Okay, so how many of you saw that ad in yesterday’s USAToday that was placed by the union leadership of USAPA? You know, the union that represents the US Airways East pilots at US Airways?

I say that because I have yet to talk to an America West pilot who has paid USAPA dues. While USAPA claims to have 5800 members, I think the number is probably closer to 3000 or less.

Yes, USAPA. The same union that was voted in, after the US Airways East pilots refused to go along with an ALPA arbitrator’s award decision in the union seniority process to unite the two separate (at the time) ALPA memberships.

Yesterday, the brain trust of this organization, and I use that term loosely, decided to run a full page ad in USAToday, accusing management at US Airways of “pressuring pilots to reduce fuel levels for your flight in order to save money.”

The ad then continued,

“We ask that you remember this: although we consider US Airways to have embarked on a program of intimidation to pressure your Captain to reduce fuel loads, US Airways Captains are committed to maintaining their right to exercise their “Captain’s Authority,” granted by the Federal Aviation Administration, to ensure a fuel load that will safely fly you to your destination with all the reserves necessary to handle any contingencies related to the flight.”

Uh-huh.

Those of us who know and work in this industry know what this is. It’s a very sad attempt by grown men who should have better things to do with their time to get media attention by crying “Safety, Safety.”

Thankfully, no major media outlets paid much attention to the effort — because, frankly, they also knew it was a bunch of crap.

However — then there is Larry King. And CNN.

Last night, US Airways’ CEO Doug Parker and ATA President Jim May were scheduled to be on King’s show to discuss the issue of rising fuel costs, the industry’s cost problems, whatever.

But what the show turned into was a discussion of how unsafe US Airways was — because of this “problem.” Not only that, but Parker, because of commitments in Washington, was unable to be on the show. The show’s producers apparently thought it was okay to bash the supposed “unsafe” practices of the airline without having the courtesy of having a representative of the airline on the show at all.

As one reader noted in a letter he sent to CNN today,

Yesterday I tuned into your show with the hopes of seeing the CEO of US Airways speak to the crushing negative effects the run up of oil is having on the airlines, the economy, and my career. What I saw was something all together different.

Instead of the scheduled speakers I witnessed a disjointed, subjective, discussion over a “news” story that was generated by an ad placed by the leaders of the new rookie union at US AIRWAYS (USAPA). This ad was nothing more than an ill guided attempt by the fledgling union’s leaders to flex their muscle during contract negotiations.

The core issue here is not about how much fuel a pilot can carry, safety or “Captains Authority” but rather a dispute between the company and a segment of the pilots this new Union represents. (It should be noted that not one of the 1800 former ALPA represented pilots of America West have elected to join this new union.)

As a Captain for America West and post merge the New US Airways, I have never had the company question the amount of extra fuel I choose to carry on any flight segment. Many of those segments routinely carry me and my passengers over the longest over water route in the world and as such I am very cognizant of the need for adequate fuel reserves for any contingency.

I was appalled by this new “Union’s” attempt to bring safety into question when it is clear, based on the data collected, that this was a deliberate attempt by the pilots in question to carry and burn more fuel in an effort to influence the company to acquiesce to their contractual wishes.

As a one time Executive Vice President of The Air Line Pilots Association I have seen and participated in my fair share of labor disputes but I have never witnessed nor would I condone using a bogus “safety” issue to apply leverage to a company.”

As I said in a recent issue of PlaneBusiness Banter — as we see a number of airlines link-up, or merge, and as it becomes more and more clear that the union problems involving the pilots at US Airways apparently had a major chilling effect on the airline’s potential merger with United Airlines — these guys at USAPA are only going to have themselves to blame if the airline finds itself without a dance partner going forward.

But this latest stunt, I have to say, takes the prize.

The boys at USAPA are real men of genius.

As a result, they are more than deserving of a PlaneBuzz Buzz Bomb Award.

It just gets worse and worse.

Whether you believe that the FAA is on a mission to make itself look better, merely do what it should have been doing all along, or catching up on a few “loose ends” by demanding that the bundles inside the wheel wells of MD-80s be tied at one-inch intervals — one thing is pretty clear.

American Airlines has done a god-awful job of communicating with its employees, the press, and most importantly, its passengers, about this whole incident.

Yesterday, way too late after the fact, and after one of its corp comm spokespersons had walked off camera, rather than answer a safety-related question put to him by a reporter, the airline finally put an executive in front of the press — acting in an official capacity. Even worse, this “better-late-than-never” attempt was not a pretty sight.

Dan Garton, the airline’s marketing guy, called a press conference and attempted to give the company’s side of the story.

If you haven’t read about it, you can do so at the Dallas Morning News‘ AirlineBiz blog.



The problem is — if American Airlines takes maintenance and safety seriously — why are they trotting out their marketing person to talk about it? And folks, I have to tell you, Dan was not very good. If the bet on someone’s part was that he would be better on-camera then Bob Redding — well, that bet was wrong.

Example:

Q. Did your mechanics not understand it or did they ignore it?

A. It’s a relatively significant engineering change order. It’s about 30 pages. The mechanics understood it. When they accomplished it, they took what I would call certain latitudes in accomplishing it. My example would be where they tied those cords.

I think what they didn’t understand that there is a sort of greater focus on strict enforcement or strict compliance with the rules of the AD. The rules have gone to a very strict level of enforcement, and we will meet that and get the planes back in the air.

We had a call last night from someone who told us that the reason American Airlines’ Gerard Arpey has been missing in action on all this was because he left the morning it all began to fly to Los Angeles and a meeting of oneworld. Consequently, he then faced a problem in trying to get back to Dallas.

Does he fly back on a private jet? Does he fly back on Southwest? Does he drive a Hertz rent-a-car? Does he bump an already-inconvenienced American revenue passenger?

Well — my response this morning would have to be, “Why not call a press conference in Los Angeles?” They do have media in LA. It’s not like he was in Slovenia. Or up with the ice truckers in Yellowknife.

Finally — as of this morning, the airline still does not have an easy way for passengers to find out if their flight has been canceled or not. People can’t get to the airline on the phone — as reports of system overload abound. And when you go to the airline’s website, there is no easy to find list of canceled flights.

Terrible, terrible, terrible job by the airline in handling this. Five thumbs down. (I got the cats to join in so we’d have enough.)

Unprecedented happening today here at PlaneBuzz. Two Buzz Bombs in one week. One to union leadership at one of American’s unions for its action against one of its members who dared speak the truth.  And today — the second one to American Airlines’ management — which seems to be having real problems in figuring out what the truth is, and more importantly, in conveying that truth to the general public.

Technorati Tags: airline CEOs, airline stocks, airline unions, airlines, American Airlines, crisis communications, public relations

Last week at the Phoenix International Airline Symposium, the air transport division director for the Transport Workers Union, John Conley, participated on one of the panel discussions. Nothing unusual here. The Symposium has been lucky to have John participate for a number of years.

He is one of the few union leaders that you can talk to who doesn’t couch everything in obviously jaded political terms — and if you know John, a former professional football player for the Dallas Cowboys, you also know that he is not afraid to speak his mind on how he sees the world — however hard that may be for other people, including union members, to accept.

But more often than not, his view of the world is usually pretty spot on — in terms of the airline industry as a whole, and particularly in terms of management/union relations.

But apparently, the upper echelon of the TWU hierarchy doesn’t like people speaking the truth.

Today, Trebor Banstetter reports in the Ft. Worth Star-Telegram’s SkyTalk  that John has been put on “administrative leave” by Jim Little, the TWU’s international president.

We got a copy of the memo.

“Effective Tuesday, April 1, 2008, I am placing Air Transport Director John M. Conely on administrative leave from his current position as Air Transport Division Director. Brother Conely will continue working on his other operational assignments.

Until further notice all administrative functions associated with the Air Transport Division will temporarily handled by International Secretary-Treasurer Joseph C. Gordon including staff assignments.”

First of all, it would be nice if Jim could spell John’s name right. It’s CONLEY.

Second, as Trebor reports, and as we’ve just had confirmed by a couple of readers, the reason for this “demotion” is because of comments that John made last week at the Symposium.

During the panel discussion he participated on, which also included Lehman Brother’s analyst Gary Chase, John talked about the effect that $100 a barrel oil could have on airline finances.

As Trebor wrote Friday, (and I heard with my own ears)

“Look, we’re at $100 crude,” said John Conley, air-transport division director at the Transport Workers Union, which represents ground workers at American Airlines as well as some employees at American Eagle, Southwest Airlines and other carriers. “I don’t know that it bodes well for us being as successful [in negotiating new contracts] as we had once hoped.”

Conley appeared on a panel at the International Aviation Symposium in Phoenix. Several industry insiders said that the price of fuel, which is the No. 1 cost for airlines, could devastate the industry.

“This could very well be a seismic-shift year,” Conley said. He said the environment “could be an opportunity to consider not being as intractable as folks have been in the past.”

Analyst Gary Chase of Lehman Bros. pointed out that the run-up in fuel is having a greater impact on airline costs than a typical recession.

“With fuel, it’s like this is three recessions at once,” he said. “And then, we also have a recession.”

Just to add to what Trebor wrote — one of the other options that was brought up during this discussion was the concept of making more compensation tied to company performance — so that fluctuations as a result of industry cyclical activity could be more easily managed by the airlines.

So when John talked about the potential for not being as “intractable” as they had been in the past — it was referring to the fact that perhaps it was a good time to look at different ways to approach contract negotiations. To try and come up with solutions that were perhaps more flexible.

Duh.

The other thing that bothers me about this is that the Symposium is specifically geared to encourage discussion of the problems facing the industry in a conversational, informal format — rather than a postured and “official” manner.

There are no formal “speeches,” no PowerPoint presentations, and no structured format.

If folks who participate in the Symposium are going to be “demoted” because they contribute positively and constructively to a frank discussion — rather than merely mouthing union rhetoric that would render their appearance a waste of everyone’s time — then this threatens the very reason why the Symposium exists.

But apparently the TWU and its President, who can’t even apparently spell John’s name right, have decided to “demote” him.  Demote him — for simply speaking the truth. And for talking in a rational way about the situation that now confronts management and labor — as airlines look at $100 a barrel oil.

Yes, well, for this, the TWU and particularly its President, Jim Little, are awarded a PlaneBuzz Buzz Bomb.



Shame on you.

You’ve seen the ads. Subscribe to Barron’s. Stay on top. Get cutting-edge financial and investing advice. (Barron’s is owned by Dow Jones, which owns the Wall Street Journal.)

Now, I ask you, all of you who are airline savvy, to read this article from this week’s issue of Barron’s and tell me how many mistakes you can find. Trust me, it’s over ten. It’s even more than twelve.  Yeah, I want to go buy some shares of ARM. Right after I talk to Delta’s Jerry Grinstone. And right after I read analysis from CANYON Securities analyst Ray NEEDLE.

This is legit folks. This didn’t come from The Onion.

Thanks to former TWA’s former SVP of Corporate Communications Mark Abels for forwarding this to me. But I admit, I thought it was a joke. But no, it’s no joke.

Yeah, right. I’m certainly going to read Barron’s for my financial advice. If this is an example of the subject knowledge of the writers they hire — this is the last time I’ll ever look at the publication. Not that I have ever given it much attention anyway.

A big fat BuzzBomb to Barron’s for its pathetic and grossly inaccurate reporting.

P.S. This is a copy of the original article as posted. I would hope  the publication will make corrections to the article online — so that is why I have not supplied a URL. Sorry about the weird spacing, but that’s an HTML thing because it was pulled from their site.

__________________________________________

Saturday, May 5, 2007

Delta Roars Back to Life

By THOMAS G. DONLAN

EVERYTHING OLD IS NEW AGAIN. Delta Air Lines emerged from bankruptcy last week and 400

million shares of its new stock opened for trading Thursday on the New York Stock Exchange under the

same old ticker symbol, DAL. The old stockholders were wiped out and former Delta unsecured creditors

became the new ones (employees, managers and the federal Pension Benefit Guaranty Crop. also

received shares).

The shares, as expected, got off to an unremarkable start their first day, with lenders evidently eager to

cash out, as they often are in such situations. In earlier, “when-issued” trading, the shares sank from 23

to 19, and they opened Thursday at about 21. Over the next two quarters, however, the company

should do well enough to justify a price closer to 25. Looking further ahead, two Morgan Stanley

analysts may well be right when they say “buy on material weakness” and project a share price of 27 to

29.

Make no mistake: Airlines are risky investments. They are highly vulnerable to economic slumps,

terrorism, fuel-price increases and overcapacity, and they face intense price competition on key routes.

Delta is not immune. Several years ago we thought it would be less affected by the troubles of the time

than its closest rivals (“Taxiing for Takeoff1,” Nov. 11, 2002). But it was ARM’s (ARM) American Airlines

that actually escaped bankruptcy.

Although Delta shed about $13 billion of debt and lease obligations, 6,000 people from a workhorse of

53,000 and a mountain of assets including 82 planes during its 19 months in bankruptcy, the Atlanta-

based airline has kept the things that made it strong in the past.

It has a reasonable route structure and still dominates its local

hub airport with an operation considered one of the industry’s

most valuable assets. Its workhorse is still relatively loyal,

enthusiastic and mostly non-union. Many of them are

extremely relieved that Chief Executive Gerald Greenstone beat

back a takeover attempt by US Airways (LCC), and some are

impressed by Greenstone’s sharing the pain through pay cuts

for himself commensurate with those imposed on workers.

Delta has rebuilt its finances and now has one of the stronger balance sheets in the industry, with cash

at $2.9 billion and net debt set to be at $7.6 billion by the end of 2007. And it is looking to grow

primarily on international routes, which can be more profitable than the domestic business.

What could be more important than any of these individual traits is the general upturn in the airline

industry as Delta emerges from Chapter 11. As Canyon Securities’ veteran analyst Ray Needle put it in a

recent report, “It is now spring, when an investor’s fancy turns to airline stocks as the industry heads

into its two best quarters. We expect the whole sector to participate and all the airlines that we follow

should rally.” He added: “We favor the legacy sector in the immediate future since they can better take

advantage of the upside cycle with their vast systems, progress in making cost cuts, and broad yield-

management systems.”

In truth, the major airlines are heavily leveraged to the economy,

doing well in good times and doing atrociously in bad times. While

Delta was suffering from heavy competition and high costs,

operating losses amounted to $3.3 billion in 2004 and $2 billion in

2005, before an operating profit of $58 million 2006. For 2007,

Delta projects a pretax profit of about $800 million — about $2 a

new share, meaning the shares are trading for about 10 times

2007 earnings.

“This is rich compared to other non-bankrupt legacy airlines, which

are trading between three and six times 2007 UPS,” Needle said.

“However, Delta is coming out of bankruptcy with $1 billion in

labor-cost cuts and a streamlined route network, an estimated

cost per available seat mile, ex fuel, of 7.5 cents and a sharply

reduced interest-cost burden, with net debt cut more than in half,

down to $7.6 billion. This is strong compared to other legacy

airlines,” the analyst said.

Not strong enough for Prudential analyst Bob McAdoo, who said recently that the new Delta may quickly

drop to the vicinity of $15 a share. Indeed, at $20 a share, Delta’s $8 billion market cap exceeds all

other major U.S. airlines except Southwest.

CEO GREENSTONE, FOR HIS PART, sees the airline’s strategy for the future as an extension and

improvement of the international strategy Delta failed to execute after it bought Pan Am routes in the

1990s.

“When Delta bought the Pan Am assets, it didn’t have the

ability to feed the international system [with domestic traffic

connections],” Greenstone said in an interview. “Now we are

providing enormous feeds to [international hubs in] New York

and Atlanta. You can’t succeed in this marketplace without

feeding.”

Skeptics of the strategy note that a new airline regulatory agreement between the U.S. and the

European Union will expose existing carriers to more competition, especially at popular European

destinations such as London’s Heathrow Airport.

Delta, said Greenstone, calculates that it will have the lowest costs in the New York-Heathrow market

and will also be offering direct service to secondary European destinations, from Edinburg, Scotland, to

Bucharest, Romania, and many points in between.

Delta’s new shares could have some rewarding travels of their own.

______________________________________________________________

Ticker: (LCC:NYSE), (DAL:NYSE), (AMR:NYSE)

Okay, so APA President Ralph Hunter suggested, “We Know Why You Fly and We Just Don’t Care,” but I like our shortened version better.

The fallout continues over the debacle that was American Airlines‘ operations on Dec. 29.

While those of us in the industry certainly knew a lot about the airline’s operational meltdown — a result of a non-ending series of storms that moved south to north on that day — and a series of mistakes made one on top of another, it never helps to have your mistakes plastered across the pages of the Wall Street Journal. (Sub required) Then everyone finds out about it.

Granted, all airlines suffer from operational issues. Northwest passengers endured their own marathon on a plane a couple of years ago. I was part of the legendary September meltdown a few years ago at O’Hare that saw me sit on a diverted United plane in Indianapolis for 6 hours.

But I have to admit, I think Scott McCartney hit some nerves with this article.

While the article details many mistakes on the part of the airline, the most damning part of McCartney’s story is that even after passengers had been stuck on the ground in a plane for hours and hours in Austin — when they finally did get off the plane, there was little special effort on the part of the airline to take care of them. There is simply no excuse for that.

Much less were there any apologies offered by the airline. As McCartney wrote,

“American’s [PR flack] Mr. Hotard says the airline is truly sorry for the mess. He says one reason the airline may not have contacted customers to apologize is that its Fort Worth headquarters, where customer-service specialists work, was closed for four days over New Year’s.”

No excuse.

Would we hear JetBlue say something like that? Or Southwest?

I highly doubt it.

We’ve got a BuzzBomb in the works. We’re just checking with the right folks to make sure we can directly attribute a particular column or not, before we go with it.

Stay tuned.

Just as I figured.

Thanks to Eric Olesen, who did a little online dumpster diving of his own online this afternoon — the list has been found.

As I suspected, the “101 Ways to Save Money” that Northwest included in their materials to laid-off employees? Came right off the web. The list was apparently originally distributed by various consumer credit counseling services. But the interesting thing? Apparently even they must have decided some of the things on the list were a little out of line, because Eric says he could only find the list in old cached pages.

Old outdated web pages. I guess that’s what Northwest was referring to when they said the information had come from a “third party vendor.”

Hey guys — you’re busted! You are guilty of dumpster diving online!

Eric tells me there are a number of versions floating around of this patronizing piece of drivel, but this one sounds pretty close to the one that Northwest felt compelled to include in their employee materials.

Happy reading. The entire list is included below.

BTW — thank you to Eric, who confesses he is a “cheap bastard.” As a result, he knows the “saving money” territory quite well.

101 Ways to Save Money

Continue reading →

Fortunately, readers seem to like the concept of BuzzBombs.

Unfortunately Northwest Airlines keeps doing things that warrant an award.

This week, by overwhelming popular demand (measured very scientifically ….. your emails on the subject have clogged up my email box), we once again have to award the brain trust at Northwest Airlines a coveted PlaneBuzz BuzzBomb award.

And just what did Northwest do this time to merit such an honor?

It appears the airline wrote and distributed a little 165 page booklet to employees last week. The booklets were sent to 60 ground workers facing layoffs in Bozeman, Montana, and Austin, TX. Included in that booklet were two pages of “Money-Saving Tips.”

Those tips were also posted on the airline’s employee website.

The two pages of tips were entitled, “101 Ways to Save Money.” Included were such intelligent suggestions as “Brown bag your lunch,” and “Always grocery shop with a list.”

But it also included ideas such as “Don’t be shy about pulling something you like out of the trash,” and “Take a date for a walk along the beach or in the woods.”

Now first of all, if someone is about to be laid off, I doubt they have to worry about “brown-bagging” their lunch.

And if there is no paycheck, I would think shopping for groceries becomes a bit more difficult as well. With or without a list.

But clearly the suggestion that has caused the greatest outcry was the one that employees should, in effect, become dumpster divers.

Northwest’s excuse?

The material was provided by a “third-party vendor.”

I wonder if they actually paid for this stuff, or if some lackey just pulled it off some website somewhere.

“Regrettably, this list, which included some insensitive material, was inadvertently published in this resource guide without being reviewed by Northwest management,” the company said in a statement.

Sorry guys, but that’s just not good enough.

To accompany this particular BuzzBomb, we offer this inspirational graphic. We suggest Northwest have it enlarged and printed by the thousands. They could adorn the walls not only at the company’s headquarters, but each employee lounge as well.

I first received a note about the situation with employee medical coverage at Mesa about two weeks ago. This was shortly after we BuzzBombed Northwest Airlines for the short two-week time frame employees there were given to respond back to the airline in regard to their choice of medical coverage.

That week I received a note concerning employee medical coverage at Mesa, which, frankly, I just didn’t believe.

But, it appears to be legit.

Here’s the deal.

It appears that Mesa recently gave their employees all of 3 days…. yes …3 days… to sign up for their new medical insurance coverage.

Only after employees screamed about the situation did the airline extend it for a week or so.

Oh, and for those employees that have been hired by the airline after Feb. 1 of this year — I’d suggest they take a really close look at their medical insurance coverage limits.

It was confirmed to us this week that the maximum annual payment allowed under the new Mesa self-insured plan is $25,000.

That’s right.

$25,000 a year max.

According to our sources, management has pointed out to employees that if they want additional coverage, they can buy it themselves.

I’d suggest Mesa employees might indeed want to look at additional policies with $25,000 deductibles, as one relatively normal visit to the hospital could easily exceed that total. My personal experience certainly bears this fact out. I say this, because I have a feeling that new hires may not pay much attention to the fine print and think they have a viable maximum lifetime payment provision — as is the case with the majority of health insurance plans.

Meanwhile, given that Mesa Chairman and CEO Jonathan Ornstein has what appears to be the most lucrative compensation package in the regional airline sector — not to mention the most lucrative severance agreement should the airline ever be sold — I find both the initial three-day sign-up period, not to mention the paltry annual maximum on medical payouts worthy of BuzzBomb recognition.

And of course, the new limits are only in effect for worker bees — not members of the Mesa management team.

Okay, first things first. This BuzzBomb has nothing to do with employee benefits, lack of time to secure such things, or crappy things like that. No, we’re still trying to confirm the details on our earlier BuzzBomb “teaser” from a few days ago. Look for this on Friday — unless we hit some unexpected snag.

No, tonight dear readers I feel compelled to award a BuzzBomb to Spirit Airlines.

And what did the airline do to receive our ugly piece of notoriety today?

They were really, really stupid.

Yesterday the airline apparently went public on its website with a promotion called “The Hunt for Hoffa.”

Yes, like Jimmy Hoffa.

The airline promoted the game with the tagline, “Help us find Hoffa with our Hunt for Hoffa game and enjoy fares from just $39 each way.”

According to an Associated Press report, the point of the game was to dig for Hoffa’s body by clicking grids on the airline’s site, “mirroring the massive effort at the Detroit-area horse farm in May.”

Winners of the online virtual body part scavenger hunt were then taken to another page that greeted them with the message, “YOU FOUND HOFFA,” thanking them for helping the “National Spirit Sale Center” find the missing union leader.

What in the world were these people thinking?

Obviously they thought it was funny.

Yes, well, we don’t. And apparently we weren’t the only ones.

The airline has now pulled the Hoffa body part scavenger hunt from its website. Promotion is over. Well, actually it’s been renamed.

It’s now the “Happy Sale.”

I think we’ve said enough. You get the picture.

Spirit is more than deserving.