Tag Archives: airline

PlaneBusiness Banter Now Posted!

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Good evening everyone.

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s 80-plus page issue here.

It’s that time of year. Yep. Earnings time.

This week we have our in-depth look at the earnings calls and our PlaneBusiness Earnings Summaries for Southwest Airlines, American Airlines, and Delta Air Lines.

If you are wondering why it was that airline stocks took a header last week — it was not because of higher oil prices. It was because Wall Street was not overly impressed by the earnings posted by Delta, or Southwest — much less American Airlines.

American, once again, is slated to be the only major airline which will not post a profit for the quarter — much less the year.

In the case of Delta, analysts were disappointed by the airline’s revenues, and by the fact the airline says, at least for now, that it intends to keep its existing plans for capacity growth intact.

Southwest Airlines also warned that revenue “head winds” are going to be tough in the first quarter and a profit for that airline for the first quarter is “iffy” if you look across the sector analysts’ current estimates. The airline also forecast a rather sharp increase in costs for the first quarter.

As for American, I don’t know where to start. As I tell my subscribers in more detail, I think the AMR earnings call was an embarrassment. Add that to the fact that the airline continues to lose money and we heard nothing whatsoever in the airline’s call in regards to a specific plan to turn the airline around and …..it’s pretty ugly.

Meanwhile, on the American/GDS War frontline, American and Sabre called a truce Monday. Not unexpected. I was surprised when Sabre threw its hissy fit and pulled American’s fares from its GDS. No way Sabre’s customers were going to let this situation remain in effect.

Truce is officially until June 1 — we’ll see something negotiated between the two before then.

American also announced a new deal with Priceline, which allows Priceline to use the airline’s new “Direct Connect” product. (And yes, this deal was announced before the truce with Sabre, which leads me to believe it was done to push Sabre back to the table — which is what happened.)

US Airways also announced a new deal with another OTA, Expedia, but that deal uses the more traditional GDS method of delivery. It will allow Expedia to market “seat choice” options and other goodies though.

Meanwhile, we did our own little test today of what showed up and at what price when I Iooked up fares between Dallas and LGA on both Expedia and Priceline. That was a fun experiment.

Our new “Retro” feature this week takes us back to 1994, and British Airways. And the billion dollars plus it invested in airlines such as USAir, TAT, and Deutsche BA. That strategy really didn’t work out too well for the airline, did it?

But enough of all this fun and frivolity. This week the emphasis is on earnings. Next week, we’ll be taking a gimlet-eyed view of United/Continental, US Airways, Alaska, and JetBlue –– all of whom report this week.

Speaking of Alaska Airlines — did they not blow the doors off in the fourth quarter or what? I remain tremendously impressed with the airline. I like the decision to de-brand Horizon as well.

But that’s for next week.

Meanwhile, all the rest — and more! — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Hello to everyone on what is a gloriously beautiful day here in the DFW Metromess.

Today I bring you another luxuriously long issue of PlaneBusiness Banter posted for your reading pleasure. Or as someone said to me last week at a conference I was speaking at, “I LOVVEE these issues. It gives me something to read during my entire flight!”

Yes, well. I’m so happy we can be of help.

Earnings season is finally winding down. We talk about three airlines in depth this week – Air Canada, WestJet and SkyWest. We also have earnings summaries for the last two reportees for the quarter — Republic Holdings and Pinnacle. We’ll talk more about them in next week’s issue.

But hey, there was a whole lot going on this last week besides earnings.

Shares of AMR, parent of American Airlines, had a great week, after Jamie Baker at JP Morgan Chase picked the stock as his current favorite. Kind of a no-brainer considering how badly beaten up the stock is — compared to its peers. According to Jamie, the company should start to see some improvement to its lagging margin performance as the British Airways joint venture kicks into gear. He said a lot of other stuff as well. More in this week’s issue.

On the labor front, the flight attendants at Delta Air Lines just said “No” to union representation last week. After 16 years and three elections, the Association of Flight Attendants couldn’t get it done. The AFA said it is going to protest the election on grounds the airline interfered.

Negotiations have clearly bogged down between the pilot unions at United and Continental. Sounds like pay scales for the United Boeing 747 is a major sticking point but that sticking point runs parallel to the other bigger problem — seniority.

As I say this week, you guys should not attempt to negotiate a contract unless the seniority agreement has been completed.

Meanwhile, in Dallas, the Allied Pilots Association has hired a professional negotiator. I think I said the union needed to do this about four years ago. Glad they finally took my advice.

The man they hired, Seth Rosen, is affiliated with the Air Line Pilots Association.

Interesting. I sense a thaw developing in relations between the two pilot unions.

Some notable tidbits from across the pond this week as well, including the fact that privately-held Virgin Atlantic confirmed it has hired Deutsche Bank to look at its “strategic opportunities.” This comes as reports also say Sir Richard may be ready to sell his interest in the airline. That would make sense. He would never be able remain at the helm as he is now if the airline were to be sold. He could never accept not being in charge.

But the most disturbing things we talk about this week have nothing to do with unions or earnings.

The first one — the uncontained failure of a Rolls-Royce engine on a Qantas A380 last week and the fact the airline says it has found other A380 Rolls engines with unacceptable levels of leaking oil.

Not good.

The second one — my first experience with the new TSA “extended” pat-down procedure.

Not good either.

More feedback on the TSA’s changed procedures from yet another pilot union this week — and we couldn’t agree more.

Speaking of “more,” — all this and more in this week’s issue of PlaneBusiness Banter.

Subscribers can access this week’s 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.

PlaneBusiness Banter Now Posted

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Hello everyone. This week’s mega-earnings issue of PlaneBusiness Banter is now posted. No thanks to the wizards over at Verizon, who disconnected us totally from the rest of the world early yesterday morning — five days before they were supposed to — as part of a move of the PlaneBusiness Worldwide Headquarters.

I don’t want to get into it.

However, I will pass along this rather ironic piece of information that not one, not two, but three Verizon employees (who were being recorded at the time probably) told me in the midst of some eight hours of talking to various techs, customer service reps, and supervisors as I frantically tried to get us back online so that we could get published yesterday.

That advice from those on the dark side: Never use the Verizon website to do anything. And especially — never order any service on the website.

Their advice: Call them and talk to a human.

Now how positively telling are these comments? Isn’t the internet/websites/connectivity their business?

Funny. Whenever someone complains to me about the airline industry I always turn and ask them, “And what about your cell phone provider? How’s that service working out for you?”

While I don’t have my cell phone service with Verizon (I have an iPhone and AT&T has its own problems), all of our H/S internet connectivity is part of a Verizon FIOS package.

Love the FIOS service — have never had an issue with it. And unfortunately there is no competing AT&T Uverse service at the new Worldwide Headquarters. Otherwise — at about 2 p.m. yesterday, FIOS would have been history.

Sigh.

What do they say about competition?

Anyway, as I said before I got sidetracked, this week’s issue PBB is now posted. Subscribers can access this week’s issue here.

This week is another big earnings issue. This week we take a close look at the recent earnings results and earnings calls from Air Canada, Republic Holdings and Hawaiian Airlines. Whew. The three airlines provide a lot to talk about.

In addition, we have the March DOT Air Travel Consumer Report. Verdict? Clearly there was a lot less bad weather in March than there was in February.

We also talk a lot this week about British Airways. The airline is poised to report its biggest annual loss in its history this week. On top of that the airline got hit with yet another strike this morning — before the airline was successful in getting an injunction against the union mid-day. Still the damage was already done — at least in terms of flights affected for today and tomorrow.

Then there is the little matter of that damn volcano that nobody can pronounce. And the ash it continues to spew into the atmosphere. It started doing it again this weekend, and once again, airports were closed in the U.K. Is the ash a deadly mess for aircraft engines — or do we need to develop more accurate methods of determining the extent of the ash and its whereabouts?

UK and European airlines are not happy.

The worst part? This volcano is probably not going to stop doing this any time soon.

We talk about the latest merger chatter this week. We get caught up on the progress in the Continental/United match-up and we wonder who Jesup & Lamont’s analyst Helane Becker thinks Republic is going to pair up with before the end of the year. Enquiring minds want to know.

All this and lots more scintillating discussions — all in this week’s issue of PlaneBusiness Banter.

Airline Industry Not Happy With Biden; WHO Debunks Usefulness of Travel Restrictions

Thursday morning Vice-President Joe Biden said on NBC’s Today Show, “I wouldn’t go anywhere in confined places now. It’s not that it’s going to Mexico, it’s [that] you’re in a confined aircraft; when one person sneezes it goes all the way through the aircraft. . .If you’re out in the middle of a field and someone sneezes that’s one thing. If you’re in a closed aircraft. . .it’s a different thing.”

Thank you Joe.

Unfortunately, we all know he’s right. Then again, the same could be said for riding in an elevator.

However, knowing that being in a small confined space with recirculated air for hours is probably not the best place in the world to be if someone in that space has something contagious is not what the airline industry needs to have said by a top government official on television. Not right now.

The Air Transport Association immediately blasted the comments, with CEO Jim May expressing “extreme disappointment at your suggestion that people should avoid air travel.”

The rest of the day, and even this morning, the fallout continued, with other government officials stepping up in an attempt to mitigate the damage, as did Transportation Secretary Ray LaHood late yesterday. LaHood said in a speech that “flying is safe and flying is healthy, and flying to Mexico is safe.”

Meanwhile, this morning the World Health Organization said that it was not recommending travel restrictions related to the outbreak of the virus. “Limiting travel and imposing travel restrictions would have very little effect on stopping the virus from spreading, but would be highly disruptive to the global community,” WHO said in a statement.

One of the reasons behind this statement? The lessons learned from the hysteria surrounding the SARS encounter. As WHO said in its statement, “Furthermore, although identifying the signs and symptoms of influenza in travellers can be an effective monitoring technique, it is not effective in reducing the spread of influenza as the virus can be transmitted from person to person before the onset of symptoms. Scientific research based on mathematical modelling indicates that restricting travel will be of limited or no benefit in stopping the spread of disease. Historical records of previous influenza pandemics, as well as experience with SARS, have validated this point.”

What Did This Quarter’s Earnings Tell Us?

It’s Friday. Do you know how well YOUR favorite airline did for the first quarter of 2009?

As of today, all the major airlines have reported earnings.

So what have we learned? A couple of things.

One, Allegiant Air continues to blow away everybody else on the block. The travel company, which happens to include an airline that happens to fly only MD-80s that also happens to make money hand over fist had a spectacular first quarter. As I mentioned earlier this week, a 31.3% operating margin was posted by the airline.

You just don’t see margins like that in this industry.

I told you guys not to believe that anti-Allegiant rant that CNBC’s Jim Cramer spewed out not too long ago. Cramer, by lumping ALGT with Las Vegas “casino stocks,” proved that his research is lacking.

We also learned this week that AirTran had a great first quarter. No, the results were not as stratospheric as those of Allegiant, but they were pretty damn good. Nice fat profit, and nice big declines in costs. Excellent job.

We also learned that while we may have hit a point where declines in demand have more or less leveled out — nobody, and I mean, NOBODY, (well, except for Allegiant) is ready to call what is going to happen in May and June.

Preliminary bookings are down — but will they recover, as more and more passengers continue to book tickets closer in? Then again, at the heart of the demand decline here in the U.S. is the declining number of premium passengers. That is only going to improve when the economy improves.

What I might have concerns about if I were an airline other than Allegiant is just how much of that previous business travel my airline had before does return. Even if the economy picks up.

You don’t have to look very far to see what is happening in companies both big and small these days. Companies are cutting back on travel and are using video conferencing more and more. Heck, today anyone with a laptop can connect via video to a small one-on-one meeting or to a meeting with many more participants. There is no question that the quality and ease, not to mention the low to no-cost of such efforts — has changed dramatically just in the last couple of years.

So yes, I am concerned that going forward — if a company gets used to using video conferencing as a result of the current belt-tightening — is that same company going to be anxious to start spending money on sending their employees to far-flung regions of the country? Much less the rest of the world? Just because they now have a little extra money to spend?

I’m not so sure.

And, if this is the case — which airlines stand the best chance of inheriting the earth? Or at least the bulk of the shorter-term profit kitty? Those airlines that cater to the leisure traveler and have the low fares and low cost structure to make money doing so.

Which is one of the reasons why Morgan Stanley analyst Bill Greene recently advised airline stock investors to move out of U.S. legacy carriers and into low cost, low fare airlines such as Allegiant, AirTran and JetBlue. US Airways kind of sneaks in there as well, as it has the lower fares and the lower cost structure and a bigger domestic market than that of American, United, Delta, or Continental.

United Boeing 767 Gets Hosed

Now I know the rest of the story.

This week one of our friendly airline geeks on a list I am on sent out some disturbing pictures in which it appeared someone at United AIrlines decided to take a pressure washer to one of the airline’s Boeing 767s — knocking out windows and generally making a huge expensive mess.

But that wasn’t a pressure washing. It was from fire hoses.

Kieran Daly wrote on his blog, Unusual Attitude this week that he was told that United took a Boeing 767-300, and gave it the full customer-facing treatment. New seats, interior fittings, and best of all,”Panasonic’s all-singing, all-dancing in-flight entertainment.” All of this was done at its Chicago maintenance base.

That’s when all hell broke loose.

If you would like to read the official MX write-up of the damage, you can access it at Kieran’s blog. It runs for pages and pages. And pages.

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.