, and new titles announced at United Airlines yesterday and today. We’ll tell you who is out, who is still in, and who had some responsibilities altered. Oh, and yes, I think the person who owned the dog that ate the demand forecast in the third quarter? Yeah, I think he’s left the building.

Meanwhile, we update you on the latest news concerning the slot wars. You know — the fight for the slots that American and US Airways have had to cough up as part of their deal with the Department of Justice. Looks like Virgin America and Southwest are the winners at LGA — but what about DCA? Better yet, the catfight for American’s gates at Love Field just escalated up a couple of notches this week as well. Delta has already gone public with its desire to keep the gates its leases from American there. Now Southwest Airlines says it wants them.

Let the fight commence.

It was a good week for airline stocks last week. We’ll update you on all that. Energy prices have been on a bit of an up and down run the last week or so though. We’ll explain why that is the case as well.

Finally, we give you a peek at the Business Travel Hall of Fame Dinner we attended this week. Former American Airlines Chairman and CEO Robert Crandall was certainly making the rounds of the event — or should I say he was making the most of the fact that neither Gordon Bethune nor Herb Kelleher was there. It was a great night. Nothing like being at the St. Regis in New York for Christmas.

All this, and much more, including a profit warning from Qantas, Southwest’s new route cuts, and a great quote of the week, in this week’s edition of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello earthlings! This week’s issue of PlaneBusiness Banter is now posted. No surprise, I’m sure, but we are talking a lot about the DOJ settlement with American Airlines and US Airways that was released on Tuesday. We tell you what the deal really means — and not what the headlines you’ve been reading say it means.

We also give you a head’s up on what is now going to be the best show to watch — the fight for slots the two airlines are being forced to divest themselves of. DOJ wants “LCCs” to get them. Only problem — what is an LCC? And why shouldn’t other airlines like Delta and United have a crack at them as well? Is Alaska an LCC? The fireworks haven’t even started yet.

We also take an in-depth look at 3Q13 earnings from both SkyWest and Republic.

Oh, and how about that IAM vote that came down last night in Everett? Where will the 777X be built? Dunno. But the possibilities just got a whole lot more complicated.

Lots of other stuff as well! I’m off to New York. Have a great Thursday everybody!

PlaneBusiness Banter Now Posted!

Hello everyone. A nice Happy Halloween to you all!

This week’s issue of PlaneBusiness Banter is now ready for perusal by all card-carrying subscribers.

This week’s issue is a beast — a mega-earnings issue in which we take an in-depth look at the 3Q13 results issued last week by Delta Air Lines, US Airways, Southwest Airlines and United Airlines. We also have PlaneBusiness Earnings Summaries posted for Allegiant, Spirit, JetBlue, Hawaiian and Alaska Air Group.

The long and the short? Delta Air Lines rocked the house, US Airways did extremely well, Southwest Airlines came in a bit better than expected, but United Airlines disappointed.

We also have the latest DOT Air Consumer Travel Report numbers this week. Again — Delta Air Lines more or less dominated the results for the big four.

Of special note this evening, following up on court documents Monday in which American Airlines and US Airways and the Department of Justice disclosed that they had agreed on a mediator, the Wall Street Journal is reporting that US Airways and American are preparing a settlement package to present to the DOJ.

This is pretty much what we thought would happen. In fact, the Judge in the trial had told both sides to seek mediation.

But as I write in PBB this week, it’s all about those depositions. Once those start to be taken and both sides get access to the information contained in them, then the strength or the weakness of a particular case begins to take shape. According to the court on Monday, 19 depositions had already been taken from execs at both airlines. Another nine depositions have been taken from “other airline executives.”

I still think we will see a negotiated settlement of this case.

On that note, it’s time for us to sign off. It’s been a long day — very long issue this week.

Have fun later today. But don’t eat too much of the candy corn. That stuff is evil.

PlaneBusiness Banter Now Posted!

Hello earthlings. I hope you all had a wonderful weekend. It certainly was a gorgeous one here in the DFW Metroplex. I love this time of year. I wish the clock could just stop and let us enjoy it all just a bit longer.

The latest issue of PlaneBusiness Banter is now posted.

This week we are all over the place. Literally.

Last week I traveled to Mexico City where I participated on a panel discussion as part of the Travelport e-Volve 2013 conference. More than 1000 folks signed up for the event. I’ll tell you why I think the event was not only a positive in terms of Travelport and its attempts to build client relationships, but because it was an effective and efficient way for developers and buyers to meet one-on-one.

Speaking of corporate travel, this week I follow up with my rather short, yet cryptic comment last week in PBB about the Global Business Travel Association. This week I explain why I think the organization needs an extreme makeover — as it has strayed way too far from what its role is as a industry organization and morphed into a money-making machine.

I have news for GBTA — for-profit entities can do the “tradeshow” conference better. And they are. That’s not why people pay GBTA dues. Nor is it why they belong to GBTA chapters.

In other news, JetBlue announced its new city last week (Detroit) and American Airlines announced it was shutting down its Haneda/JFK route. The airline also announced new nonstop service between DFW and Hong Kong and Shanghai.

This week we have a great new piece of analysis by our PlaneBusiness airline dork, analyst, and contributing editor, Brett Snyder.

With all the flak out there these days about just how “low” the fares at Southwest Airlines are or are not, we decided to take a look at how fares and total revenues have fared (pun intended) at both Southwest, as well as its competitors, over the last few years.

I think subscribers will find the graphs quite telling.

First, fares and total revenues have shot up at Southwest at a much higher rate than any other airline in the U.S. since 2009. Second, this has helped to create a nice “comfy” pricing umbrella for the likes of Spirit, Allegiant, and Frontier to position themselves under.

It also means that the rest of the industry has benefited as well, as other airlines have also been able to raise fares.

But the third point is this one — just how much higher can Southwest raise fares? It would seem the airline is now in a rather precarious pricing situation.

So why did all of this start in 2009? Simple. That is when the previously-advantageous fuel hedges at Southwest turned in the opposite direction.

To put it another way, it’s when the airline finally had to deal with fuel costs on a similar level as its competitors. Result? Fares have rocketed.

Airline stocks enjoyed one heck of a great week last week, with shares of Spirit Airlines and bankrupt AMR leading the pack. We update you on the latest analyst musings about those bankrupt AMR shares.

A heads-up. This week U.S. airlines begin to report 3Q13 earnings. Seven airlines will report between Tuesday and Thursday.

Lucky us. 🙂

All of this and more in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

Hello everyone. This week’s issue of PlaneBusiness Banter is now posted. It was another travel week for moi, as I talked about all things airline-related last week at the Business Travel News 2014 Trends and Forecasts conference in San Francisco.

This week I travel to Mexico City, where I will moderate a panel at the Travelport Evolve Conference. Yep, you can rest assured that NDCs, GDS offerings, and merchandising platforms will be on the agenda!

This week in PlaneBusiness Banter we are talking about a wide variety of topics. First, I update everyone on the current situation with the American Airlines/US Airways merger. I’ve changed my mind on the chances for a potential settlement. I’ll give you all the details.

In addition, the big news from last week that rocked the aviation world has to be the fact that Airbus has wrestled Boeing out of its cozy situation in Japan. That’s right. Japan Airlines announced an order for Airbus A350s.

This was no small deal. Remember that All Nippon Airways is now in negotiations with both Boeing and Airbus for replacements for its aging 777 fleet. Now — all bets are off. Most watchers of the aircraft side of the business say the ANA deal is now a “must-win” deal for Boeing.

Airline stocks had a relatively slow week last week, but two airline stocks posted nice double-digit gains — AIr Canada and Spirit. Do you know why? We’ll tell you.

We also review both the September RASM estimates and traffic numbers in this week’s issue. Short and sweet? September turned into a dynamite month revenue wise for the U.S. airline group — with one big exception. United Airlines.

United had already pre-warned about lower than expected 3Q13 revenue performance. This was just the icing on an already somewhat less-than-tasty cake.

We also talk a lot this week about the problem of onboard Wi-Fi. It’s great. When it works. And for god’s sake, don’t make it free. There is not enough capacity and then it doesn’t work for anybody.

That’s a very short version of our discussion.

All this and much, much, more in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

We’re baaack! No more vacation for us.

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

This week we talk about a lot of stuff — including the fact that 3Q13 earnings are right around the corner. We are hearing very bullish comments from both analysts and airline folks about what we should see when the numbers roll out next month. Delta, in particular, looks like it is going to announce very strong 3Q13 earnings.

However, it looks like once again, United Airlines is going to lag its peers in terms of earnings and margin performance. We’ll have to wait to see.

This week we talk about whether or not the fact that United Airlines has a lack of dominance at its hubs (compared to Delta Air Lines for instance) is negatively affecting both revenues and costs. Hunter Keay, analyst with Wolfe Research, talked about this last week in a research note. We think he’s onto something.

In other news, U.S. Bankruptcy Judge Sean Lane approved AMR’s plan of reorganization last week, but the approval is contingent on the DOJ signing off on the deal. Judge Lane also refused to allow American Airlines‘ Chairman and CEO Tom Horton’s $20 million severance to be part of the reorganization plan. This means someone else is going to have to okay the payment.

Meanwhile hundreds of employees of both American and US Airways were in Washington today to lobby members of Congress on why the merger should be allowed to take place.

On the aircraft front, this week was simply stellar for those of us who like to watch brand new shiny airplanes take flight. We saw the maiden flights of both the Boeing 787-900 and the Bombardier C-Series 100 this week. If the Bombardier can come anywhere close to its projected fuel savings and engine performance (and we should start to get some real answers in about 6 weeks or so as flight testing continues) I think the company has developed a very viable player in the smaller jet segment.

But you know how it goes. Airlines are always reluctant to jump to a new player — especially when it is not part of a larger family of aircraft.

While we were on vacation, I am happy to report that energy prices more or less remained stable. Meanwhile, last week was a great week for airline stocks, as the inclusion of Delta Air Lines in the S&P 500 lifted the entire sector. Delta becomes the second airline in the index. Southwest Airlines is the second.

All of this, and much, much more, including a surprise departure announcement from a major airline CEO — in this week’s PlaneBusiness Banter.