Along with the wings and the engines.

This morning Silverjet, the last remaining business niche trans-Atlantic airline, shut the doors.

You may recall that the airline, which halted trading in its shares on the London Alternative Stock Market a little over a week ago, claimed earlier in the month that it was going to receive another $100 million in capital from Viceroy Holdings, LLC., based in the U.A.E.

Apparently the money never came, and this morning the airline announced it was ceasing operations. Its Dubai-London flight Friday morning was it’s last.

Technorati Tags: Silverjet

I always said that this stock was a bad bet — because the company did not control its own destiny.

And yesterday, that fact hit home for employees of ABX Air and ASTAR Air Cargo, as Deutsche Post, parent of DHL,  announced that it had, for all purposes, given up the fight to set up its own competing delivery service here in the U.S.

The company has lost hundreds of millions of dollars in trying to establish DHL as a credible third option to UPS and FedEx. Yesterday, the company’s parent, Deutsche Post World Net, said at a press conference in Bonn that it is going to partner with UPS for all of its air shipments and sorting operations in what it called a “radical” shake-up of it’s U.S. operations.

The hard and cold facts for employees of ABX Air? More than 6000 employees will lose their jobs, including a good number of pilots.

Someone needs to write a book about the FedEx-DHL-UPS saga from start to finish. Would make a great read. I would, however, hate to think how much money all three players have expended over the last 15 years or so — fighting each other in court almost continuously over the right of DHL to enter the U.S. domestic market.

Know anyone that would like to buy 39 DC-9s?

Ticker: (Nasdaq:ATSG)

Fitch Ratings has downgraded the debt ratings of US Airways Group:

–Issuer Default Rating (IDR) was dropped to ‘CCC’ from ‘B-‘;

–Secured term loan rating was reduced to ‘B/RR1’ From ‘BB-/RR1’;

–Senior unsecured rating was reduced to ‘CC/RR6’ from ‘CCC/RR6’.

Fitch’s ratings apply to approximately $1.7 billion in outstanding debt.

“The downgrade follows the unprecedented spike in crude oil and jet fuel costs that continues to erode margins and operating cash flow generation for LCC and all of its competitors in the U.S. airline industry. Given the dramatic rise in energy prices, Fitch believes that the potential for a liquidity squeeze in early 2009 has increased significantly. Assuming no dramatic pull-back in jet fuel prices later in the year and increasing softness in domestic air travel demand as the U.S. economic slowdown continues, Fitch believes that LCC’s unrestricted liquidity could decline toward the covenant level in its secured term loan facility by early next year. The ‘CCC’ IDR reflects the growing likelihood of a constrained liquidity position, as well as LCC’s limited flexibility in raising additional cash through asset sales or new financings.

Because LCC’s average length of haul tends to be shorter than that of the other legacy carriers, the airline’s financial results are relatively more sensitive to swings in the price of jet fuel. Each 10-cent change in the average price of jet fuel for LCC drives approximately $120 million of annual mainline operating costs. While the carrier has hedged a considerable portion of expected 2008 fuel consumption, an increase in the full-year 2008 average jet fuel price to $3.30 per gallon from $2.20 per gallon in 2007 would result in approximately $1.2 billion of mainline expense pressure from fuel alone this year. With current jet fuel spot prices near $4.00 per gallon, a quick reversal in fuel prices would be necessary if LCC is to avoid an erosion of its cash position by Q109.

On the revenue side, industry fare initiatives aimed at offsetting the intense fuel pressure will likely boost yields on reduced domestic capacity, particularly after August as legacy carriers reduce their domestic schedules. Corresponding adjustments in domestic capacity will be somewhat constrained at LCC in 2008, however, by pilot contract fleet and aircraft utilization minimums that could reduce the airline’s near-term flexibility in dealing with a worsening revenue and fuel environment. In 2009, LCC is expected to have more flexibility to reduce capacity, if needed.”

The rating agency also said that it could further downgrade the airline’s debt into the junk category if weak revenue growth increases and fuel trends continue upward.

According to Fitch, this could increase the likelihood that the airline will breach its term loan liquidity covenant. The agency also added, “Any significant increases in credit card processor holdbacks linked to adverse operating developments could further limit LCC’s financial flexibility and prompt an additional downgrade.”

Ticker: (NYSE: LCC)

Technorati Tags: airlines, US Airways

There was good news and not-so-good, but not unexpected news today for Mesa Air Group.

The good news is that  a Federal Court in Atlanta has granted Mesa a preliminary injunction that prevents, for the time being, Delta Air Lines from terminating its contract with Mesa’s subsidiary Freedom Airlines.

This news sent the penny stock traders into a frenzy, as shares of the airline ended the day up 39% to 70 cents.

As for the not-so-good, but not unexpected news, the airline also acknowledged today that Nasdaq has sent the company an “Intent to Delist” letter.

However, this letter was not apparently a result of the airline’s shares having traded below $1 for a given period of time. No, this delisting warning came because the airline still has not filed its quarterly earnings report for the quarter ending Mar. 31.

On May 13, the airline said it was delaying the report, and would file on May 20. But May 20 came and went and no filing. The airline now says it expects to file its quarterly report on or about June 2, which would be next week.

Ticker: (Nasdaq:MESA)

Is there an echo in here? Ah, we’ll at least use another chart.

Fitch also lowered the boom and the ratings on United Airlines’ parent UAL today.

– Fitch Ratings has revised the Rating Outlook for UAL Corp. and its principal operating subsidiary United Airlines, Inc. (United) to Negative from Stable. Debt ratings for both entities have been affirmed as follows:

—UAL & United Issuer Default Ratings (IDR) are now rated at ‘B-‘;

—United’s secured bank credit facility (Term Loan and Revolving Credit Facility) is now rated at ‘BB-/RR1’;

–Senior unsecured rating for United is now rated ‘CCC/RR6’.

The bank facility rating applies to approximately $1.3 billion of funded term loan debt, and the unsecured rating applies to approximately $1.4 billion of outstanding notes.

Fitch said in its release:

“The Negative Rating Outlook reflects Fitch’s view that the unprecedented rise in crude oil and jet fuel prices witnessed over the last several weeks will put increasing pressure on United’s margins and cash flow generation capacity through the remainder of 2008, potentially forcing the carrier to consider asset sales or new financing to shore up liquidity in an increasingly challenging industry operating environment. United has taken steps in recent weeks to counter the fuel shock by cutting domestic available seat mile (ASM) capacity after the summer, while negotiating covenant waivers with its credit facility lenders to ensure access to its $1.5 billion secured credit facility. Still, the magnitude of the recent fuel price spike is leading United and other large U.S. carriers to pursue fare and fee increases that may well begin to crimp air travel demand and undermine the industry’s ability to partially offset fuel-related cash outflows in a weak macroeconomic environment.

Ratings for UAL and United reflect the airline’s highly levered balance sheet, volatile cash flow generation capacity, and ongoing susceptibility to intense fuel and revenue shocks in an industry that remains particularly vulnerable to macroeconomic risk. Following two years of improvements in cash flow generation and steady debt reduction in 2006 and 2007, United faces an increasingly difficult operating environment in 2008 that will likely lead to a deterioration in credit quality over the next few quarters.

In a prolonged high fuel cost scenario that assumes no significant pull-back in crude oil and jet fuel prices through early 2009, United and all of the major U.S. carriers will face intensifying liquidity pressures–particularly if an extended economic slowdown drives a sharp reduction in air travel demand. However, it is important to note that United’s unencumbered asset holdings give it some room to maneuver with respect to liquidity preservation in a deep industry downturn. United’s current unencumbered fleet of 113 aircraft could be financed to shore up cash balances if free cash flow trends deteriorate further. The potential sale of other assets such as United’s maintenance, repair and overhaul (MRO) operations, spare parts, advance sales of Mileage Plus frequent flier miles and London Heathrow slots all represent sources of liquidity that could be tapped in the coming months if unrestricted cash balances fall closer to the $1.0 billion covenant level.

Taking into account the impact of fuel hedges, United remains highly sensitive to volatility in jet fuel prices. Fitch estimates that the annual mainline fuel cost impact of a 10-cent change in jet fuel prices is approximately $220 million. A full year 2008 post-hedge average fuel price of $3.20 per gallon (well below current spot prices of about $4.00 per gallon) would translate into approximately $2.2 billion of incremental mainline fuel costs this year versus 2007.”

The rating agency added, as with US Airways, that “further negative rating actions, including a downgrade of the IDR into the ‘CCC’ category) could follow if sustained high jet fuel prices (above $3.50 per gallon) through the summer, coupled with weakening revenue per available seat mile (RASM) trends and softening air travel demand drive substantially negative free cash flow and force United to borrow heavily to avoid intensifying liquidity pressure moving into 2009.”

Ticker: (Nasdaq:UAUA)