Tag Archives: NYSE: AMR

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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Good evening to all.

It’s a late night tonight here at the Worldwide Headquarters. Three guesses why. That’s what happens when a U.S. airline files for Chapter 11 bankruptcy protection at 6 AM in the morning.

Not surprisingly, I spend a lot of time this week talking about AMR and American Airlines. The airline’s bankruptcy filing, why it finally pulled the trigger, why the move was inevitable years ago, why it was not a “moral failure,” and more.

And yes, don’t even start with the AMR merger rumors. Long way between here and there.

In addition, I also take a time this week to talk about the recent DOT slot auction for slots at both LGA and DCA. While the DOT won’t make the “formal” announcement concerning who won what until Thursday, the winners have either confessed or been outed by process of elimination. 😉

The results of the auction were somewhat intriguing — both because of what airlines were successful in nabbing slots and because of the one big airline that came away empty-handed.

Then there is the continuing mess that is the Indian aviation industry. We talked a great deal about this last week, but this week it’s back on the radar as both Jet Airways and Kingfisher continue to struggle. Jet announced a new lease-back plan that should generate at least $300 million for the airline in the coming months, but Kingfisher is still looking for an investor. Meanwhile, employees haven’t been paid in weeks, and the airline’s pilots are beginning to leave for better opportunities. Oh, and AerCap is taking two of its planes back.

The Air Transport Association is ready to roll out its new “branding” Wednesday. Not sure I like the new name, but I am a fan of the idea behind the extreme makeover. For too long the ATA has been a wet noodle in a sea of sharks — a totally ineffective trade organization.

So here’s to a new gorilla on the block.

Meanwhile, last week was a horrible week for airline stocks. We’ll go over the details of the carnage.

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

Five Things I Know About the American Airlines Bankruptcy

This much I know is true about the American Airlines bankruptcy.

1) With another record number of pilots about to opt for retirement on Dec. 1, the company could ill afford another run on cash reserves

2) The company can talk about “costs” all it wants, but the airline has systemic network and revenue problems it has yet to effectively address. Even if labor costs and productivity were “righted” — airline would only break even at current revenue levels

3) Gerard Arpey had to leave. No option.

4) Expect to see a number of other high-level departures from the AMR C suite.

5) While the pilots have taken the brunt of recent headlines, I suspect it will be the flight attendant group that will be faced with the harsher changes to their contracts as part of bankruptcy process.

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PlaneBusiness Banter subscribers — this week’s re-written <!> issue will be posted later today.

Meanwhile, for our latest take on the American situation, please join our Twitter feed at @planebusiness.

PlaneBusiness Banter Now Posted!

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Hello everyone.

This week’s issue of PlaneBusiness Banter is now posted. No surprise that this week’s issue is headlined by the events from Monday. We talk a lot about the AMR Monday Meltdown. We give you the facts. Then we give you our opinion.

Before shares of AMR went on their freefall Monday, there was good news for another airline last week. A US District Court Judge awarded US Airways a preliminary injunction against its pilot union, USAPA. You may recall the airline asked for the injunction the end of July, as it claimed the pilots were engaged in an organized attempt to “slow down” or disrupt the airline. Apparently Judge Conrad agreed.

We also talk a bit more about Stelios and his plans to start up a new airline. Last week we quoted one European airline analyst who said he thought the rumblings were merely Stelios’ latest attempt to extract more funds from the easyJet management.

That’s not what we heard this week. We let you in on all the details as to why the founder of easyJet may just be serious about a new start-up.

Travelport narrowly avoided a trip to bankruptcy court last week, as parent company Blackstone managed to convince debt holders to accept an extension. However that extension came at a price. Blackstone was forced to pay the highest interest rate paid so far this year for a debt restructuring, according to Bloomberg.

It’s hell when a scheduled IPO never happens and a company has a horrific LBO overhang. And that is exactly where Travelport is, as parent company Blackstone was forced last spring to pull Travelport’s expected IPO. Meanwhile, Travelport’s market share of the GDS market continues to shrink.

Emirates is coming to town. The airline announced two new U.S. destinations last week, and outlined a list of other U.S. destinations that are on the airline’s hit list.

Allegiant Airlines announced a couple of strange moves last week as the airline announced it was going to start flying between Phoenix (Mesa) and Las Vegas, and it announced it was pulling out of Long Beach completely. Wait, wasn’t the reason they were in Long Beach in the first place because the airline wanted to launch its Hawaii flights from there?

We talk about third quarter airline stock performance this week as well. A hint — we don’t have a lot to talk about as only one airline stock posted a gain for the quarter. One.

As for last week, the results on Wall Street weren’t quite that bad, but it wasn’t anything to get excited about.

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

PlaneBusiness Banter Now Posted!

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Good evening everyone. In this week’s chokingly long issue, we take our magnifying glass to the recent earnings results reported by Southwest Airlines, SkyWest, Allegiant, Republic Holdings, and Pinnacle. Yes, a rather strange mix of subjects this week.

In the case of Southwest Airlines, this quarter’s results were a lot noisier than expected, as a result of the way the airline is reporting its numbers –re: merger with AirTran. Revenues were also not as good as had been expected. As one analyst wondered, did the airline push fares higher too hard, too fast in the spring? Whatever — the airline came in under expectations.

The airline was also one of the few that reported that its “business traveler” revenues showed a softening during the quarter. This was in contrast to what some other airlines reported.

As for the three regional airlines — it continues to be a period of transition for all three. SkyWest finally admitted what we have thought for six years — the merger with Atlantic Southeast has never really gone as well as they had anticipated. Now, they are trying to layer the ExpressJet merger on top of ASA.

With Pinnacle, the airline has a totally new executive team to work out the details of merging three airlines together. ‘

Then there is Republic. The fixed fee basis continues to make money. Just not as much as it used to make because of shrinking margins. Then there is Frontier Airlines. The airline lost a ton of money during the quarter. The restructuring continues.

Finally — Allegiant Travel also reported earnings last week. Again — another airline that finds itself in a period of transition. New aircraft types, sharp reductions in capacity as a result of higher fuel prices, new engine overhauling program, ETOPS certification fun, seating modifications to all existing aircraft — a lot of stuff going on out in Las Vegas.

It was a horrible week for airline stocks last week — but I agree with a couple of analysts who put out notes Monday and Tuesday. This is a great time to load up on airline stocks. If they are the right ones. Oil has tanked, demand still looks good, fare prices are still good, the airlines got a little revenue bump as a result of the FAA snafu, and well, yeah, airline stock prices have been, for the most part, beaten to a pulp.

We look at break-even load factors and operating margins for the second quarter. Question of the week — which airline finished dead last in both important metrics?

All of this — and more in a 160 plus page issue this week. Subscribers can access this week’s issue here.

Big AMR Deal in the Works? Not Hardly

We dashed off a quick tweet about this hot topic last night, which I thought conveyed my sentiments regarding this hoopla surrounding a potential “deal” for AMR, parent of American Airlines. I made the point that I questioned any “offer” that was addressed to one “Gerald” Arpey. Not “Gerard” Arpey.

In a nutshell — I was implying that you should go back to whatever you were doing before you got sidetracked with news of this nonsense.

But, because I’ve received so many emails in the last 12 hours about it, I figured a blog post might help to quell any remaining hysteria.

So, my updated take? Same as last night.

For those of you who are in the dark, yesterday some outfit called Sterling Global Holdings sent out a number of letters to media types in which it said it was offering $9.75 a share for AMR. That amount represented about a 50% premium over AMR’s closing price on Tuesday.

The person who actually sent the letter is someone by the name of Al Weintraub. He claims he is an AMR shareholder. While we still don’t know if that is true or not, he does seem to be a man with a checkered past, as this post at stockpatrol.com details. It seems the SEC is not one of his fans.

No need to duplicate the excellent detective work by Dallas Morning News reporter and AirlineBiz blogger Terry Maxon, who has been all over this from the very beginning. You can read his various missives on this subject at his blog, particularly here.

My final comment? For those of you who remember these kinds of things, this reminds me of the “mystery” buyers with the money that was tied up in various banks who were going to do a deal for TWA.

Uh-huh. Right.

Okay, everyone can now go back to whatever it is you were doing before all of this hit the fan.

Meanwhile those of us who find this kind of stuff entertaining will try to figure out if this guy was trying to get the stock to move, was simply bored, is crazy, or just likes to stir people up for the fun of it.

PlaneBusiness Banter Now Posted!

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Hello everyone. This week’s issue of PlaneBusiness Banter is now posted. This week we talk a lot about what all the folks from the airlines were talking about last week as they made their way up to New York and the JP Morgan Transportation Conference.

All the usual suspects were there, including United/Continental, US Airways, JetBlue, American Airlines, Delta Air Lines, Alaska Airlines and Southwest Airlines.

It was a little preview of sorts of first quarter earnings, which are, in case you haven’t kept up, are right around the corner. In fact, the first quarter ends Thursday.

I know. Where did it go?

It was fun to listen to Jeff Smisek talk about the “new” United. As I tell subscribers, the more he talked, the more it simply sounded like the “old” Continental to me. But that is not necessarily a bad thing.

Gary Kelly talked a lot about what Southwest has been trying to do for the last five years, and what it hopes to accomplish in the next two years. He also uttered that positively horrible phrase when talking about the AirTran deal. Yes…he talked about “harvesting those synergies.”

Aaaaaccccck!

Meanwhile the folks at Delta Air Lines were reassuring investors that yes the revenues have been a little on the low side (speaking of those elusive synergies) but that the airline was going to concentrate this year on improving them.

As for American, the airline didn’t announce any further capacity cuts at the conference — an omission that had one Wall Street analyst fuming last week.

Then there was US Airways’ President Scott Kirby. He said in New York that he saw revenue strength during the first quarter that was stronger than he has ever seen during his career.

That’s saying something.

Aside from the presentations in New York, we take a good look this week at the cash/revenues ratio for the major US airlines we track on a regular basis. It’s interesting to see who ends up above the average line and who ends up below. And what is more remarkable is the wide variance between the airline with the worst cash/revenue performance and the airline that posted the best for 2010.

Airline stocks also had a pretty good week last week. Except for shares of Air Canada, which took the Goat of the Week award.

In other news we talk about the FAA reauthorization bill that is now set for a House vote this week, and the latest critical analysis that looks at the DOT’s three-hour rule and why it isn’t what it’s cracked up to be.

Alaska Airlines suffered a nasty computer outage Saturday. That was not good. But as we discuss at length, the airline dealt with the problem in a superb manner. Kudos to the airline for a great job in terms of keeping customers informed and in the loop.

As usual, there is all this and more in this week’s issue of PlaneBusiness Banter. Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Hello all. It’s that time again. This week’s issue of PlaneBusiness Banter is now posted. Yes, this is the pre-earnings issue. Before the madness begins later today as Hawaiian Airlines starts off the third quarter earnings parade with its earnings release. By the time the week is over, we will have heard from all the major U.S. domestic players.

It’s going to be a strong quarter for the industry. We could even see some record profits posted by a number of denizens. And, yes, for the first time in two years, American Airlines will, finally, post a quarterly profit, although most analysts don’t expect the profit to be much more than $110 million.

On the other side of the cha-ching-o-meter Delta Air Lines is forecast to post the largest profit for the major airline group, as it should post a profit in excess of $730 million dollars for the quarter. Not bad. Not bad at all.

But before all those big numbers start to roll in later this week, we are talking this week about the recent ALPA national election of officers. To say that the largest pilot union in the U.S. just made a rather notable change in its leadership would be an understatement. We talk this week about why I like the fact that Lee Moak is the organization’s new President and why his outlook and approach to labor/management negotiations is so different from what we have seen historically from other labor leaders, not just at ALPA.

And yes, we think this is a good thing.

For those of you who are not familiar with Lee, you can catch a public posting of a PBB Lounge Lizard interview we did with him last January over on our Planebusiness.com site.

The DOT issued its latest Airline Consumer Travel Report numbers last week. Which airlines performed well and which ones didn’t? We talk about all that, and we take another look at the number of reported tarmac delays and cancellations. Is there a discernible trend here or not? It depends on how you interpret the numbers.

We also talk about the situation in France this week. To put it simply, if you don’t have to fly there, don’t. Why? Unhappy French workers. Everywhere. Including airports and air traffic control towers.

We had two new airline marketing campaigns hit the airwaves last week. What do we think of those? We’ll let you know.

Lots of mail in this week’s email bag too.

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

Big Liquidity News at American Airlines

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One can never have enough cash.

Especially not in these days and times.

Following this train of thought, today AMR, parent of American Airlines, announced that it has put together a deal that will bring $1.3 billion in additional liquidity to the airline. In addition, the company announced that it has negotiated a reduction in the airline’s credit card holdback total of nearly $300 million. Combined, this means an additional $1.6 billion in new liquidity by the end of they year.

According to analyst Gary Chase with Barclays, this announcement, combined with the airline’s revenue fundamentals means that, according to his estimates, the airline should end the year with about $4.3 billion in unrestricted cash or 22% of trailing revenue. Give or take.

As Gary also noted, he now expects the airline to have “ample cash to manage its upcoming debt maturities. Moreover, we suspect re-financing those maturities will now be facilitated by a stronger liquidity position.”

Gary also noted that the airline is expected to release its mid-quarter update tomorrow, which effectively is a pre-announcement of third quarter earnings.

Gary expects the airline to post a $0.75 loss for the quarter — which is right in line with consensus.