Monthly Archives: February 2011

PlaneBusiness Banter Now Posted!

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It’s Tuesday. The Libyans are shooting at each other. Do you know where your favorite airline stock closed today? You don’t want to know. Do you know how much the price of oil increased today? Jet fuel? Ditto.

Today was an airline industry CFO’s worst nightmare.

In this week’s issue of PlaneBusiness Banter I talk about the current goings-on in the Middle East and just how much of an impact these events could have on airline financial results in the short term.

Before the people in Libya began shooting at each other, though, there were a lot of other things that happened last week that we will be talking about as well.

First, we talk in-depth about the fourth quarter earnings results and the fourth quarter earnings call for Pinnacle Airlines Corp. The airline is in the middle of a major transformation of itself. First it is taking three separate airlines and ending up with only two airlines. In addition, the airline’s contract with Delta Air Lines will not compensate the airline for its higher pilot contract costs (the TA was just ratified by all three pilot groups last week) until much later in the year. As a result, the numbers going forward into 2011 are going to be kind of ugly. Until all of this is sorted out.

But the business plan remains the same, the airline continues to build its Q400 fleet, and well, we’ll give you the lowdown.

In other news, the FAA held its forecasting forum last week in DC. Not a whole lot of news from the forum, but the FAA does forecast very slow growth continuing in the US domestic market for years to come.

On the international side, meanwhile, the IATA said last week that it expects international airline profits to decline 40% in 2011, down from 2010’s $15 billion plus figure.

We take a look at comparisons of operating margins and break-even load factors for the fourth quarter this week. Three airlines took the top three positions in each metric. Know which ones they were?

Air fare hikes? Oh yes, we talk about those too. Ones that failed, and ones that appear to have “taken.” You know the rest of the industry denizens are happy when Southwest Airlines rolls out a fare increase. And that is exactly what happened on Friday.

Airline stocks were fairly quiet last week — the calm before the storm I suppose you could say.

Anyway, as usual, all this and more — in this week’s issue of PlaneBusiness Banter.

Subscribers can access this week’s issue by clicking here.

PlaneBusiness Banter Now Posted!

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Hello everyone.

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

This week we’re talking in-depth about the recent earnings call from WestJet and Air Canada. Our short and sweet take? WestJet posted a great quarter, and I was glad to hear the airline has deferred six aircraft deliveries. Our biggest beef with the airline over the last year has been its reluctance to cut back on capacity.

As for Air Canada, a funny thing happened during the call. Not once did any member of the airline’s management team ever talk about the airline’s net income for the quarter. Never.

Oh, but they talked about EBITDAR. A lot.

A good-enough quarter for the airline, but the airline’s RASM results disappointed. In addition, looking forward, the airline has a number of cost pressures on the horizon, including the fact that every one of its employee labor contracts come up for renewal in the first part of this year.

This week – Pinnacle Airlines reports on Thursday, with SkyWest and Republic bringing up the rear next week.

We talk about the December DOT Airline Consumer Report this week. JetBlue had a horrible December on-time performance. Hey, if you are based out of JFK, you pay the price when Mother Nature gets cranky.

The drama factor kicked up over at the Allied Pilots Association last week as first the new President of the APA sent out a missive in which he basically said the union has been its own worst enemy. Even though his take was spot-on, we all know what happens to union leaders who dare speak the truth. And, in no short order, various domicile reps began issuing their own take on the situation. Not surprisingly, some of them didn’t exactly share the same sentiment. We’ve got the excerpts.

The FAA recently reported an alarming uptick in the number of “near-misses” year-over-year. Is this really as bad as it seems, or is it just due to changes in the way the FAA is reporting these incidents?

By the way, you remember what the late great George Carlin called a “near miss?” A “near-hit.”

All this and a whole lot more — including which two airline stocks just posted eyebrow-raising increases in the percentage of short interest. Anyone want to take a guess as to which two airlines we are talking about?

Ciao.

PlaneBusiness Banter Is Now Posted!

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Good afternoon earthlings. How is everyone today?

As of right now, things here at the Worldwide Headquarters are hunky-dory. However, as you can see by this lovely graphic, that is about to change. Sigh. Enough already.

This is how the weather map looks now.

This is what is forecast for tomorrow morning.

However, before the ice and snow arrives once again and we have to perhaps endure more rolling blackouts, it’s time to talk about this week’s issue of …PlaneBusiness Banter! Subscribers can access this week’s issue here.

This week we take our usual in-depth look at the recent earnings calls and results from both Hawaiian Airlines and Allegiant Travel Co. Our overall assessment of both carrier’s results? Both airlines are in “transition” modes. Translation? I wouldn’t jump into either stock right now. Too many costs on the horizon.

We also talk about the Raymond James Growth Airline Conference, which was held last week in New York. The conference welcomed two newcomers to the fray — Delta Air Lines and Alaska Air Group.

As most of you know by now, Delta Air Lines took the opportunity to talk about its decision to reduce its capacity — a decision that was universally cheered by the Wall Street community.

However, as of today, we have not heard any news from any other airlines in regard to them doing the same — a situation that one airline analyst finds quite frustrating. So much so that he slashed his estimates on most of the legacy airlines last week as a result.

As Jamie Baker, analyst with JP Morgan wrote, given the rise in the price of fuel and the apparent “push back” that airlines may now be feeling as a result of a fare increase that fell apart last week, reductions in capacity are the answer. Sooner rather than later.

Speaking of those fare increases, while the across the board fare increase attempt sputtered last week, this morning United/Continental decided to stop abusing the leisure class, and instead they announced fare increases for both first class and business class passengers. The increases were matched almost immediately by competitors American and Delta Air Lines.

This fare increase has a much better chance of “sticking” because Southwest does not compete with the first class and business class fare buckets — so unlike last week when Southwest proved to be the spoiler, this increase will probably hold.

In other news, Senator John McCain (R-Ariz) tacked on an amendment to the FAA reauthorization bill last week that would effectively kill the Essential Air Services program. Was this just a political play for headlines? Or is he serious?

On another front, the American Eagle ALPA MEC Chairman, Tony Gutierrez, issued a letter last week outlining where the regional carrier is in terms of its relationship to AMR. We had a number of AE-related emails this week and this is why. We talk about this a bit this week, and oh yes, public kudos to Tony. This letter that he wrote to the AE pilots was one of the most thorough letters of its type I’ve ever read from a union leader to his troops.

All this and more…in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Hello everyone.

This week’s 100-plus page issue of PlaneBusiness Banter is now posted. Subscribers can access it here.

This week we take a very detailed look at the earnings calls and earnings reports from US Airways, Alaska Air Group, United/Continental and JetBlue.

And yes, as far as we can tell, PBB is the only place, aside from the usual top end financial websites that charge $50-$75 a shot, that you can find earnings call transcripts for both Alaska AIr Group and United/Continental.

Not only that, but you get selected analyst comments on each airline and our take as well.

So what was our take on the results? I’ll give you just a taste. I think the Five-Year plan at Alaska Air Group has been a huge success as the airline posted an outstanding quarter and a great year. US Airways also posted an excellent quarter and year — and remember US Airways is the only major airline that does not hedge its fuel purchases. I think this is phenomenal. But when you listen to the airline’s President Scott Kirby explain the decision, and how expensive it is to hedge fuel these days, and you look at the money the airline made last year and last quarter, well — hey, I like it.

UAL/Continental had a good quarter, and guidance for January was outstanding. We expect continued revenue improvement here as the Continental folks begin to optimize the airline’s network and its aircraft. But as we all know, this is now the latest industry rehabilitation and improvement project. Just as we did with Delta and Northwest, it will be awhile before we know just how those “synergies” are going to shake out.

Then there was JetBlue. Yes, the airline did not have a great fourth quarter. But I don’t see this as a major indicator of any overriding problem. However, because so much of the airline’s business is based out of Boston and New York — the more snow and weather events that hit the East Coast in the first quarter — the more the airline will be tagged.

But we have lots more to talk about than U.S. airline earnings. We also talk about Singapore’s numbers which were released last week, as well as LAN Airlines‘ quarterly results.

Oh, and subscribers can also enter our “Retro Quote” Contest this week. Tell me what industry person said the quote and in what year they said it — and a geeky airline-related present will wing its way to you.

For those of you in the Chicago area, please be careful out there tonight and tomorrow. We are getting subscriber reports tonight that sound rather ominous.

For us in the DFW Metroplex, ice, sleet, and snow welcomed us this morning. Tonight? We’re headed to 7 degrees.

So much for all those swanky Superbowl events that have been scheduled for the outdoors. A number of the large “party tents” that various groups had put up to house events were brought down by ice and snow today, and I think the guys here for ESPN are going to go out and buy electric handwarmers, long johns and ear muffs before they go back outside to their glorifed “tent” environs in downtown Ft. Worth tomorrow.

Flight cancellations? Last check says that more than 8000 flights have now been canceled on Monday, Tuesday, and Wednesday across the U.S. But that number is going to go up tomorrow.

Yee haw. Where’s that damn groundhog?