Monthly Archives: November 2007

Ahhhhh. Let’s Get Back to Work: Good News on the Oil Front

050306Oilbarrels200-21Good day for airline stocks today. The price of oil dropped back $3.45 to $91.17 and only three airline or airline-related stocks we track here at PlaneBusiness were down on the day.

On the not-so-good news front, however, as a person who, just like you, puts gasoline in his or her car on a regular basis, the price of gasoline is now beginning to reflect the increase in oil prices we’ve seen over the last month.

A fact I was ruminating over today when I went to the Post Office and saw a soccer Mom tooling around in a new burnt orange Hummer. Keeping that thing fed these days must cost the equivalent of some people’s rent payment.

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Jonathan Ornstein and Mesa Air Group Sue PlaneBuzz

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In a March 17, 2006 issue of the Star-Bulletin, Mesa Air Group’s CEO Jonathan Ornstein told the paper, in reference to a lawsuit his airline had filed against Hawaiian Airlines, “Frankly, I always view lawsuits as negative energy, and a lot of time spent on lawyers’ pay with very little good coming out of them.”

Not withstanding his comments then, apparently Mr. Ornstein feels that our recent coverage of the Hawaiian-Mesa trial was defamatory to his company.

I first received a letter from a legal firm representing Mr. Ornstein and Mesa on October 18, which was basically one of those “threat before we file suit” types of letters. The trial was over, but had not yet been decided. The letter demanded a retraction of several PlaneBuzz blog posts. In fact, the demand was for an immediate retraction. I did not feel there was a basis for the retraction of the posts, so I did not do so.

Those posts are:

Here

Here.

And here.

My attorney, who represented me against another similar lawsuit that Mr. Ornstein filed against me in 2002, Dan Barr of Perkins, Coie, Brown and Bain in Phoenix, was out of the country on vacation.

I replied to the law firm that sent me the letter that I would like time to discuss this with my attorney.

Neither he nor I received any additional response from the other firm. Nor did I receive any communication from Mr. Ornstein.

This past Friday I was served at the PlaneBusiness Worldwide Headquarters with the lawsuit. It was filed on the day the ruling came down in the Hawaiian case.

So folks, here’s the deal.

I am going to publish everything that is relevant to this case here. Publicly.  As it continues.

You can read for yourself and judge the merits (or demerits) of the suit.

Here is a .PDF of the original letter that was sent to me.

Here is a .PDF of the complaint section of the lawsuit. (There is more to the actual filing, but this will give you the gist of the assertions that are being made without you having to download 35 pages. However, if you want the whole thing, just drop me a note. I’ll be happy to send it to you.)

As my attorney told me Monday, “Just tell your readers that you are going to vigorously defend yourself in this matter.”

And folks, that is exactly what I intend to do.

Ticker: (MESA:Nasdaq)

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PBB Now Posted

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Okay guys, this week’s issue of PBB is now posted.

That’s it for the earnings issues. We should be back on our normal “non-earnings intensive” schedule next week.

PlaneBusiness Banter subscribers can access this week’s issue here.

I Need a Visit to the Wings Bar and Grille

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Anyone else out there remember when I used to do that thing on Friday nights called “The Wings Bar and Grille.” If you do, you get a dog biscuit.  I mean, we’re talking 7,8,9 years ago.

That’s what I feel like I need right now. A trip to the Wings Bar and Grille.

Maybe we’ll have to reopen the old place one of these days. Then again, I guess if we “re-open” it, we’d have to make it the Wings Spa and Grille, since that seems to be more politically correct these days, huh?

Okay, guys, the last big earnings issue of the quarter is done. But since it’s late, I’m going to go with a posting tomorrow.

I have to admit, I like picking through the airline earnings calls. I know, I’m weird.

This week I take a look at the recent results of WestJet, SkyWest, and Hawaiian Airlines.



SkyWest
was the last earnings review I did this week. What was the most interesting factoid about the boys and girls based in St. George this quarter? (Besides the fact the airline continues rake in cash at a faster clip then Citibank?)

For the first time since SkyWest took over Atlantic Southeast, SkyWest did not make one dollar on operational bonuses for the ASA operation. Not one incentive threshold was met.

I may be wrong, but I don’t remember SkyWest ever not picking up at least one of its performance incentive payments during a quarter. Ever.

So while the SkyWest operation had a fairly solid quarter, the travails of ASA continued.

Listening to SkyWest CFO Brad Rich at the beginning of the call, referring to the ASA problems, I got the impression he just wanted to address them, acknowledge them, and then move on as fast as he could to something else. Anything else.



Last quarter Brad talked about how Delta had taken over ground operations for ASA in Atlanta. In this call, the airline acknowledged that Delta’s shifting schedules in the third quarter took a toll on the airline — as did the fact ASA was faced with a 32% increase in departures during the quarter.

Interesting reading.

Okay, on that note, I’m going to go rest the eyes. We’ll post tomorrow. Let me clean up the edits, and polish her up a bit. I’ll talk to you guys manana.

Ticker: (SKYW:Nasdaq), (HA:AMEX),WJA.TO

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Virgin America Blinks

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I wonder if Gary Chase got any sleep last night?

This morning, the Lehman Brothers analyst was out with another interesting research note. Every Friday Gary updates investors on the industry’s capacity moves. Today? He had some interesting news concerning Virgin America’s trans-cons in his pre-update capacity note.

Gary reports that Virgin in pulling down capacity in its trans-con routes.

Clearly, this is primarily good news for JetBlue. But it also is good news for other airlines that fly a notable portion of their RASMs in trans-cons as well, including American, United, Delta, and Continental.

According to Gary, Virgin  today pulled about 14% out of its JFK-SFO schedule and 6% out of its JFK-LAX schedule for Nov, Dec, and Jan period (deepest reductions come in Dec).  JFK-SFO went from 4x daily to 3x daily and JFK-LAX went from 4x to 3x (in the off-peak parts of the month) in the schedule tapes.  The adjustments begin in late November. As Gary noted, “It may be only for the off-peak period, but it sure is better than the previous schedule.”

So is Virgin merely moving the capacity elsewhere? Nope. Gary reports that there does not appear to be any offsetting additions by the airline.

Gary’s overall take on the news? “We don’t think Virgin would be drawing down capacity if they were eating everyone’s lunch in these markets and shifting large market share.”

Tickers: (UAUA:Nasdaq); (CAL:NYSE), (AMR:NYSE), (JBLU:Nasdaq)

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Kudos To Southwest Corp Comm

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In all the hub-bub this week over the changes in Southwest AIrlines‘ fare structure, I forgot to say something about the airline’s really nifty web-based audio-video system they used this week to hold their web cast press conference.

I do not recall the name of the product that popped up on my computer, after I went to the media-designated web address, but the system they used was excellent. I’ll drop the folks there a note today and ask them who it was.

Not sure if this is the same system the airline has used in the past, as I have never participated in one of their live calls in this manner before, but audio quality was excellent, we saw slides of the changes to the website set-up come up on our computer as Kevin Krone, their IT wizard went through the changes — and if we had a question, there was a little box right there for you to type in the question. Southwest corp com folks then would read out the questions sent in by various folks to CEO Gary Kelly in-house in Dallas. (There were also reporters there underfoot who asked questions directly.)

Very, very, nice system. Would be nice to see more airlines be so open and technologically advanced when they do webcasts. Then again, it would be nice to see more airlines do more live webcasts. Period.

Ticker: (LUV:NYSE)

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Chase on JetBlue: Airline Needs Restructuring

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Gary Chase, analyst with Lehman Brothers, posted a midnight oil research note tonight on the departure of John Harvey from JetBlue.

Chase says to expect some “near-term weakness” in JetBlue’s shares, especially tomorrow. However, he also does not see this news as being indicative of any “imminent breakdown” in JetBlue’s fundamentals.

However, Chase also commented,

“This news comes at a bad time.  Oil is reaching new highs almost daily and concern about competitive impact from Virgin America among other things are weighing on JBLU sentiment specifically. JBLU is heavily shorted (highest short interest in the group) amid concerns about Virgin impact especially.  To boot, on the surface, it looks very expensive.  Bottom line, the path of least resistance is to be negative for tomorrow and possibly the next several trading sessions.

Now for the not so obvious…

We believe JBLU is a company in need of restructuring. Its valuation on current consensus is not the issue.  Its true earnings potential is the issue, in our view.  Importantly, we see significant upside opportunity on the cost side of the ledger and in the potential for larger network restructuring.”

Ticker: (JBLU:Nasdaq)

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JetBlue CFO Out — Was He Pushed?

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Late day announcement today from JetBlue that says CFO John Harvey has resigned as CFO of JetBlue. We hear that is not exactly the case. Sounds to us like Harvey was pushed. By the JetBlue board of directors.

The airline said in its release that SVP of Finance Ed Barnes has been named interim CFO.

Looks like it’s shake, rattle and roll time at the carrier. The airline recently also showed its previously  highly touted EVP and Chief Revenue Officer Trey Urbahn the door. Although in his case there was no press release announcing his departure.