Monthly Archives: April 2010

PlaneBusiness Banter is Now Posted!

home-typewriter copy 1.jpg

Big, huge earnings issue this week for PlaneBusiness Banter subscribers to paw through, as we take an in-depth look this week at the earnings posted by AMR, parent of American Airlines, Southwest Airlines, Continental Airlines and Delta Air Lines.

We also have earnings summaries for Allegiant, Alaska Air Group, AirTran and Hawaiian.

But….there is more.

Like a long update on the latest chapter in the United Airlines‘ Mating Dance. Is US Airways really out? Will Continental and United be able to agree on stock prices? Will Gordon Bethune come back to run the new airline?

(That last one is a joke. No, really.)

We’ve got the details of the testy exchange between JP Morgan analyst Jamie Baker and American’s Gerard Arpey and Tom Horton on that airline’s call. We’ve got the details on what I think was a great quarter for Delta Air Lines. And Southwest — they have made good on their pledge to find more quarters, nickels and dimes in the seat cushions.

As for Continental — let’s just say I think the boys in Houston were a bit distracted.

All this an a whole more in an issue that should run over about 75 pages this week! (Great airline flight reading material.)

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

US Airways Says It is No Longer in Talks With United

How ironic. I’m sitting on a US Airways flight, waiting to take off from CLT to DFW. News just out on the wire says that US Airways is no longer doing the merger mating dance with United Airlines. I’m sure there will be more news by the time I return to the PlaneBusiness Worldwide Headquarters. Behave yourselves in the meantime.

PlaneBusiness Banter Now Posted

home-typewriter copy 1.jpg This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access the latest issue here.

This week we are talking about ….what else? The latest chapter in the United Airlines/Continental/US Airways mating dance.

Do we think anything has changed? What do we think is going to happen?

We also talk about the press release that Southwest Airlines issued Friday pertaining to its now-dead codeshare agreement with WestJet.

As our PlaneBusiness Brown Bag Analyst told PBB subscribers two weeks ago — this was all about New York. More on all that in this week’s issue.

Then, of course, there is that little problem of all that volcanic ash that is now making its way slowly over the UK and much of Europe. Volcanic ash and jet engines — not a good combination. For much of Europe, and all of the UK, air travel has effectively stopped altogether, although there were a few “test” flights that went up today — in an attempt to “measure” the level of ash in the atmosphere.

Right.

Meanwhile today Pratt and Whitney issued the following statement:

“Volcanic ash can damage aircraft and engines in several ways. P&WC encourages operators to refer to their airframe OEMs guidance on a potential volcanic ash encounter for additional information.

While P&WC acknowledges that the Local Regulatory Authority has the final determination of whether flight operation is to be conducted, we want to inform you, our customers, of potential hazards.

P&WC does not recommend operation in conditions where volcanic ash is present. Let us explain why.

Volcanic ash may clog air filters of turbine engines, block cooling air passages, erode the gas path components, and erode the protective paint on casings. Volcanic ash entering the engine can also melt in the combustor and then re-solidify on the static turbine vanes, potentially choking the turbine airflow and leading to surging and an in-flight shut-down. It is also noted that there is a high level of acidity associated with volcanic ash, and this may also lead to deterioration of engine components.”

Airline stocks had a pretty good week this week, but oil was positively volatile. Then there was the news of the SEC fraud case against Goldman Sachs. Oh boy. This is just the small tiny piece of what is going to be a very ugly iceberg. We tell you why.

And finally, in addition to all the other things we talk about this week — there is this major news.

This week we award, for only the second time in 14 years, a PlaneBusiness Wild Turkey Award to an airline CEO who we think has done an outstanding job in leading his employees and managing his airline. No hints. You’ll have to go find out who it is somewhere else.

And yes, the award is named in honor of you know who.

United Airlines’ CEO Glenn Tilton’s Post Merger Role Key to Eventual Merger

Just as anticipated, it was reported today that Continental Airlines and United Airlines are supposedly talking about a potential merger, “according to media reports that cite people familiar with the matter.”

In answer to a few emails from some folks today, here’s our take on this “news.”

One, just as the news about a potential US Airways/United deal was clearly “leaked” last week by those on the United side of the potential deal in an attempt to gauge the market interest in such a match-up, the news today that has Continental and United talking another potential merger is no different.

Here’s the deal: United Airlines wants to do a deal with somebody. It may be Continental. It may be US Airways.

I could talk at length about the potential plusses and minuses of either deal.

But frankly, those details are not going to be the determining factors in terms of which airline United ends up doing the merger dance with.

Just as was the case with both failed potential merger deals last year involving the same three players, an eventual deal will depend heavily on the role current members of upper management at United Airlines take in any deal. Particularly United Airlines Chairman and CEO Glenn Tilton. As I wrote this week in PlaneBusiness Banter, one of the big factors in the failure of the Continental deal, and a complicating factor in a proposed US Airways’ deal was Tilton’s insistence upon keeping control in both deals.

But at the same time, Tilton knows that both US Airways and Continental would like to link up with United. And pressure is building on Tilton to get a deal done. He’s only been talking about doing one since he took his position with the airline in 2002.

Frankly, I think Continental would be better off to sit and wait out the current matchmaking attempts. Unless Continental CEO Jeff Smisek and his management team can take control of the new merged entity. Continental already has an advantageous partnership agreement with United, and both airlines are in the Star Alliance. (As is US Airways.)

With US Airways, sources who are involved with the deal tell us that CEO Doug Parker appears willing to let Glenn Tilton stay on in the role of Chairman, with Parker taking the CEO position. But would Tilton be willing to give Parker the control he would need to put together a new management team?

One thing is for sure. This deal, when all is said and done, will be all about ego. Forget routes, forget aircraft compatibility. Forget which deal the markets finds more appealing.

At the end of the day, United Airlines Chairman and CEO Glenn Tilton and his desire to retain control of United is what is going to make or break any new attempt at a merger.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access it here.

What are we talking about in this week’s issue?

US Airways/United Airlines merger chatter leads off the issue. My column this week takes on the latest “leak” that clearly came from the United side of the house. We talk about why that was probably the case — and then take on the pros and cons of a US Airways/United Airlines merger. Again.

I talk about how Continental Airlines fits into all this as well, and why, if I were Continental, I’d be very happy to sit on the sidelines and enjoy the perks of the United/Continental partnership. Not to mention CAL’s new membership in the Star Alliance.

We give you the first quarter stock performance review this week. The top performing airline stock for the first quarter was somewhat of a surprise, but the two airlines behind number one were not a surprise.

We also give our usual monthly rundown of the latest DOT Airline Consumer Travel Report numbers. A hint: February was a nasty month for weather-related cancellations. Especially for Comair. What the heck happened up there in Cincinnati anyway?

Looks like Ryanair is serious about their “Fee for Pee” plan. Meanwhile British Airways has submitted a new offer to leaders of its cabin crew union.

All this and much more in this week’s issue.

Hot Off the Rumor Mill: US Airways Set To Make Formal Offer for United Airlines

For what it’s worth, we’ve been hit by a number of emails in the last hour concerning a possible announcement regarding a move by US Airways on United Airlines.

While this would certainly be big news, for those of you who follow the industry (and hopefully by reading PlaneBusiness Banter), you shouldn’t be surprised.

Yee haw. I hope these rumors are spot on. I’m tired of reading emails about diaper bags and charging for carryons.

This Week in PlaneBusiness Banter

Terry Maxon with the Dallas Morning News dropped me a friendly note today and asked me if I had forgotten to finish my thought from last night.

No, just had to get my hard drive upgraded in the laptop today. And I simply forgot to update the post-in- progress from last night. My bad.

I could have used the excuse that I was trying to recover from what had to be one of the best sporting events I’ve ever watched last night — but no, I had a much more pedestrian excuse.

So what are we talking about in this week’s issue?

Judging from the email box today, the most talked-out piece is our PlaneBusiness Brown Bag Analyst guest column. In this column, a subscriber of ours who also just happens to be an expert in the confusing subject known as the Canadian aviation market, pens his take on the Southwest Airlines-WestJet codeshare “disagreement.”

Our guy knows his stuff.

And yes, of course I weigh in again on the American Airlines/JetBlue announcement from last week — following up on the blog post that first appeared here.

I still like the deal.

Then there is the story of the ALPA poster boy for ethics.

If you’ve read this month’s issue of Airline Pilot, the in-house mouthpiece of the Air Line Pilots Association, you know that, unfortunately, ALPA decided recently to parade out a particular ALPA member each month who it had determined exemplified the “best” of ALPA.

Yes, well, this month’s ALPA poster boy for ethics, Tim Martins, who we think has most recently been employed as a pilot for American Eagle, apparently has a problem with putting things on his Facebook page that aren’t true, much less telling the publication other, er, “facts” that now, apparently we find out, are not quite true.

A complete and total PR disaster for ALPA.

More on all this in this week’s issue.

We talk about the disappointing “agreement” that the EU and the U.S. recently trumpeted in the ongoing Open Skies negotiations. I’d argue, “What agreement?”

On the Wall Street front, one of the most well-respected airline analysts is coming back for more fun and frolic. He is going to take over for Mike Linenberg, who is getting ready to flee Bank of America/Merrill Lynch for Deutsche.

Who is the analyst that proves “everything new is old again?”

We also talk about Hudson Securities analyst Dan McKenzie’s latest competitive analysis notes. We always like to read these as they give us such a great insight as to how the major players are moving the chess men about the playing field.

We also have a couple of good letters this week, and a whole lot more.

If you are not already a subscriber to PlaneBusiness Banter — you should be. You can find out more here!

PlaneBusiness Banter Now Published!

home-typewriter copy 1.jpg This week’s issue of PlaneBusiness Banter is now posted for your reading pleasure. Subscribers can access the latest issue here.

However, unlike most weeks, I am not going to give you a rundown of what is in this week’s issue – because I have to go pick up the pizza for the NCAA Men’s Basketball Championship watching party here at the PlaneBusiness Worldwide Headquarters. The cat has to have her pizza. Or else.

More tomorrow guys!

Go Butler! Beat Duke!

Happy April Fools Day

Thanks to JetBlue and American Airlines for providing us with a nice bit of April Foolery this year. Yeah, right, they are going to join in some kind of partnership, slot swap, interline agreement.

Good job guys.

Oh, wait.

That was yesterday.

Today is April 1.

Hmmmm.

So what is your take on all this news? I admit it. I was surprised at the news. I thought April Fools Day had come a day early when I first saw the headline.

If you could put two airlines in front of you that exhibit totally different cultures, management attitude, brand, and product — well, here you go.

If, on the other hand, you want to strip all that out and strictly look at the deal from a strategic viewpoint — then I can see the merit.

From American’s viewpoint, clearly this gives the airline an opportunity to strengthen its position in New York at a relatively low cost — as opposed to Delta Air Lines, which continues to throw the kitchen sink, the garbage pail, and the baby’s bath water into the market in an attempt to snatch market share.

From JetBlue’s standpoint, the agreement will allow its passengers to book international flights much more easily, utilizing JetBlue on the domestic segments, and American on the international legs. In addition, JetBlue should would get eight slot pairs at Washington Reagan (which the airline has lusted after for a long time) while American would pick up 12 slot pairs at JFK.

But having said that, we have to wonder — what does Lufthansa think about all this? Remember, the German uber carrier owns a piece of JetBlue. When the airline first wrote out the check to JetBlue, the assumption was that this was because Lufthansa was less than impressed with Star Alliance partner United Airlines’ presence into New York.

What presence? Exactly.

So what happens with all this? How can JetBlue serve two alliance masters?

Aside from that niggly problem, I think this is just another example of what we are now going to continue to see more and more of in this industry — creative deals that go against what we have seen done in the past. The reason for them? Necessity. Efficiency. This is what is motivating the Delta/US Airways slot swap request. The AirTran/Continental deal.

So, on the surface, I like it. I’d be happy to see even more of these things. (But only if the airlines’ respective IT systems are up to the task!)

My only question for JetBlue would be this — have you surveyed your passengers who fly into JFK as to whom they fly on to Europe? Is American their first choice?

I would be curious to know the answer, because my gut feeling is that someone who is going to fly on JetBlue into JFK and connect to Europe might not necessarily be someone who would fly on American.

Yep. It’s that mismash of culture and expectations thing I’m thinking about.

Then again, maybe, just maybe, that might be one of the reasons American was receptive to do the deal. They knew that too.