Category Archives: Breaking News

AirTran Issues Statement on Today’s Stock Drop

Aai

Hoping to quell potential motivations behind a panic sale in its shares late Friday afternoon, AirTran issued updated financial information concerning the airline’s financial status.

The airline said it is in full compliance with the terms of its credit card agreements, and has no holdbacks with any of its major credit card processors.

AirTran also said its liquidity position has strengthened this year, with the total cash and investments balance increasing to $358 million at March 31, up from $326 million at Dec. 31.

The airline said it expects its liquidity to further strengthen during the second quarter.

Ticker: (NYSE:AAI)

Frontier Airlines Files for Chapter 11

Frontier Airlines A319

It’s getting so that it’s scary to crank open the computer and open up the email bag.

Another Friday, another airline bankruptcy.

Frontier Airlines Holdings, Inc. today announced that, following an unexpected attempt by its principal credit card processor to substantially increase a “holdback” of customer receipts, which threatened to severely impact Frontier’s liquidity, Frontier and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

We had talked about the shares of Frontier being in freefall here earlier this week. We formally placed the airline on our PlaneBusiness Titanic Watch last week. Yesterday shares of the airline took another dive, closing at $1.57.

Unlike the last several airline bankruptcy filings however, Frontier remains in business.

Frontier said it expects to continue operating its full schedule of flights, adding it will honor tickets and reservations as well as providing refunds and exchanges as usual.

“We felt that Frontier would be able to withstand the challenges confronting the U.S. airline industry, which include unprecedented and significant increases in the cost of jet fuel and the impact of the credit crisis in the financial markets, without seeking bankruptcy protection,” said CEO Sean Menke in a statement.

Just a note here on the increase in credit card holdbacks. We’ve seen this happen in the past — and it is something we can certainly expect to see again with other airlines that book their own reservations and find their cash reserves under scrutiny. (Clearly this does not apply to the bulk of regional airline flying.)

Ticker: (Nasdaq:FRNT)

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American Grounds MD-80 Fleet

One of our readers at American just sent me a note that says:

“Last night, the FAA conducted a spot inspection

of the S80 fleet to check compliance with AD 2006-15-15,

as incorporated into an American ECO (engineering

compliance/change order).

Using their method where they sample a statistical

number of aircraft and extrapolate to the entire

fleet, the FAA examined 10 aircraft at DFW. 9

were found not to be in compliance with the ECO.

As a result, the entire S80 fleet is grounded

as of now.”



He included this list:

This is only one page of many.

2020 2135 SP80XL DFW /ATL SEG CNLD CODE910-MECH RMKS OPNL

2211 2135 M83GXL DFW /PDX SEG CNLD CODE911-MECH RMKS OPNL

0497 2140 M83GXL DFW /ICT SEG CNLD CODE910-MECH RMKS OPNL

0657 2145 M83GXL DFW /ABQ SEG CNLD CODE911-MECH RMKS OPNL

              — CHG EQ M83G/4YU TO SP80/

1251 2145 SP8VXL DFW /MCI SEG CNLD CODE911-MECH RMKS OPNL

              — CHG EQ SP80/586 TO SP8V/

0541 2150 M83GXL DFW /DEN SEG CNLD CODE910-MECH RMKS OPNL

2059 2150 M83GXL DFW /SLC SEG CNLD CODE911-MECH RMKS OPNL

1601 2200 M83GXL DFW /SAN SEG CNLD CODE910-MECH RMKS OPNL

              — CHG EQ SP80/470 TO M83G/

0343 2205 SP80XL DFW /ELP SEG CNLD CODE911-MECH RMKS OPNL

0785 2205 SP80XL DFW /AUS SEG CNLD CODE910-MECH RMKS OPNL

2380 2205 M83GXL DFW /ORD SEG CNLD CODE911-MECH RMKS OPNL

              — CHG EQ SP80/422 TO M83G/

0403 2220 SP80XL DFW /TUS SEG CNLD CODE910-MECH RMKS OPNL

              — CHG EQ SP80/4WB TO M83G/

1079 2225 SP80XL DFW /OKC SEG CNLD CODE910-MECH RMKS OPNL

2285 2235 SP80XL DFW /PHX SEG CNLD CODE910-MECH RMKS OPNL

0550 2240 SP80XL DFW /SAT SEG CNLD CODE910-MECH RMKS OPNL

1410 2255 SP80XL DFW /TUL SEG CNLD CODE910-MECH RMKS OPNL

1274 2300 M83GXL DFW /AUS SEG CNLD CODE910-MECH RMKS OPNL

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Skybus Shuts Down Operations

Skybus

The Columbus Dispatch is reporting that Skybus is kaput.

Skybus investors include Nationwide Mutual Capital, Huntington Capital Investment Co., Battelle Services Co. and Wolfe Enterprises Inc., a subsidiary of The Dispatch Printing Company, which owns WBNS-TV, the Ohio News Network, and the Columbus Dispatch.

The airline will cease flying tonight.

No recourse for passengers here, unless they can get a refund from their credit card company.

We have more than one PlaneBusiness Banter subscriber who is employed with the airline — good luck to you — and to all the Skybus employees who now find themselves with no job.

ATA Airlines Shuts Down Passenger Services; Lehman Analyst Discusses Effect on Southwest Airlines

Ata

Southwest Airlines codeshare partner ATA has filed for Chapter 11 bankruptcy protection.

The airline said that it made the decision to do so after FedEx informed the airline that it would no longer be a member of a “teaming arrangement.” This agreement gave ATA a large number of airlift contracts for transporting military personnel and their families to destinations overseas.

This one agreement had apparently made up the bulk of ATA’s charter operations.

Global Aero Logistics and its other subsidiaries, World Airways and North American, will continue to operate as normal.

Interestingly, the ATA website was down for a time last night, and we had seen a number of emails suggesting that perhaps the airline was getting ready to shut down. But after about an hour or so, the site popped back up again, and was again taking reservations.

So much for that great Southwest codeshare idea.

Speaking of, in a research note this morning analyst Gary Chase tackled the impact this shutdown will have on Southwest, as he wrote,

“With ATA’s discontinuation of service, LUV loses both near-term code
share revenue as well as a future partner for its international code
share efforts.  LUV disclosed ~$14mm in code share revenue for 3Q07,
or ~$40-50mm on an annualized basis.  Based on DOT data, we believe
that only 35% of revenue was coming from Hawaii service (although the
mix likely shifted more towards Hawaii in recent months), with the
remainder coming from Chicago service to business markets such as New
York LaGuardia, Washington National and Dallas-Ft/Worth.  With the end
of Chicago service, LUV was likely to see a meaningful reduction in
ATA code share revenue prior to its ending service.  Over the
longer-term, LUV will now need to find alternative code share partners
for its near-international efforts in 2009.”

Delta Tells Mesa Air Group The Embraer 145 Party Is Over

Mesa Air Group 225X215-1

According to a press release issued by Mesa Air Group tonight, Delta Air Lines notified the airline on Friday that it intends to terminate the contract between Delta and Freedom Airlines, Mesa’s wholly-owned subsidiary.

According to the release,

Delta seeks to terminate the Connection Agreement as a result of Freedom’s alleged failure to maintain a specified completion rate with respect to its ERJ-145 Delta Connection flights during three months of the six-month period September 2007 through February 2008. The notice issued by Delta is accompanied by a proposed temporary agreement pursuant to which Freedom would continue to provide Delta Connection services while the parties discuss the terms of a transition agreement. This termination does not affect Freedom’s CRJ-900 Delta Connection flying.”

Mesa, not surprisingly, said in the release that it intends to “vigorously defend its rights.”

So how many aircraft are we talking about? 36 Embraer 145s. Not chump change for Mesa. And no, the ERJ-145 is not an aircraft that is particularly in hot demand either — if Mesa has to try and unload them and/or find them new homes.

Ticker: (NYSE: DAL), (Nasdaq: MESA).

Sad Day: As Expected, Aloha Airlines Announces Shutdown

Aloha

This week at the Phoenix Symposium, I couldn’t find one person who was optimistic about the chances of Aloha Airlines keeping the doors open beyond tomorrow.

This afternoon the airline confirmed the worst.

Aloha Airlines, which first began operations in 1946, will shut down operations tomorrow.

The airline’s cargo operation, which remains profitable, will continue to operate. In fact, the cargo operation is going to be auctioned next month. Saltchuk Resources out of Seattle, has already said that it intends to bid on the cargo operation.

Confirmed: Aloha Files for Chapter 11

From the airline’s official statement:

“Aloha is also seeking Court approval of a cash collateral financing arrangement with its principal working capital lender, General Motors Acceptance Corporation, to provide financing for operations pending a further hearing in accordance with bankruptcy rules. In doing so, Aloha seeks to protect 3,500 jobs, honor thousands of passenger travel reservations, keep the U.S. Mail and air cargo moving between the islands, and continue to provide essential ground-handling services for domestic and international airlines serving Hawaii.

In its filing, Aloha cited its inability to generate sufficient revenues from its inter-island passenger business due to predatory pricing by Mesa Air Group’s go! airline. In the highly competitive inter-island market, Aloha was forced to match go!’s below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel. Late last week, crude oil rose to an all-time record high of $111 a barrel. For Aloha that means an annual increase of $71 million in fuel expenses.

“It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action,” said David A. Banmiller, Aloha’s president and chief executive officer. “Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha, and to continue to earn the support of our loyal customers, business partners, vendors and financial backers.”

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