Hello earthlings.
Subscribers to PlaneBusiness Banter can access this week’s issue here.
What are we talking about in this — our last mega-earnings issue for the quarter?
Well, obviously we’re talking about earnings. This week I grouped the three remaining regional carriers together — SkyWest, Pinnacle and ExpressJet.
While institutional investor interest in the regional sector is understandably less than enthusiastic, I still found it interesting to listen to the calls from the three airlines. Clearly SkyWest is obviously the dominant carrier of these three, and the airline ended the first quarter with more than $700 million of cash in the bank. Gotta love it.
But even SkyWest has had to become creative over the last several years — as the major airlines keep trying to cut, cut, and cut some more costs from their regional airline contracts.
Regional airlines, in turn, have been forced to get creative.
Nowhere have those efforts been more obvious in this group than with ExpressJet. The airline has dabbled in the corporate charter business, it started its own branded operation, and now it’s struggling to keep the doors open while saddled with a big chunk of convertible debt that is coming due. The airline also paid some nice fees to United Airlines — in return for United throwing some business in its direction.
As for Pinnacle, it didn’t have a particularly good quarter. CEO Phil Trenary said that it was one of the worst he had ever experienced — in terms of the weather-related costs to the airline.
Mekong Air? Heard of it? Apparently Jesup & Lamont analyst Helane Becker has as she grilled SkyWest CFO Brad Rich about the airline’s potential involvement with it.
While Brad was not forthcoming with much information, other reports suggest that SkyWest is, in fact, behind the new start-up.
In other news we talk about a lot of labor issues this week — and of course that includes the situations at British Airways, American, AirTran, and Spirit.
A reminder: The 30-day cooling off period for the pilots at Spirit ends on June 12. A strike here could be nasty — as Spirit does not have the deepest pockets on the planet.
On Wall Street it was ugly for airline stocks last week. This week hasn’t started off all that well either — although a bullish JP Morgan analyst note this morning seems to have lifted the sector. Shares of US Airways seem to be enjoying the nicest ride today — a result of both a positive comment from JP Morgan and because of a note from Avondale Partners in which analyst Bob McAdoo discusses the reasons why an American/US Airways deal would make sense.
Which reminds me. I’ll be talking a lot about mergers. And potential mergers — in next week’s issue.
All of this — and more in this week’s edition of PlaneBusiness Banter.