Tag Archives: American Airlines

PlaneBusiness Banter is Now Posted!

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Good evening Earthlings.

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

The last week has been brutal. I’m not kidding. First, we had two airlines report earnings last week, and we have the full review of the earnings call this week from Southwest Airlines and Alaska Air Group.

Our short take? Alaska turned in a respectable quarter — especially considering the airline used to simply assume it would post a loss in the first quarter. Not anymore.

This was also Alaska CEO Bill Ayer’s last earnings call. Ayer, one of the best CEOs in the business — will remain as Chairman. Should investors be worried about this change at the top of one of the most well-run (and profitable) U.S. airlines? No. I’ll tell you why.

As for Southwest, the airline has us totally confused.

It keeps pushing back dates for various merger-related integrations with AirTran. That we get. The airline clearly, as many of us said at the time the deal was announced, did not and still does not have the technology underfoot to make this deal work.

That includes the technology necessary to enable Southwest to fly internationally. Or to merge fully with AirTran. And then there are the fees that AirTran charges as part of their operation. An operation that, in a number of ways, performed better than Southwest in the first quarter.

Now they say they are going to keep all fees that are currently a part of the AirTran model in place. For at least 2-3 years.

Say what?

So now the “we’re going to migrate the AirTran operation into that of Southwest as quickly as possible” mantra has changed.

But why? The airline could switch off the fees at AirTran overnight.

Could it be Southwest is finally beginning to understand the value of “the upsell?”

No. Otherwise they wouldn’t be putting more seats in its 737-700s.

See what I mean about confusing?

About the best news out of Denton Drive last week was the news that the airline has finally made a decision about upgrading at least some of its IT incapability.

The airline announced it was going with Amadeus — and will use that company’s res product to enable it to start international operations. But not until 2014.

(Actually I think we’ll see Amadeus take both the international and the domestic PSS projects on at Southwest before this is all over.)

But clearly the major news last week was the announcement Friday that the three major unions at American Airlines had signed term sheets with US Airways — in effect telling management at AMR they want no part of a standalone airline — and pretty much throwing out a vote of “No Confidence” towards the current AMR management.

Needless to say, the fact the pilots did this pretty much confirms what we had said here last week — that the “Hale Memo” was a farce. Clearly Mr. Hale just signed his name to something that had no truth attached to it whatsoever.

And then the powers that be at AMR wonder why it is that their employees don’t trust them. Funny how that works.

We talk a lot about what happened last week, tell you what you can expect to see happen in the next weeks and months, and why you shouldn’t think that things have stopped happening just because they aren’t happening in public.

No question about it — the actions of the three union leaders and their boards last week was amazing. Something we’ve certainly never seen in this industry before.

No surprise — shares of US Airways climbed sharply last week on the news of the union agreements.

In addition, did you hear about the lawsuit that AIG, parent of ILFC has filed against Steve Hazy, the founder of ILFC, and currently the CEO of Air Lease Corp.?

The really bizarre part of the story — all the major players were in New York at the Plaza Hotel for the Air Finance Conference this week when the news hit.

I would think that might have made things just a tad uncomfortable.

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

American Airlines Bankruptcy Proceeding Begins

It’s a packed house in Manhattan this morning as U.S. Bankruptcy Judge Sean Lane opens up the airline’s Section 1113c hearing.

Apparently the crowd is so large, they have opened up two “overflow” rooms.

I am not in New York. I am in the lovely confines of Slidell, LA, just outside of New Orleans, where my Dad is now in the hospital, awaiting transfer into a physical rehabilitation program, after suffering three falls in one week.

But fear not.

The intrepid Terry Maxon, reporter for the Dallas Morning News is on the ground there, as is Scott Mayerowitz with the Associated Press.

Scott is the more prolific tweeter of the two. Terry — he’s still getting used to the Tweetie thing.

Scott can be followed at @globetrotScott

But I would strongly recommend you follow Terry’s blog posts. You can find them here.

We also have a couple of folks on the scene (our stellar cast of PlaneBusiness undercover correspondents) and if we hear any particular tidbits of note, we will tweet them. If you don’t follow us on the Tweetie yet, our account is @planebusiness.

Speaking of, what do you think Captain Dave Bates, president of the Allied Pilots Association, thought, when he realized Terry was on the same plane to New York as he was on Sunday?

Surprise!

You can read Terry’s comments about their short “leaving the aircraft” interview here.

Good read. I continue to be impressed with Dave Bates and the way in which the APA has handled themselves over the last few weeks. No histrionics. No union/management posturing. No “looking toward the past.” Just a very methodical and business-like way of approaching the options in front of them.

What a refreshing and, I would add, much needed change.

Captain Bates and I spent some time together when we were both at the recent Phoenix Sky Harbor Airline Symposium . I came away impressed with his take on the situation then. I remain impressed.

Breaking: Three American Airlines Unions Sign Term Sheets with US Airways

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Here we go.
Just minutes ago, a joint statement was issued by the three unions that represent more than 55,000 American Airlines’ employees. Concurrent with that, US Airways issued an 8-K with the SEC.
The situation we have is this: All three unions have signed term sheet agreements with US Airways, and have now publicly thrown their support behind a merger between US Airways and American Airlines.
See below for the union statement:

_____________________________________________

ALLIED PILOTS ASSOCIATION, ASSOCIATION OF PROFESSIONAL

FLIGHT ATTENDANTS AND TRANSPORT WORKERS UNION JOIN IN

SUPPORT OF AMERICAN AIRLINES-US AIRWAYS MERGER

Union Leaders Pursue Best Path to Restore American Airlines to Preeminence

Fort Worth, Texas (April 20, 2012) — The Transport Workers Union (TWU), the

Association of Professional Flight Attendants (APFA) and the Allied Pilots Association

(APA) issued the following joint statement today:

“On behalf of nearly 55,000 American Airlines front-line employees—including

the 17,000 members of the Association of Professional Flight Attendants, the 10,000

members of the Allied Pilots Association and the 26,000 members of the Transport

Workers Union—we are pleased to confirm our support of a possible merger between our

airline and US Airways. We have reached agreements on terms sheets for collective

bargaining agreements that would govern the American Airlines employees of the

merged airline with US Airways.

“This significant step represents our shared recognition that a merger between

American Airlines and US Airways is the best strategy and fastest option to complete the

restructuring of American Airlines, enabling it to exit the Chapter 11 bankruptcy process

and restore American Airlines to a preeminent position in the airline industry.

“As envisioned, a merger of US Airways and American Airlines provides the best

path for all constituencies, including employees of both American Airlines and US

Airways. The contemplated merger would be based on growth, preserve at least 6,200

American Airlines jobs that would be furloughed under the company’s standalone

strategy, and provide employees of both American and US Airways with competitive,

industry-standard compensation and benefits. Over the long term, the combined new

airline would support greater job security and advancement opportunities for both

American Airlines’ and US Airways’ employees that are far superior to those available to

employees at either airline on a stand-alone basis. Importantly, by avoiding a lengthy and

contentious 1113 process, the new carrier would be able to emerge from bankruptcy more

quickly.

“A merger would create a foundation to establish American Airlines as a vigorous

competitor of the two larger network carriers and the industry at large. Customers of both

airlines and air travelers in general will benefit greatly from a viable third network carrier

and significantly enhanced travel choices.”

That is the full text of the unions’ joint statement.

PlaneBusiness Banter Now Posted!

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Hello earthlings. I would say good morning, but I’m not ready to concede that fact yet.

This week’s issue of PlaneBusiness Banter is now posted. This week we’re talking about airlines that are bankrupt, airlines that want to merge with airlines that are bankrupt, airlines that are trying to figure out how to merge with their partners who used to be bankrupt, and then there is the airline that wants to buy a refinery and produce its own jet fuel.

Never a dull moment in this industry.

This week we take a break from our American Airlines’ Bankruptcy Follies as we give you instead a summary from a panel discussion we participated in on Monday. The subject? “The Future of American Airlines.”

PBB subscribers are pretty familiar with most of what was discussed, which is more than I think was the case for most of the folks assembled at the Neeley School of Business at Texas Christian University in Ft. Worth.

Stand alone? Go belly up? Enter into a merger with another airline? Stand on the sidelines while their last chance at a major airline merger is snatched out from under their nose?

Trust me — there are a lot of scenarios here.

Twelve months out, those of us who participated on the panel will be able to see if our suggested thesis for the business case study –“Missed Opportunities” is still the case. Or if the long-term trend changes.

In other news, we talked to the folks at United Airlines last week about their continued cutover hangover. There does seem to be progress being made — and we’ll talk about that. We also talked to them about why the cutover had to be done on March 3 — and not after the new SHARES GUI was completed in nine months. We also ask the question that we were pushed to ask by subscribers — namely — was the airline motivated to do the cutover because there were management incentive payments in play?

We got answers to most of our questions. By next week, hopefully we’ll have the rest.

Meanwhile, down in Houston, Southwest Airlines wants to start flying internationally out of Hobby Airport. Needless to say, United, which is in the middle of a $700 million international terminal upgrade at IAH is not too happy about this idea. But it sounds like Houston is very happy about the thought of increased service, more money, and more jobs.

Let the fight begin.

Airline stocks had a pretty benign week last week — with one glaring exception. That of course was Pinnacle. Shares of the airline sank 60% after the airline filed for Chapter 11 protection.

And of course, we preview first quarter results, as they are just around the quarter. Long and short — we will have more airlines lose money for the quarter than post a profit.

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

PlaneBusiness Banter Now Posted!

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

We are almost done with fourth quarter 2011 earnings. This week we take an in-depth look at the results reported last week by Spirit Airlines and SkyWest Airlines.

I found both calls interesting last week — but for different reasons. Spirit notched the best operating margin of any North American airline for the fourth quarter. That was no small feat. It’s ROIC as nothing to sneeze at either.

As for SkyWest, the financial carnage associated with the airline’s ExpressJet deal continued during the fourth quarter, but there might, finally, be hope for 2012, although SkyWest will report a loss for the first quarter.

By the way, which aircraft that many operators seem to think is so desirable right now in the regional space does SkyWest’s CEO Jerry Atkin think may not be that important in the regional space five years from now? His answer may surprise some.

This week Republic Holdings and Pinnacle are slated to wrap up the sector’s fourth quarter results.

We also spend a lot of time this week parsing the latest bankruptcy filings for American Airlines. In particular, this week we take a look at the airline’s recent request to the bankruptcy court for $12 million dollars. Give or take. The airline wants the money so it can pay the Boston Consulting Group. (Just one of tens of consultants and advisors the airline says it has to have working for it.)

But the request for the BCG money is especially interesting to pick through.

Do you know what “The Cascade Project” is and what it supposedly is going to do for AMR and its management team?

We give you the scoop. We also tell you when BCG first started working with the airline.

I warn you though, if you have a weak stomach for corporate speak and consultant-eze, it may be hard to get down. And keep down.

We may have to force ourselves to parse the bankruptcy filings more carefully on a more regular basis.

Then again, maybe not.

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

PlaneBusiness Banter Now Posted!

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Good evening everyone.

This week’s issue of PlaneBusiness Banter is now posted. And a jam-packed issue it is.

This week we’re talking all things American Airlines (of course), we give you a look at the presentations last week at the Raymond James Global Airline Conference in New York, and of course, we have fourth quarter earnings reports from two airlines to dissect. Both Hawaiian Holdings, parent of Hawaiian Airlines, and Allegiant Travel Company reported earnings last week.

While we have been big fans of the Hawaiian Airlines story over the last several years, and particularly the last year, why is it that I was not that impressed with the airline’s earnings call? A hint: It has a lot to do with what is on the airline’s plate in 2012. Both in terms of revenues and costs.

As for Allegiant, the fourth quarter numbers were good, but the airline continues in the midst of its own transformation plan with seats being added to its aircraft and the carrier’s move into the Hawaiian-West Coast market still yet to launch.

Meanwhile, it was another great week for airline stocks on Wall Street. We tell you who posted double-digit gains for yet another week. (And a good number of airline stocks did just that.)

On the IT front, sources tell us that the HP “JetStream” PSS Extreme Makeover project at American Airlines is done. Not as in “It’s completed.” More like, “It’s done.” Toast.

We hear the project has finally been shelved — after the airline had spent tens of millions of dollars on it with little to show for its investment. In the airline’s bankruptcy filing, the airline said it owed HP some $30 million or so. In fact, HP has a seat on the airline’s unsecured creditors committee. The project was first announced in 2009.

Should be quite interesting to see what the airline does now. Will it crawl back to Sabre and try to work out some type of add-on to its existing Sabre system? Or will this give yet another vendor a chance to wriggle their toes in the door?

Meanwhile, up in New York last week Raymond James held its Global Airline Investor Conference. We’ll give you a peek at some of the presentations that were made by some of the usual suspects.

Malev shuts down, Ryanair moves in, and Singapore Airlines posts a 53% drop in fiscal third quarter earnings — all of this and much, much, more in this week’s jam-packed edition of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Good evening everyone.

This week’s issue of PlaneBusiness Banter is now posted. This week we’re talking a lot about the two airlines that call Dallas-Ft.Worth home — American Airlines and Southwest Airlines.

Last week Southwest Airlines rolled out its fourth quarter earnings results — making the airline the first to report for the quarter. Overall the airline posted numbers that were just a bit better than expected, although the “noise” from the airline’s merger with AirTran will continue into 2012. The airline also updated its list of AirTran cities it is keeping and those it is putting on the “Don’t fly there no mo” list.

Were there any surprises here? Yep. On both sides.

Meanwhile, the bankruptcy continues at American Airlines. Monday Human Resources SVP Jeff Brundage sent out a letter to employees trying to reassure them that even if their pensions were terminated or frozen, they would still get almost the same payment from the PGBC. Only problem — that is not true if you are a pilot. Or a member of upper management. Why? The pension payouts for those two groups are higher — and the payouts would exceed the maximum levels allowed by the PBGC.

Brundage’s letter was issued, I believe, as a result of the airline’s failure to pay the roughly $100 million it was scheduled to pay into its pension plans last week. News of the airline’s minimal payment it did make was not received well with labor leaders of the airline’s employee groups. The move, coupled with the publicly vocal sparring between the airline and PBGC over the last several weeks succeeded in raising the angst level of employees considerably.

Brundage’s letter was followed by a missive to the troops from CEO Tom Horton. But all Horton’s note said was that the airline was going to make changes in its executive ranks, its management “layers” and that it was going to be the airline it used to be — again.

Again — no details.

Meanwhile, out in Phoenix, US Airways’ President Scott Kirby and his revenue management team are hard at work putting together a network restructuring plan for American Airlines. Or so said a report in Bloomberg last week.

Say what?

Let’s just say the obvious!

Of course US Airways’ President Scott Kirby has his minions working on a plan that will increase American’s revenue performance.

We may not get to hear the details until much later in the year — after American has had its chance to impress the bankruptcy court and the unsecured creditor’s committee with its restructuring plan. But I assure you — yes, US Airways is working on a proposal.

Oh my gosh. And this is just the start of this week’s issue.

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

PlaneBusiness Banter is Now Posted!

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Good evening everyone. It’s time once again for this week’s issue of PlaneBusiness Banter. Or rather, this week’s “Turkey Trot” edition of PBB.

Yours truly got hit by a nasty upper respiratory infection this last weekend, so I have to tell you — the “Turkey Trot” edition almost didn’t make it to the table.

But I couldn’t have all our subscribers venturing out over the river and through the woods without some good reading material.

This week we’re talking about a hodge-podge of things — lunatic legislation introduced just in time for Thanksgiving travelers that seeks to either prevent airlines from charging for fees, or then taxing airlines more that do charge for fees; a USB investment research report that pretty much calls the EU’s Emissions Trading Scheme worthless; American Airlines’ withering market cap; American Airline’s withered state in general; SkyWest’s new flying for US Airways; Travelport and American’s latest court news; one analyst’s take on the latest Southwest Airlines‘ schedule uploads for 2Q2012, and what these changes mean for competitors; Hawaiian Airlines’ decision to take Manhattan; the DOT’s September Airline Consumer Travel Report; and oh, a whole lot more.

Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Hello everyone.

It’s that time once again. This week’s edition of PlaneBusiness Banter is now posted.

This week we have yet more third quarter earnings to discuss, as we take in-depth looks at the results posted by Allegiant, SkyWest and Pinnacle.

Next week, we wrap up our third quarter earnings call coverage as we look at Republic Holdings, Air Canada and WestJet.

Speaking of WestJet, our moles tell us that we should expect to hear another “important” announcement along with the airline’s third quarter numbers this week. That would make sense. It would also explain why the airline is late in reporting their numbers for the quarter.

Speaking of Republic — did you see what happened to shares of Republic Tuesday? That’s right. Shares picked up a whopping 61% on the day on incredibly heavy volume. The airline reported better than expected numbers and also gave clear guidance on how it plans to divest itself of Frontier Airlines. Investors liked what they heard. Obviously.

Late Tuesday there was an update posted on the AMR negotiations website concerning the negotiations between American and its pilots. This follows a week in which all indications continue to point to news of a new tentative agreement between American Airlines and its pilots being announced in the not-too-distant future.

Meanwhile, pilots at Southwest Airlines and AirTran overwhelmingly okayed their proposed seniority agreement. No surprise there.

Internationally, Singapore Airlines, IAG Group and Emirates all reported sharp declines in earnings for the quarter last week — as higher fuel prices took their toll.

Meanwhile, does IAG have a deal to buy bmi from Lufthansa or not? Depends on who you are asking. If you are asking Willie Walsh, the answer is yes. But if you are asking Richard Branson, the answer is apparently no.

Question of the week — How many weeks does it take to train new Boeing 787 pilots? Answer: Five weeks.

No, that’s not a joke. That’s what ANA is doing. Five weeks?

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

In Memoriam: September 11, 2001

While the world paused today to commemorate the events that happened September 11, 2001, we — as we have since that awful day — prefer to focus on our departed airline family members. Those crew members who went to work on what was a beautiful day — but never came home.

Yes, there were thousands of people who lost their lives that day. But for those of us who follow this industry, work in this industry, or simply continue to be fascinated by its endearing dysfunctionality, the loss of four airline crews that day hit us hard. And it still hurts.

This is our corner of the world. And as I see it, the courage and bravery of these crewmembers deserve our heartfelt acknowledgment. And remembrance.

American Airlines Flight 11, Boston to Los Angeles, crashed into the World Trade Center.

CREW: John Ogonowski, Dracut, Mass., Captain; Thomas McGuinness, Portsmouth, N.H., First Officer; Barbara Arestegui, flight attendant; Jeffrey Collman, flight attendant; Sara Low, flight attendant; Karen Martin, flight attendant; Kathleen Nicosia, flight attendant; Betty Ong, flight attendant; Jean Roger, flight attendant; Dianne Snyder, flight attendant; Madeline Sweeney, flight attendant.

United Airlines Flight 175, Boston to Los Angeles, crashed into the World Trade Center.

CREW: Victor J. Saracini, Lower Makefield Township, Pa., Captain; Michael Horrocks, First Officer; Amy Jarret, flight attendant; Al Marchand, flight attendant; Amy King, flight attendant; Kathryn Laborie, flight attendant; Michael Tarrou, flight attendant; Alicia Titus, flight attendant.

American Airlines Flight 77, Washington to Los Angeles, crashed into the Pentagon.

CREW: Charles Burlingame, Captain; David Charlebois, First Officer; Michele Heidenberger, flight attendant; Jennifer Lewis, flight attendant; Kenneth Lewis, flight attendant; and Renee May, flight attendant.

United Airlines Flight 93, Newark, N.J., to San Francisco, crashed in Shanksville, Pa.

CREW: Jason Dahl, Colorado, Captain; Leroy Homer, Marlton, N.J., First Officer; Sandy Bradshaw, flight attendant; CeeCee Lyles, flight attendant; Lorraine Bay, flight attendant; Wanda Green, flight attendant; Deborah Welsh, flight attendant.

May they all be at peace in a much better place.