Tag Archives: continental airlines

Flea Market Open for Business: US Airways, Delta, AirTran and Continental Play “Let’s Make a Deal” With Slots

First, AirTran and Continental announce a slot swap involving slots at Newark, Reagan National and LaGuardia on Tuesday. But the scope of that deal was swamped this morning with news that US Airways and Delta Air Lines have agreed to terms on a much larger deal that involves both a swap of slots, and a few routes thrown in for good measure.

This morning US Airways announced that it will obtain 42 pairs of slots at Reagan National, as well as access to slots in Tokyo (NRT) and Sao Paulo, Brazil (GRU) from Delta Air Lines.

In return, US Airways is giving Delta Air Lines 125 pairs of slots at LaGuardia.

This is a big deal for US Airways. The airline estimates that the deal will create an additional $75 million dollars in revenue per year.

It’s a positive for Delta Air Lines as well, as Delta continues to muscle into the New York market in a major way. This is a huge gain for them.

And no, this does not affect the US Airways’ Shuttle operation in any way.

Meanwhile, yesterday it was reported that AirTran plans to stop flying to and from Newark completely — giving its takeoff and landing slots to Continental Airlines. In exchange, Continental is going give AirTran slots at both Washington Reagan and LaGuardia.

Apparently AirTran will give Continental 10 slots, a single gate and a jetway at Newark. In exchange, Continental will give AirTran four slots at LaGuardia and six slots at Washington Reagan.

So, those are the facts.

What does all this horse trading mean?

It means that the bigger airlines are doing exactly what we said they were going to do. They’re getting creative.

While most headlines over the last few months have continued to talk about the lack of liquidity, “Which airline is most at risk?” — we have continued to make the argument in PlaneBusiness Banter that in this industry — good management teams are going to find a way to survive.

Look at the airlines involved in these two deals announced. Four of the better management teams out there.

We don’t see United, we don’t see a mention of American.

Meanwhile, Republic and Southwest are slugging it out over Frontier. Again, two of the better management teams in the industry.

Oh, and speaking of American – is it just me, or does that Holy Grail of a British Airways – American Airlines anti-trust agreement seem to continue to diminish in importance as the days go by?

I continue to believe that American, by putting all of its eggs in one basket it doesn’t even have in its possession yet, runs a big risk of being odd man out when the music stops.

PlaneBusiness Banter Now Posted

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This week’s mega-earnings issue of PlaneBusiness Banter is now posted. I think this one has set a new record at around 100 pages. Hey, I like to give you lots to think about.

This week I look at five airlines that recently reported second quarter earnings in-depth: AirTran; Alaska Air Group; Delta Air Lines; United Airlines; and JetBlue.

We also have earnings summaries now posted for ExpressJet, Republic Holdings, and Hawaiian Airlines on the site for PBB subscribers.

So what did we like or didn’t like about the earnings from this crop of airlines?

It was nice to have three honest-to-god profits to talk about this week. AirTran had an excellent quarter, Alaska was no slouch either, and JetBlue also had a nice quarter — although their profits were not as hefty as those posted by either AirTran or Alaska.

Then there is Delta. The airline continues to slog through some very costly underwater fuel hedges. And of course the airline is being hit hard on the international front as demand has simply gone into hiding for not only Delta but all the U.S. carriers who fly internationally.

And then there is United Airlines. CFO Kathryn Mikells was hammered in the airline’s call about the “L” word — yes, that would be liquidity.

But she retained her poise and kept telling those analysts that they were asking “terrific” questions.

Meanwhile, down in Atlanta, Delta’s Richard Anderson was called out by yours truly for his excessive use of corporate speak. And if I hear the word “synergy” one more time, I’m going to go stark raving mad.

But of course, the big news of last week was the news that Southwest Airlines had made a bid on Frontier Airlines — as part of that airline’s bankruptcy auction process.

Southwest is now burning the midnight oil, doing their due diligence, as final bids need to be in the hands of the court by Aug. 10. (Yes, look at your calendar. That’s next Monday.)

All this and much, much more, including details on the $1 billion cobbled-together financing deal that Air Canada announced this week — The Patron Saint of Failing Airlines Lives! (We are referring of course to GECAS)

All that and more in this week’s issue of PlaneBusiness Banter. Subscribers can access your issue here.

PlaneBusiness Banter Now Posted

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

It was a busy week for the Things With Wings last week.

First, American Airlines reported its second quarter earnings results. The airline lost a lot of money. $390 million to be exact. $319 million excluding special items. However, you’d never have known it if you listened to the airline’s earnings call — which seemed focused on one thing — liquidity. Oh, and capacity reductions. That’s fine, but there are other aspects of an airline’s operations I’d like to hear about.

Then we had the blockbuster news concerning Continental’s Chairman and CEO, Larry Kellner. As I write in this week’s PBB, even though the management backbench strength at Continental Airlines is strong, and the airline should be able to carry on just fine as Larry goes to seek his fortune in the equity investment game — it’s quite discouraging to see one of the industry’s best and brightest leave.

Following up on our piece in last week’s issue about United’s bone-headed (or would that be heavy-handed) attempts to get travel agencies to take on more financial risk — or rather some travel agencies — the airline said late last week that it is going to give agencies 60 days to implement the business operation changes it seeks.

This whole thing still reeks. Nothing the airline says rings true.

Southwest Airlines had its own place in the spotlight last week, or would that be the sunlight, as the airline had a 737-300 aircraft develop a hole in the roof while enroute from Nashville to BWI. Not what the airline wants or needs — especially considering the issues the airline has had with the FAA concerning fuselage checks in the past. Preliminary NTSB report says there was no evidence of previous corrosion at the site.

That was not the only bad news Southwest had last week. The airline was also notified that its debt rating with Moody’s is under review, signaling a potential downgrade.

The Senate produced its version of an FAA Reauthorization bill last week. How did it differ from the House version? It differed on quite a few items. We talk more about that in this week’s issue.

Those misguided folks at the US Airways Pilot Association, the pilot union that was created in an attempt to circumvent the original ALPA seniority award that was handed down after US Airways and America West combined forces — had their head handed to them on a plate by U.S. District Judge Neil Wake last week. Wake issued his final injunctive order on the case brought against USAPA by the former America West pilots. Yes, we talk about this too.

Oh, and speaking of USAPA, we also give them, and our readers, a handy step-by-step instruction of how you correctly determine just how much an airline executive makes, using SEC documentation. Apparently the folks at USAPA have a problem figuring these things out.

British Airways raids its guaranteed employee pension benefit larder, Air Canada gets all of its employees “on board” with its 21-month contract extension program, and 215 Delta pilots sign up for the airline’s sweetened “early-out” package. Somehow I think the guys in suits over in Atlanta had hoped that number had been higher.

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

If you are a subscriber, you can access this week’s issue here. If not, you can learn how you can become a subscriber by clicking here.

Continental/United Antitrust Immunity Granted: With a Few Strings

Continental Airlines was granted limited antitrust immunity today by the U.S. Department of Transportation — a move that will allow it to join United Airlines and other airlines in the Star Alliance in creating schedules and determining fares.

The order did, however, set limits on the antitrust immunity in regards to some international routes.

The order excludes rights between the U.S. and Beijing. In addition, the order also does not grant immunity for those flights between U.S. and Canada, and to those flights between New York and Copenhagen, Geneva, Lisbon, and Stockholm.

These “strings” were more or less foreshadowed in the recent Department of Justice filing, in which the DOJ discussed the possibility of “harm to consumers” on routes between the U.S. and China, Canada, Denmark, Portugal, Sweden and Switzerland.

The decision did, however, give the green light to a proposal that will see Continental, United, Lufthansa and Air Canada create a joint venture for some international flights.

This was the right call for the DOT to make, although the DOJ ruling last week was a bit troubling. As I have said for years, if U.S. ownership laws continue to hamstring U.S. carriers from linking up directly with international counterparts, then antitrust immunity — which allows them to participate more fully with international carriers — is the answer.

Continental Airlines Pulls the Cord on Mexico Capacity

This morning Continental Airlines announced that it was cutting capacity on its flights to Mexico by 50%.

As we noted here last week, 5.3% of Continental’s total passenger revenue is derived from Mexico flights. The airline has more flights scheduled to Mexico than any other airline, with an average of 450 flights per week.

The new schedule begins Monday.

The airline said that service to all of its 29 Mexican destinations will continue. However, the frequency of flights has been cut, and on some routes regional aircraft will replace larger aircraft.

Continental’s RASM Numbers More Or Less In Line: Still Starkly Negative

Continental Airlines released their traffic report last night and the result was more or less what had been expected — in terms of what analysts had expected the airline would post in terms of its estimated RASM figures.

The airline said that it estimates RASM was down, year-over-year, by between 18.5% and 19.5%.

This was just a hair worse than the estimate of both analysts Jamie Baker with JP Morgan and Bill Greene with Morgan Stanley.

As for basic traffic, the airline said that its domestic traffic levels were down 12.4%, while international was down 7.5%. Total traffic was down 10%. Capacity, meanwhile, was down 7% overall. This resulted in a decline in load factor of 2.7 points, down to 79.9%.

The rest of the sector will begin to roll out their bad traffic news today.

One thing to remember, however. As bad as these numbers are — remember that Easter came very early last year, and all the revenue bump associated with Easter was in March last year. So comps were going to be difficult regardless.

Not to say that this makes these abysmal numbers any easier to swallow in the big picture, but jus’ sayin.

Airline Stocks Tumble as It’s One Messy Day On the Street

Poking our head around the damage from today’s Wall Street activities, it was not a good day for the airline stocks, as almost every one of them ended lower for the day.

While the Dow Jones Industrials were down as much as 200 points earlier in the day, the Dow ended the day down 80.05 points, or 1.09% for the day.

However, the Dow Transports and the AMEX Airline Index both had a more miserable run of it. The AMEX Airline Index ended the day down a little more than 4%, closing at 16.43, while the Dow Jones Transportation Index ended down 4%, closing at 2602.06.

The top losers for the day included: AirTran, which lost 9%, closing at 3.27; Alaska, which lost 7%, closing at 22.27; JetBlue which lost 7%, closing at 4.26; US Airways, which lost 10%, closing at 3.30; Southwest Airlines, which dropped another 7%, closing at 6.07; and Continental, which ended the day down 6%, closing at 11.15.

Ugly day.

Readers Write In on Continental Express Crash: Pilot Actions Could Have Been Warranted

Thanks for your feedback on the news concerning Southwest’s move into Boston. I’ll strip off names and summarize comments I’ve received via email later today.

But first — let’s talk about what has been going on of late concerning the NTSB and their investigation concerning the actions of the pilot in the crash of Pinnacle/Colgan/Continental Express Flight 3407 last week.

If you are like me, you probably did a double take when you read the the Wall Street Journal article yesterday in which the paper reported that “evidence suggests pilot error” as the likely cause of the crash. The New York Times then ran with a story that said that the “crew may have overreacted” after the auto pilot system pointed the plane’s nose down to generate speed. No sources were named in either paper’s reports.

While officially the NTSB has not publicly made such comments, the assumption would have to be made that someone on the inside of the investigation was feeding both news sources.

Enter a number of our pilot readers.

Here is a “Read Before Fly” announcement that was sent to Southwest Airlines’ pilots yesterday. Sound familiar?

Last night more than one pilot sent me a copy. And they weren’t all Southwest pilots. Apparently the notice was posted on the PPRUNE site, or at least that is what one American Airlines‘ pilot wrote me.

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Safety Alert 2009-01 – February 18, 2009

There is a potentially significant hazard concerning the ILS to runway 23 in BUF.

Information has been received indicating it is possible to obtain a significant nose pitch up, in some cases as much as 30 degrees, if the glide slope is allowed to capture before established on centerline. Pilots who are preparing to configure and land have the potential to experience abrupt pitch up, slow airspeed, and approach to stall if conditions present themselves in a certain manner.

This effect is the result of an earthen obstruction close enough to the ILS to affect the integrity of the glide slope signal. This has resulted in the issuance of an advisory given on ATIS which states that “the ILS Glide Slope for runway 23 is unusable beyond 5 degrees right of course.” When attempting to intercept the runway 23 ILS from right traffic, the ILS glide slope indication may read full deflection down. Just prior to intercept it may then move up in such as manner as to enable approach mode to capture in such a way as to result in a nose up pitch and loss of airspeed. Southwest Airlines has issued a notice reading: “Until further notice, when executing the KBUF ILS/LOC Runway 23, DO NOT select Approach Mode until established on the localizer inbound.”

This issue is being addressed on several levels in an attempt to address procedures, facilities, and communication regarding this matter. If you experience any issues related to this, please file an ASAP form and or call SWAPA Safety at SWAPA toll free 800-969-7972.

____________

Interesting, eh? Especially because if this is the case, then the pilot could have been doing exactly what he was supposed to have been doing. He was trying to save the aircraft, not stall it. My point in all of this is that no one involved with the NTSB investigation should be “leaking” information to news sources such as that which was obviously leaked for publication in both the New York Times and the Wall Street Journal Wednesday. Especially given this advisory that was just issued to Southwest Airlines’ pilots.

Continental Airlines Express Air Crash

The industry suffered yet another crash last night, as a Continental commuter aircraft operated by Colgan Air apparently dove into a house shortly before it was scheduled to land in Buffalo. All 49 crew members and passengers on the aircraft were killed, as was one person who was in the house.

The aircraft involved was a Bombardier Q400.

Bloomberg reports this morning that the aircraft, registration number N200WQ, was ordered by Pinnacle Airlines in 2007 and handed over to the carrier’s Colgan Air unit on April 16 last year. Colgan was operating it on behalf of Continental Airlines, Inc.

Closer Than We Want to Be to Continental Airlines’s Flight 1404 Wreckage

One of the more unfortunate news items while we were on holiday hiatus was the crash of Continental Airlines‘ Flight 1404, which apparently tried to take off from Denver International, but instead found itself careening off the runway, ending up in a ravine on the edge of the airport. Minus one engine and its landing gear. And on fire.

While we all saw photos of the wreckage in the days after the mishap on Dec. 20, and while I think most of us were amazed that everyone onboard had escaped — when you look at this slide show posted by Denver Channel 7 News, you’ll be even more amazed that there were not more casualties.

Warning: These are powerful images.