Tag Archives: US Airways

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 Now Posted!

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

No surprise, we’re talking a lot about American Airlines again this week.

First, the airline’s labor unions have been given a strong position on the airline’s creditors committee. This is no small deal, as the members of the airline’s creditors committee pretty much dictate how the airline is operated and what the airline will look like when it finally escapes from the grasp of bankruptcy.

In addition, Tuesday the airline announced the first round of upper level executive departures. We expected this — and we hope the departures announced Tuesday are just the beginning.

American’s filing has begun to have ripple effects across the industry. One such effect: JetBlue announced Tuesday night that it was starting (FINALLY) BOS-DFW service in May 2012.

A different effect? Southwest Airlines‘ CEO Gary Kelly’s letter he posted to employees about the American bankruptcy. Essentially Kelly took a hardline with employees — making the point that Southwest Airlines is now, for all practical purposes, the airline in the crosshairs — having never filed for bankruptcy, and now forced to compete with an aggressively managed group of “new” airlines including United, US Airways, and Delta Air Lines.

In other news, we’re sad to see FAA Administrator Randy Babbitt have to resign from the agency. But someone in his position cannot be arrested for DUI. Even worse, you can’t be arrested for DUI and then not tell your boss about it. Reportedly DOT Secretary LeHood found out about Babbitt’s arrest only after the Fairfax City police issued a press release on Monday.

Worse, if Babbitt is convicted, he will lose his commercial pilot’s license.

An extremely unfortunate situation — both for Babbitt, and for the FAA. The last thing the agency needs right now is a distracting search for his replacement.

On Wall Street, airline stocks posted a great week last week. Well, there was one exception. But AMR was just that — an exception. Shares of JetBlue soared, leading a number of airline stocks to hefty double-digit gains on the week.

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

PlaneBusiness Banter Now Posted!

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Hello everyone. This week we feel like we’ve been trapped on a tarmac for 7 hours. Or maybe 36 hours. Or maybe longer.

Yes, it’s the biggest earnings issue of the quarter, as we take the microscope to the third quarter earnings calls this week from Delta Air Lines, US Airways, United Continental, Spirit Airlines, and JetBlue.

How long is this week’s issue. Oh, I don’t know. 150 pages more or less.

Needless to say, there is certainly not a lack of things to talk about in this week’s issue, and some of the topics are not even earnings related.

Take for instance, last weekend’s freak snowstorm in the Northeast. I’m sure the folks at JetBlue would love to give it to you.

Once again, the airline found itself the brunt of headlines far and wide after passengers on a number of the airline’s aircraft were forced to sit on said aircraft for hours, and hours, and hours after landing in Hartford. American Airlines also saw one of its international flights diverted there, and all in all, a horrible time was had by all.

Although the governor of Connecticut seemed to think passengers weren’t looking at the situation in the right light. He reminded those who finally did make it inside Bradley International that hey, they landed safely, didn’t they?

We also talk a lot this week about the subject of fuel hedging.

I am convinced that airlines need to stop doing it.

Why?

Because it’s not necessary.

Airlines now have the resources and the planning tools they need to weather the ups and downs of fuel prices. Hedging has become a complicated unnecessary expense.

At least that’s how I see it.

And hey, how ’bout the management team at Qantas? CEO Alan Joyce finally had it last week with the ongoing “mini strikes” and other various efforts by three different employee groups to disrupt the airline’s operations. Saturday, the airline simply shut down.

Brilliant move on the part of Joyce in my opinion.

He knew if he did it, the Australian government would be forced to step in, which it did, and the arbitration court in Australia on Sunday ordered the employees at Qantas back to work — but only after it was made clear that employees were forbidden to participate in any more “mini-strike” job actions.

I can’t recall any airline ever doing anything like this. Ever.

As usual, this is just the tip of the iceberg. This week’s issue is huge, and we’re talking about a lotta stuff.

Subscribers can access this week’s issue of PlaneBusiness Banter here.

PlaneBusiness Banter Now Posted!

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Hello earthlings. This week’s issue of PlaneBusiness Banter is now posted. In this week’s issue we take a follow-up look at the problem known as AMR. After our look at the airline’s Monday Meltdown last week, this week we give you more insight from an assortment of Wall Street analysts. The upshot? Bankruptcy is not going to save the airline, but at the same time, the airline does not appear to be anywhere near a filing.

The airline also announced cuts in capacity for the late fall and winter months. This news was probably the best news American Airlines could have uttered. Analysts liked the reductions. The airline says they are not a result of falling demand — but of higher fuel prices. Not certain, but the airline’s continued exodus of top-tier pilots just might have something to do with the airline pulling back on the reins as well.

Other airline stocks suffered as a result of AMR’s drop last week. US airline stocks were clearly the laggards in a week that saw the the rest of the markets do fairly well.

NextGen. FAA. Congress. Department of Transportation Inspector General.

Send chills up your spine yet? It should.

Last week the FAA and its project management of the NextGen project got raked over the coals by the DOT IG. But as we talk about this week in PBB, how can the FAA be expected to manage such a complex project when it can’t even count on having money to pay for paper clips from day to day — a result of how the agency is funded (or is not funded) by Congress?

Meanwhile, the European Court of Justice gave the EU a huge thumbs up last week on its plan to charge airlines around the world for their greenhouse gas emissions. Needless to say the airline industry is not happy about this.

Southwest Airlines’ CEO Gary Kelly talked to Bloomberg last week and he started throwing around some huge revenue numbers that he says the airline can produce — as a result of its AirTran acquisition. Only one problem. I’ve been talking to a number of industry people who don’t think he can.

What do you think?

Which reminds me. This week you, our subscribers, get a chance to tell me what the next airline merger will be. That’s right. Sharpen up those pencils and send me your two cents on just which merger could be next on our radar. And why.

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

US Airways/USAPA Injunction Update: Union Issues Notice To Pilots

As per U.S. District Court Judge Conrad’s order that was issued earlier this week, the US Airlines Pilots Association (USAPA), which represents the pilots at US Airways, posted the following letter to its members on its website today.

Funny thing is — it is not posted on the public part of the site. You have to use a member user name and password to access it behind the firewall, or be on the union’s email list. Or, as in my case, have a copy forwarded to me by an American Airlines’ pilot.

Interestingly, the last publicly posted piece on the union’s website is an article dated May 25, 2011, headlined, “US Airways Pilots Protest Slow Pace of Contract Talks.”

Methinks there has been one heck of a lot of news that has involved the union since then. Perhaps a news update might be in order.

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USAPA Update on Injunction Order

In compliance with Section IV of Judge Conrad’s ruling in the United States District Court, Western District of North Carolina, USAPA is distributing the following notice to all US Airways pilots by the most expeditious means possible. USAPA will provide more information as soon as it becomes available. Thank you for your prompt and thorough review of the following:

NOTICE TO ALL US AIRWAYS PILOTS

In July 2011, US Airways filed a complaint against USAPA alleging USAPA had violated and was violating the Railway Labor Act (“RLA”) by, among other things, engaging in a concerted effort to interfere with US Airways’ airline operations, including but not limited to a slowdown, work stoppage, strike, sick-out, work to rule campaign, and other concerted refusals to perform normal pilot operations. At the time it filed the complaint, US Airways sought a preliminary injunction to prevent USAPA from engaging in the acts and conduct alleged in the complaint. After a full evidentiary hearing conducted on August 19 and 22, 2011, by decision and order dated September 28, 2011, the Court found there was evidence sufficient to meet the legal burden that USAPA had engaged in actions that violated the RLA.

The September 28, 2011 order specifically enjoins USAPA and its members, agents, and employees, and any persons and organizations acting in concert with, through, or under it, or by and through its order, from violating the status quo provisions of the Railway Labor Act and from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA. This order continues in effect unless and until modified by the Court.

All US Airways pilots are instructed to fully perform their normal working schedules and practices.

All US Airways pilots who are engaging in a concerted refusal to perform normal pilot operations are directed to cease and desist from any concerted refusal to perform normal pilot operations, by engaging in acts including but not limited to slow taxiing, writing up all maintenance items, calling in fatigued, delaying flights, refusing to answer a call from the scheduling, refusing to fly an aircraft that meets the requirements for flight, or refusing to accept voluntary or overtime flying, and to cease and desist all exhortations or communications encouraging same.

USAPA will take all steps and measures to comply with the letter and spirit of the Court’s order and instructs and directs all US Airways pilots to do the same. Any and all acts and conduct in violation of this Order may subject individuals and those acting in concert with them to punishment under the contempt powers of the Court.

A copy of the order issued by the Court is shown below.

US AIRLINE PILOTS ASSOCIATION

________________________________

ORDER ISSUED BY THE COURT

September 28, 2011

The Court . . . HEREBY ORDERS:

1. USAPA and its members, agents, and employees, and all persons and organizations acting by, in concert with, through, or under it, or by and through its order, are enjoined from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA, pending a hearing on the permanent injunction.

2. USAPA shall take all reasonable steps within its power to prevent the aforesaid actions and to refrain from continuing the aforesaid actions if commenced, including, but not limited to, the following:

a. Instructing all pilots represented by USAPA and employed by Plaintiff to resume their normal working schedule and practices and providing Plaintiff a copy of all such instructions;

b. Notifying all pilots represented by USAPA and employed by Plaintiff, by the most expeditious means possible, of the issuance, contents, and meaning of this Preliminary Injunction and providing Plaintiff a copy of all such notices;

c. Including in such notice a directive from USAPA to US Airways’s pilots who are engaging in a concerted refusal to perform normal pilot operations, including but not limited to, slow taxiing, writing up all maintenance items, calling in fatigued, delaying flights, refusing to answer a call from the scheduling, refusing to fly an aircraft that meets the requirements for flight, or refusing to accept voluntary or overtime flying, to cease and desist all such activity and to cease and desist all exhortations or communications encouraging same.

d. Posting the notice described above on Defendant USAPA’s internet websites and providing Plaintiff a copy of the notices;

e. Including the contents of such notice on any and all recorded telephone hotlines under control of USAPA, until such time as the Court has acted on Plaintiff’s Motion for a Permanent Injunction, and providing Plaintiff a copy of all such messages; and

f. Distributing the contents of such notice through all non-public communication systems maintained by USAPA, including any telephone trees, text message lists, pilot-to-pilot communication systems, or similar systems, and providing Plaintiff a copy of the notices.

3. USAPA is prohibited from including in such notices (or distributing contemporaneously with such notices) any statements that are intended or could reasonably be interpreted to mean that pilots should continue to engage in the previously-described conduct notwithstanding the Preliminary Injunction.

4. USAPA shall report to the Court by 5 p.m. on October 4, 2011, by sworn affidavit, the methods used to effect the notice described above to all USAPA-represented pilots, and furnish to the Court copies of all notices required to be furnished to the Plaintiff under the Court’s Order.

PlaneBusiness Banter Now Posted!

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Hello everyone. I feel like I need to crank up the theme song from “Rocky” tonight. Yes, it’s earnings week here at the Worldwide Headquarters of PlaneBusiness Banter. Or rather, the first of three heavy earnings weeks. Or is it four? Oh, they are so much fun — who’s counting?

This week Alaska, United Continental, AMR and US Airways in-depth earnings reviews are on tap for PBB readers. I know it’s hard to believe, given how long some of our earnings reviews have run in the past, but I do believe we may have posted our longest earnings review ever tonight. Alaska’s call attracted a lot of analyst attention and they all asked a lot of great questions.

That’s what happens when you are an airline and you post a fantastic pretax margin, operating margin, and an even more impressive ROIC. (That’s return on invested capital for those of you who are not financial geeks.)

Funny. I can remember quarters in the past when Alaska executives would give their presentations on the airline’s earnings call and there were hardly any analysts on the calls asking questions. I used to feel sorry for them.

Things change when you begin running one of the most profitable and well-run airlines in the U.S.

American Airlines? Oh. Earnings. Did the airline report earnings last week? Kind of hard to remember what with all the hoopla the airline generated about its split Airbus/Boeing order of an entire fleet of aircraft. Actually I’m sure the airline would prefer that nobody remembered that they also reported 2Q earnings. And we’ll talk about why that is the case.

No question American would much rather we talk about nice new shiny airplanes.

One thing’s for sure. Wall Street was not happy with the news about all the nice new shiny airplanes. We give readers a selection of analyst comments to pour over this week — and the gist of the feedback goes something like this: new airplanes do nothing to change the underlying problems with the current business model or the brand. Or the operational issues. Or the cost issues. Or the continued less-than-industry peer revenue performance.

Much less mounting cash flow issues.

Bu they, don’t worry, be happy. I sometimes think that AMR management is convinced the airline is simply “too big to fail.” That’s a somewhat dangerous assumption to make. Just ask Lehman Brothers.

United Continental is, of course, still in its transition mode, but so far so good. The airline’s revenue performance was good in 2Q, but I suspect we are going to see the airline’s revenue performance get even better over the next 12 months. My biggest concern with United Continental remains its continuing labor negotiations. Particularly the ones involving the airline’s two pilot groups.

Then there is US Airways. Even without fuel hedges, the airline still posted a profit for the quarter. All things considered, that’s not a bad thing. However, US Airways also happens to have a rather dysfunctional pilot union that still can’t negotiate a seniority agreement, much less a contract. Last week that same union decided to go public with its “safety” concerns at the airline. Uh-huh. Everything new is old again, isn’t it?

We also talk about other things this week of course. But I won’t spill the beans. That will just have to be a surprise.

Subscribers can access this week’s issue of PlaneBusiness Banter here.

PlaneBusiness Banter Now Posted!

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

This week I talk a lot about US Airways. For good reason. I attended the airline’s “Unplugged” Media Day last week. The airline used the occasion to announce it is upgrading its regional airline fleet with first class cabins. But that was not the only news to come out of Tempe. We’ll give you the low down.

That doesn’t mean we’re done talking about Southwest Airlines and its recent fuselage problem. Nor have the late night talk show hosts.

Last week Southwest Airlines CEO Gary Kelly and American Airlines CEO Gerard Arpey both sat down with Terry Maxon from the Dallas Morning News at the SABEW Conference in Dallas. Gary talked about the Southwest incident and Gerard talked about the recent bogus offer to buy the airline from that outfit in Florida. Yes, as we assumed, the SEC is looking into it.

Speaking of Dallas, the DOT reported its February Air Travel Consumer Report last week. As expected, it was not a good month for airlines based in Dallas. (February ….ice…snow…Superbowl on ice.)

Expedia and American Airlines kissed and made up this week. But this news leaves a lot of very ragged and messy things to clean up on the corporate travel terrain. We like TheBeat’s Jay Campbell’s take on the news. We’ll share his take with you.

While pilots for United and Continental Airlines keep working on a new contract, all is not apparently warm and fuzzy on the United Airlines pilot side of the house. Reports say that there was a recall vote originally scheduled for Monday’s UAL ALPA MEC meeting. The intended victim? The pilot’s current MEC Chairwoman, Captain Wendy Morse.

Meanwhile the flight attendants at American Airlines offered up a deal for the airline. An immediate 6% raise for its members — and the rest of the contract details would be tabled for 18 months. The airline said no.

Speaking of American — April 20 is just around the corner. That’s the day you can expect to see protests from airline employees over the airline’s latest PUP bonus distributions.

We talk also take a look this week at just how much additional revenue and/or capacity cuts the airlines would need to make — in order to cover the current price of fuel for the remainder of the year. That’s a sobering chart. Thanks to Dahlman Rose analyst Helane Becker for the analysis.

As always, all this, and more in this week’s issue.

Subscribers can access the issue here.

Mega Earnings Issue of PlaneBusiness Banter Now Posted! — United Airlines Tague and Mikells To Leave

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Hello everyone.

This week we have a 100-plus page earnings issue of PlaneBusiness Banter for you to peruse at your leisure. And yes, at that length, it should more than take up all of your leisure time for the week. Have no fear. Next week we’ll give you another one!

This week we take in-depth looks at the recent earnings results posted by American Airlines, US Airways, United Airlines, Continental Airlines and Delta Air Lines.

This coming week the PlaneBusiness microscope will be trained on the 2Q results of JetBlue, Alaska, AirTran, Allegiant and Southwest Airlines — which is scheduled to report its second quarter numbers on Thursday.

A couple of quick observations from the group we took a look at this week.

One, even before the formal announcement was issued this morning, it had been clear for some time that United Airlines President John Tague was not a member of the executive transition team that was going to stay with the “new” United. That fact was also crystal clear as you listened to the airline’s earnings call last week.

This morning, the airline formally announced that John, Kathryn Mikells, Graham Atkinson, and Rosemary Moore would not be staying with the “new” United.

Zane Rowe, current CFO at Continental will remain, but Pete McDonald will come over from United as COO. As for the rest of the top tier execs, including those heading up marketing, communications and HR, all will come from Continental. And of course, Jeff Smisek will be CEO.

We told you so. From the beginning.

Back to earnings.

Of this group, there was clearly one airline that posted earnings above and beyond — that airline was US Airways. In fact, while the airline’s numbers were great as they were, the airline would have seen their EPS figure come in 8 cents higher — had the airline chosen to classify a refund from the TSA as regular income — not a special item. (As some airlines chose to do, including United Airlines.)

The airline posted one great quarter. On a number of fronts. It managed to stash a nice chunk of cash as well.

As for United and Continental, it’s really kind of pointless to talk about them as viable standalones at this point because the merger looms in the background. In terms of potential stock investments — I’d say all bets are off here until after the actual merger is much further along.

Delta Air Lines, which was the subject of our last non-PBB post here in PlaneBuzz had a nice quarter, and yes, the comments it made about guidance and its fourth quarter increase in capacity were way overblown.

All of that capacity hysteria was so yesterday.

Good quarter for the folks in Atlanta.

And finally, American Airlines trudged out its loss for the quarter last week as well.

We are once again putting American Airlines on the official PlaneBusiness Titanic Watch this week. The airline announced a number of executive changes this last week — but I’m not sure they are going to be enough to get the airline out of its self-created sinkhole.

More on all that in this week’s issue.

We also wrap up the news from Farnborough, and we talk about the legal move US Airways announced Monday, as they try to attempt to break the seniority fight log jam that exists between its pilots.

And finally — yes, we talk about the ongoing Tarmac Tales. Consulting studies, DOT rants, and all.

All this, and more — including a shot of the new Virgin Atlantic livery. Woo hoo! (We have to do something to celebrate Sir Richard’s 60th birthday.)

Subscribers can access this week’s issue here.

United Airlines BOD Approves Deal With Continental Airlines

As expected, news reports this afternoon say that the board of directors of United Airlines has okayed a merger with Continental Airlines. The Continental BOD is expected to meet later today and do the same.

The expected merger is valued at more than $3 billion and the formal announcement is expected Monday.

For now, my lips are sealed. I’m in the middle of writing another 100 page earnings issue of PlaneBusiness Banter. But I will say this — I hope the folks at Continental did their homework.

Goodbye Houston, hello Chicago.

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.