Monthly Archives: May 2012

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Good morning earthlings!

I hope you are enjoying this holiday-shortened week. I know I am. Meanwhile, this week’s issue of PlaneBusiness Banter is now posted.

The good thing about last week? I got to travel to Chicago, where I met with a whole lot of folks at United Airlines. Including CEO Jeff Smisek. While most of my meetings with the airline’s top executives were off the record, and strictly on background, we will be doing one of our legendary Lounge Lizard Interviews with Jeff Smisek sometime later this summer — whenever his schedule and mine can come up with a day that works for both of us.

I look forward to it.

While I can’t dangle any tasty tidbits of information from my sessions publicly, I can say that they were incredibly helpful to me, and I want to thank both Dave Hilfman, SVP of Global Sales at United, and Nene Foxhall, Executive Vice President Communications and Government Affairs at United for extending the invitation to come up to Chicago and hang out. It makes a huge difference when you can sit down and talk candidly with a company’s executives.

But that is not all we are talking about this week. No, in fact, we are at a very important point in the AMR Bankruptcy 1113 process. What I write this week may surprise some of you. Essentially the faster the unions and the airline can come to terms on three contracts, the faster any and all alternatives to the airline’s “Standalone” plan can be presented and considered.

I explain all of this and why it thus behooves the union leaders to attempt and negotiate something with the airline sooner rather than later in this week’s issue. (And yes, I think this is going to be very confusing to attempt to explain to the rank and file members.)

Meanwhile, airline stocks had a fantastic week last week — mainly because of a bullish report from JP Morgan analyst Jamie Baker. We told you last week the pull back was a buying opportunity, and indeed it was.

Sad news for the SkyWest/ExpressJet family this week, as Tanner Holt, the youngest son of ExpressJet President Brad Holt was one of four men killed in the crash of a Cessna 172 at the St. George, UT airport on Saturday. Tanner was a pilot with Comair.

Not content to shake things up by buying a refinery, Delta is apparently playing some “Kill Spirit” games by offering some rock bottom fare buckets on a few routes where they compete with Spirit. We’re not sure this is such a good idea, and we’ll tell you why.

Then there is New York Senator Chuck Schumer and his claims that airlines are separating mothers and their babies. Really Chuck? Really?

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Good day everyone!

My thanks to all for your patience. PlaneDad duty once again took me away from our normal perch here at the Worldwide Headquarters this week.

The good news? PlaneDad is finally making the move to Texas. And he has a place to live when he gets here!

Thank you again for your patience with our nebulous publishing times of late. Just something that can’t be avoided, given what else is going on. We’ll get through it.

So — having said all that, what are we talking about in this week’s issue of PlaneBusiness Banter ? A lot.

Easily the biggest news is the fact that Delta Air Lines and Southwest Airlines finally confirmed that yes, Delta Air Lines will be leasing the entire 717 AirTran fleet from Southwest.

This move is a big one — in more ways than one. There are winners, and there are losers. We talk about some of them in this week’s issue.

Last week the usual suspects were all in Boston, presenting at the Bank of America/Merrill Lynch Global Transportation Conference. We let you in on some of the more interesting comments including those by Ed Bastian, President of Delta Air Lines, Scott Kirby, President of US Airways, Gary Kelly, CEO of Southwest Airlines and Mark Powers, CFO of JetBlue.

We also have a guest column this week by a PlaneBusiness Banter subscriber. His opinion is that airlines need stop the “silo” thinking that pervades so much of the industry and mover more towards what he terms an “Intersilotic” approach. Being the “big picture” person I am, I’m all for it. While some aspects of the industry certainly can benefit from a vertical approach — much more of it should take into consideration the entire team effort — not just the actions of one part of the team.

Of course no PlaneBusiness Banter would be complete these days without the AMR Bankruptcy Follies column. This week we have a short one-act play for you to read, and we update you on the 1113 process.

We also have Scott Kirby’s comments from the Bank of America/Merrill Lynch Global Transportation Conference, in which, or the first time I’ve heard publicly, he clearly and concisely explains why it is that a merger between AMR and US Airways would be beneficial to both pilot groups — USAPA and APA. While his comments dovetail with what we have assumed would be the case — this is the first time I’ve heard someone from the airline put it out there for public consumption.

Oh and yes, we also offer our condolences to American management employees, who are being subjected to a flood of obnoxious communications from the airline. If it isn’t the latest “design and layer” update, it’s superficially happy missives concerning how to handle this new “opportunity in your life!” Yes, they are talking to those employees who are going to be laid off.

We also have the 1Q Break-Even and Operating Margin run down, a look at how the market treated the airline sector last week, and much, much more. As usual.

Southwest Airlines Finally Announces What We Told Subscribers in March: 717s Going to Delta

In March, we reported in PlaneBusiness Banter that Southwest Airlines was going to offload its Boeing 717s to Delta Air Lines.
The company subsequently hemmed and hawed around the topic, but they never denied it.
Last week, I then reported that the 717 flying had been addressed in the tentative agreement between Delta Air Lines and its pilot union.
Finally, today, Southwest Airlines announced that yes, it has agreed to a deal that will see all 88 of the former AIrTran 717s go to Delta Air Lines.
This negatively impacts those AirTran 717 pilots who had been the beneficiary of a “carve-out” as part of the seniority agreement with the Southwest pilot group. Their “preferential” treatment will end — when those 717s depart. The carve-out was only applicable as long as Southwest Airlines flew the aircraft.
On the flip-side, this is good news for Southwest Airlines’ pilots — as it will move them up in terms of seniority.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Hello everyone. We just posted this week’s last 1Q mega-earnings issue of PlaneBusiness Banter.

In this week’s jam-packed issue, we have something for everyone. A little AMR, a little Delta, a little United, some more AMR, a little more United, and yes, even a little Republic.

Wrapped around all this are full earnings call reviews of AIr Canada, WestJet, and SkyWest. So yes, you get a lot of Air Canada, WestJet and SkyWest.

In case you haven’t heard, Delta Air Lines and its pilots announced yesterday that the two sides had come to terms on a tentative agreement — seven months in advance of the current contract amendable date.

Bravo.

While we have not seen a copy of the proposed TA yet, we understand that there is one very interesting part of the contract. That part is the one that addresses the flying of the Boeing 717.

Yep, you know where this is going.

In March I broke the story that Southwest Airlines and Delta Air Lines had come to terms on a deal that would see most, if not all the AirTran 717s go to Delta.

Southwest responded very defensively about the report, although the airline never denied it.

The situation is complicated because of the fact the AirTran 717 pilots who agreed to the contract/seniority agreement with the Southwest pilots and that airline agreed to a deal that saw them more or less given a “carve out” in terms of seniority — as long as Southwest flew the 717.

All I can say is that if there is a part of the Delta pilot contract that directly addresses the 717 flying as I hear is the case — this will be interesting to watch.

In other news, we also have this week’s edition of the AMR Bankruptcy Follies. We have a real mixed bag of news and commentary this week. As most of you know, both the Unsecured Creditors Committee and AMR released statements last Friday which, in essence, allowed that the UCC was going to look at any and every potential deal that might involve American in an effort to maximize creditor and bondholder’s potential return.

American wasn’t too enthusiastic about the decision of the UCC, but they really don’t have any control over the UCC.

We also talk this week about the March DOT Performance numbers. As we had expected, United Airlines took a big hit in terms of on-time performance, lost bags, and complaints. On the flip side, US Airways did very well in March.

Airline stocks also had a good week last week. Shares of United Airlines took top honors. We’ll tell you why.

We also review the recent earnings news from Singapore Airlines, which was surprisingly bad, and IAG, parent of British Airways and Iberia. LAN also reported this last week.

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Good evening everyone.

This week’s issue of PlaneBusiness Banter is now posted.

This week we have another mega-earnings issue, as we take a close look at the recent earnings calls from Hawaiian Airlines, Allegiant Travel Company, Spirit Airlines and Republic Holdings. Republic was the only one of the group not to post a profit for the first quarter.

Of course Spirit was in the news last week for other reasons — namely its decision to hike the charges for carry-on bags and for their initial refusal to refund a $197 ticket to a terminally-ill ex-Marine. By the time the week was over, the bag charge increases were still in place, but the airline’s CEO Ben Baldanza personally refunded the cost of the ticket and the airline contributed $5K to the Wounded Warriors organization.

For once the airline discovered that bad publicity was not better than no publicity.

In other news, Southwest Airlines and United Airlines slugged it out again in Houston Tuesday before an overflow crowd at the Houston City Council chambers.

Southwest wants to fly internationally out of Hobby Airport, and has asked the city for permission to build a new international addition to the current airport at a cost of roughly $100K.

But United is not amused. Especially since it just broke ground in January on a $700 million expansion and improvement of its facilities at IAH, which will include more international gate expansion.

Most interesting factoid from Tuesday’s testimony and questioning — on the day United Airlines broke ground on its new IAH expansion in January, Southwest’s Gary Kelly was talking to the Houston mayor about its desire to fly internationally out of Hobby.

Oh, this is such a cruel dog-eat-dog business.

This week we also have our latest AMR Bankruptcy Follies column. This week we look at the position of the bondholders in the bankruptcy process — why they want to get as much as possible back from the airline and how this return could be maximized as a result of a US Airways merger with American while it is still in bankruptcy protection.

Last week shares of Republic and Spirit were the laggards for the airline sector, but the price of oil plunged. That’s good news. So far this week — oil prices have continued to move downward.

As always — all this and more — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg

Hello everyone.

For those of you who are subscribers and print out PBB, I warn you — this one is probably going to be more than 150 pages. Yes, it is a return of the “Killer Earnings Issue.” (Insert screams here.)

This week we’re looking at the recent earnings calls of Delta Air Lines, United Airlines, US Airways, and JetBlue Airways. Only one of the four made a profit. Do you know which one?

The laggard in the bunch was definitely United Airlines. The airline’s 1Q revenues clearly showed the effect of the airline’s SHARES cutover. The problem? The airline still has a number of cutover issues that have yet to be resolved — and these issues directly affect the ability of the airline to capture additional revenue and/or they concern upgrades.

Between all this and the usual problems that any merger comes with — this year is looking more and more like a transitional year for United.

Delta AIr Lines, on the other hand, produced excellent revenue during the quarter, as did US Airways and JetBlue.

As we also note in our comments about US Airways’ results, the airline continues to be a great poster child for our “Just Say No to Fuel Hedging” campaign.

The airline posted a relatively small loss for the quarter — with no fuel hedges in place.

This week, Delta Air Lines announced that yes, it is going to purchase an oil refinery. When you stop snickering, I’ll tell you why I like the move.

Hawaiian Airlines‘ shares had a nice gain last week — the result of better than expected earnings results and strong guidance. Meanwhile. shares of US Airways picked up even more ground last week. For the year, our favorite trading stock (per our comments in January) has picked up more than 103%.

Of course no issue of PBB would be complete now without the latest addition of the AMR Bankruptcy Follies. This week we talk a little about Harvey Miller — the ex-Lorenzo attorney who is AMR’s lead restructuring counsel. We also tell you how much he is charging AMR by the hour. After you recover from that nugget, you can read our take on the airline’s attempt to negate the significance of the airline’s three unions and their signed term sheets with US Airways, and we talk about some of the comments that came out of last week’s court testimony.

Yes, apparently AMR did have another strategy besides the ‘Cornerstone Strategy.” It was the “Limp-Along” or “Kick the Can” strategy.

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