PlaneBusiness Banter Now Posted
Okay, let's try this again. :-)
This week's issue of PlaneBusiness Banter is now posted. Subscribers can access this week's issue here.
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March 29, 2007
Okay, and Who Was Head of the Company's Audit Committee The Last Several Years?
From the WSJ:
"Dell said an internal investigation has found accounting errors and "evidence of misconduct." The PC maker, which is also the subject of an SEC probe, said it is still working to determine whether any financial restatements are needed. Dell hasn't disclosed the exact nature of the issues being investigated."
PlaneBusiness Banter To Be Posted Later Today
This week I take a follow-up look at our recent PlaneBusiness Ron Allen Airline Management Award column. We recently awarded American Airlines' CEO Gerard Arpey the award. We give the award annually to the CEO who has done the most harm to their company during the course of the previous year.
We've received over 1200 emails in two weeks, and this week I'll go over some of the overriding themes from those emails, and I'll talk more about why it was I felt Gerard was the best candidate for the award.
Subscribers, look for this week's issue of PlaneBusiness Banter later today. I'll post here when it is available.
For those of you who are not subscribers, due to a large number of requests for copies, we will be posting that column with open access on the PlaneBusiness.com website in the next week. I'll let you know when that column has been posted.
Oil Soars
Well, I'd like to say I have good news and bad news, but I don't think I have any good news.
Oil prices have flown through the roof this morning. As we post this, a barrel of crude is now trading at 66.25, up over $2 since yesterday.
Reason? Escalating tensions about goings-on or potential goings-on in the Middle East.
Delta Goes Back to Its Roots
Good for Delta. The airline said today that it will once again list its stock with the New York Stock Exchange come May, and that it will use its old ticker symbol, DAL.
Nice move.
I still wish United had come back in its second life as UAL. UAUA still reminds me too much of ugh-a, ugh-a.
March 28, 2007
American Airlines Accelerates Boeing Delivery Schedule
American Airlines said today that it will move up three scheduled deliveries of the single-aisle, medium range 737-800 from 2016 to 2009.
American says that it will bring forward the delivery of 47 of the planes to 2009-2012 from 2013-2016.
The topic of American's delayed decision on a Maddog fleet replacement was a hot topic of conversation this year at the annual ISTAT Conference, as I reported in PlaneBusiness Banter, with no less than Steve Hazy, CEO of uber-airline leasing firm ILFC making the comment, "The day of reckoning will come."
Then again, as was pointed out by others, the airline has not been in a position to even purchase more aircraft for the last several years.
American is the largest operator of MD-80s. It currently owns 138 and leases 187 more of the aircraft, nearly half of the airline's fleet.
The 737-800 carries roughly the same number of passengers as the MD-80, but will use 25% less fuel per available seat mile, according to the statement issued today by American.
Ticker: (AMR:NYSE)
Ah What a Lovely Day on Wall Street
Not.
After rumors of ugliness overseas that were not true pushed crude prices up in after-hours trading last night, the price of a barrel of crude retreated somewhat today, but it is still a hot property. As of this posting, a barrel of crude is up 1.57 a barrel to $64.50 and change.
Meanwhile, as the WSJ reports, a day after the government said sales of new homes fell for the second straight month while the supply of unsold homes continued to climb, one of the biggest U.S. home builders said the situation is too dim for it to provide future earnings guidance.
The financial results of Lennar are closely watched as a barometer for the housing market because it's one of the biggest, and also because it has such a large share of homebuilding activity in Florida, Texas and California, the Miami Herald notes.
Lennar announced yesterday that its quarterly profits fell 73% from a year earlier, and that the housing slump and worries about fallout from the subprime lending market make the company's future unpredictable.
Meanwhile, Business Week reports today that Beazer Homes, another of the major U.S. home builders, is the subject of a broad criminal inquiry, with the FBI, the Internal Revenue Service, the inspector general of the Department of Housing and Urban Development and the Justice Department looking into its lending practices and other transactions.
PBB subscribers know that we've been ahead of the curve in forecasting this situation. And why should we care about houses? Simple. Because we think the situation is going to worsen, and as it does, the U.S. economy is going to pay the price.
And this contraction will directly affect the ability of the U.S. airline industry to generate revenues. For that matter, it's our opinion that this is already happening.
If that was not enough good news, the durable goods numbers came out today, and well, they were ugly, ugly, ugly.
Happy Wednesday everyone!
We Have a Winner!
Not sure if he wants to go public, but we do have a reader who has, using his extensive powers of observation, correctly identified the location of our Foto Friday submission.
More at 11.
March 27, 2007
Price of Crude Oil Jumps in After Hours Trading
CNN reports that U.S. crude oil futures briefly spiked over $5 a barrel in electronic trading late Tuesday on rumors that Iran had fired on U.S. Navy warships.
Crude gave up most of those gains according to one trader after reports of a confrontation were denied.
U.S. light crude for May delivery jumped $5.18, or about 8%, to $68.91 a barrel in electronic trading before giving back most of those gains to trade at $64.40 a barrel, $1.47 above Tuesday's settle price on the New York Mercantile Exchange.
"We have no information at this time that an incident has taken place in the Gulf," Gordon Johndroe, a spokesman for the National Security Council, said about reports of a confrontation between Iran and U.S. Navy warships.
30 Years Ago Today
The worst aviation accident in history happened today in 1977 when two Boeing 747s collided on a runway on the island of Tenerife, Canary Islands.
The disaster killed 583 people.
The accident involved Pan Am Flight 1736, under the command of Captain Victor Grubbs, and KLM Royal Dutch Airlines Flight 4805, named Rijn (Rhine River), under the command of Captain Jacob Veldhuyzen van Zanten.
KLM 4805, taking off on the only runway of the airport, crashed into the Pan Am aircraft which was taxiing on the same runway.
Robert Martens Surfaces
Isn't it amazing how folks just disappear for a while and then pop up again?
Put Ex-American Eagle CEO Robert Martens in that category, as today it was announced he is the new Senior Vice President and President, US Airways Express.
From the release announcing his appointment,
"In his new position, Martens, 61, will oversee the US Airways Express program, which consists of 2,300 daily flights and includes nine regional airlines. He will have direct oversight of the airlines’ two wholly owned regional subsidiaries, Piedmont Airlines and PSA Airlines, and will report to US Airways President Scott Kirby."
Where Are They Update
Thanks for the guesses you've submitted on just where those three smiling American Airlines' ramp workers are located that I posted for Foto Friday.
But alas, we don't have a winner yet.
Keep trying! Send me your guesses at hhegeman at planebusiness.com.
Bankruptcy Tuesday: Delta Air Lines
Delta CFO Ed Bastian told investors and analysts today that Delta Air Lines forecasts an operating profit of $816 million this year.
Bastian also said that the airline anticipates exiting bankruptcy in late April and that the airline will launch a stock-exchange listing in early May.
The deadline for creditors to vote on Delta's reorganization plan is April 9, with a bankruptcy court confirmation hearing set for April 25.
While Bastian said the airline has decided which stock exchange the new shares will trade on, he would not disclose the decision publicly.
Delta expects to carry forward about $7.8 billion in net operating losses.
As for the "C" question, (are you as tired as I am of the word, consolidation?) Bastian no doubt got a few tongues wagging today after he reportedly said that "airline industry consolidation will be one of the top issues for discussion by Delta's board once the bankruptcy case is over."
"The question is how long is it going to take," said Bastian. "I think consolidation is eventually going to occur."
However, Gerry Grinstein was quoted later as saying that he saw Delta more as the acquier, not the acquiree -- and that he would not rule out the possibility of Delta acquiring a low-cost carrier.
Hmmmm.
One final note. Delta also talked Tuesday about how it plans to spend big bucks to upgrade its operations at JFK in New York.
Uh-huh.
What about all those nice new gates up in Boston?
Okay, I'll behave.
It does not appear that anyone at the meeting brought up the new "grand global marketing scheme" for the airline, nor gave any hints as to what is going to replace the "drapes" on the tails of the Delta aircraft, as CEO Gerry Grinstein described them in a recent employee question and answer session.
But Bastian did, apparently, more or less confirm that Delta subsidiary Comair could be up for sale rather shortly.
"We will, once we're out of bankruptcy, look at whether owning that business makes a lot of sense," Bastian said at the
conference.
During a conference call later with reporters, Bastian elaborated that Delta's effort to maximize returns for shareholders may mean "spinning off certain assets, such as Comair."
Raise your hand if you are surprised.
Grinstein also said today that the airline expects to have its new 11-member board announced by the end of the week.
Bankruptcy Tuesday: Northwest
Both airline bankruptcy beefcakes are in the news today, as they continue to make progress in their efforts to leave the halls of bankruptcy court for the last time.
On the Northwest Airlines' front, Monday U.S. Bankruptcy Judge Allan Gropper ruled that the airline can begin seeking creditor approval of a plan to exit bankruptcy. The deal values the airline at about $7 billion.
Gropper said that once Northwest revises its disclosure statement to incorporate agreements reached Monday, the statement could be released to creditors along with a restructuring plan.
Northwest has said that it plans to cancel all existing shares in the company and issue 272 million new shares. A stock offering will also offer a percentage of shares at an estimated $27 a share.
Another hearing will be held this week to determine whether an examiner will be appointed to investigate merger discussions that may have taken place with Northwest. This is in response to a complaint filed with the court by a group of funds that invested heavily in shares of the bankrupt stock -- anticipating a potential merger.
A reorganization plan could be mailed to creditors as early as April 6.
A hearing to confirm the company's reorganization plan is scheduled for May 16.
The group of funds, along with the Association of Flight Attendants and the Air Line Pilots Association argued that the company's disclosure statement did not go into enough detail about management compensation and stock options that will be a part of the deal.
At the judge's instruction, Northwest consulted SEC lawyers, who approved the airline's plan to wait until 20 days before the voting deadline to release more details.
While the SEC said it was okay, I wish the airline had issued the details now - and not at the last minute. The fact they are doing so can only mean that they anticipate a heavy cry of opposition over whatever the plans are.
Was Gerald Grinstein's recent example made in vain?
Good News for Employees
Aside from the management payout details that are still not known, there was some good news for employees Monday.
Northwest will give 4,000 non-union employees $77.4 million in cash and stock as part of a bonus program after the airline emerges from bankruptcy.
The employees, who took pay and benefit cuts as the company reorganized, would get 40% of the bonus as cash when the company emerges from court protection.
The remaining 60% would be issued as new common stock in the company one year later, as long as the employee is still with the company.
It was also announced that flight attendants and certain workers represented by the International Association of Machinists could receive a claim of an undisclosed amount, partially restoring pay and benefits that the company extracted earlier. The company and union supported the move, and it will be considered in an hearing to be scheduled soon.
The IAM claim, estimated by the union to be worth $212 million today, would replace special Northwest shares issued as part of a 1993 deal when IAM workers made concessions in an effort to help the airline stay out of bankruptcy.
March 23, 2007
Foto Friday
Now, isn't this a jovial looking group? I think so.
Thanks this week for this wide-angle contribution from one of our readers. Now, my question is this. Big-time brownie points for anyone who can tell me where this photo was taken.
Send me your guesses at hhegeman at planebusiness.com
Sorry for the spell out. Have to try and thwart those bots that send me all that email from China.
March 22, 2007
PlaneBusiness Banter is Now Posted
Subscribers can access this week's issue here.
PBB To Be Posted Soon
It must be time for our usual Thursday update.
For those of you who are PlaneBusiness Banter subscribers, this week's issue should be posted in about an hour or so. I'll let you know when it's up.
Thanks.
Open Skies For All
Well, maybe. I'll believe all of this when I actually see it happen. But it does seem we passed a major milestone in the bigger fight today.
The European Union today entered a deal with the United States that will boost competition and the number of passengers flying across the Atlantic, but said the accord was only a first step to prise open the US air travel market.
Under the so-called "open skies" agreement - the first of its kind - EU air carriers will be allowed to fly from any airport in the 27- member EU bloc to any airport in the US and vice versa.
The accord will replace bilateral pacts between the US and EU countries, ruled as illegal by the EU's highest court.
German Transport Minister Wolfgang Tiefensee, whose country currently holds the rotating EU presidency, hailed the unanimous agreement as a "breakthrough" for trans-Atlantic aviation ties.
However, he acknowledged that the deal was only second-best for the EU, as it did not fully open the trans-Atlantic air travel market.
EU ministers said they were poised to immediately start negotations on a second deal with the US in a bid to gain more access to the closed US market.
For the rest of the story, please click here.
However, at Britain's request, EU ministers agreed to delay plans to implement the deal from October this year to March 2008.
The UK had raised concerns that open skies reform did not go far enough on US airline ownership rights.
As most of you are aware, the US has insisted on limiting any foreign company from owning more than 25% of a US airline's voting rights.
This is a huge deal folks. Especially for the cargo carriers. I'm sure the champagne is apoppin' at FedEx, even if their numbers yesterday left a little to be desired.
One thing is for sure. It should certainly make for a very entertaining 12 months as the details of how this "big picture" change will be implemented in practice.
Kicking off that line of thinking this morning was Continental, which immediately filed with the U.S. Department of Transportation for rights to serve new routes to Europe, including a Houston-Heathrow route and a Cleveland-Paris route.
Bada Boom, Bada Bing. Let the fun begin!
March 20, 2007
Kudos To Delta's Grinstein
Goodness knows I have not always been a fan of Gerald Grinstein at Delta Air Lines. I've questioned a number of his decisions over the last couple of years, and I have wondered why he didn't do more at the airline when he was on the board of directors to change the direction in which the airline was headed.
But it's hard to find fault with the airline's proposed management compensation plan that was filed in bankruptcy court today.
Unlike the top-exec bloated compensation plan that management at United Airlines put forth, and largely saw remain intact after the airline came out of bankruptcy protection, Delta Air Lines is not going down that path.
Unlike United's Glenn Tilton, who could walk away with as much as $60 million from the United bankruptcy, Delta's Grinstein apparently will walk away with no additional stock options whatsoever.
In addition, the airline will pay all of its non-union employees about $480 million in stock and cash when it emerges from Chapter 11, plus a July 1 pay raise and future profit sharing awards. Pilots have a separate deal with similar elements.
Delta says the immediate stock and cash payout will be worth close to $13,000 for a typical worker if they sell the stock immediately.
More in this week's PBB after we've read the rundown of the executive payouts. But again, kudos to Gerald Grinstein.
Tickers: (OTC: DALRQ), (UAUA:Nasdaq)
Nice Video of A380 Landing at O'Hare
Hey, we're all airline geeks this week. Forget the lack of orders, forget the weight issues, forget the employee strikes against Airbus.
This week we are all just gawkers of the latest thing that can fly. The fact it is so huge is just icing on the cake. Or would that be two cakes? Two cakes and one french croissant?
DOT Tells Virgin America They Can Start Up....But With Conditions
For Hire: Ex Airline CEO and President. Completely flexible. Can dress up or dress down -- depending upon the company culture and opportunity. Please call Fred Reid.
Virgin America has been given the okay to fly by the DOT.
But, as anticipated, not without restrictions.
Those restrictions include:
"**Requiring that the disinterested directors on the Virgin America board (that is, U.S. citizens) separately approve of the appointment or replacement of the trustee of Virgin Group's shareholdings.
**Amending the voting trust agreement to require that the Trustee vote its shares proportionally to the other shareholders as to any matter that, in the opinion of the U.S. investor directors, creates a conflict of interest between the interests of Virgin Group and that of U.S. shareholders.
**Modifying the Virgin Trademark License Agreement to remove certain geographic and operational restrictions on Virgin America and the requirement that it pay royalties to the Virgin Group should the applicant conduct operations independent of the Virgin name.
**Confirming that the current CEO has terminated employment with the applicant within 90 days of the certificate being issued and any follow-on consultancy within 180 days following termination of employment.
**Submitting copies of all executed and signed agreements prior to certification.
**Reporting to the Department in advance if any additional loans (or other debt funding) are to be provided to it from the Virgin Group."
Whew. I'm kind of surprised that the DOT took the airline up on its "sacrificial offering" to fire Reid. I'm also not sure if Richard Branson is going to be too happy about the restrictions to be placed on the Virgin Trademark License Agreement.
Then again, I guess if I were Virgin, I'd probably go with the deal and work out any infractions or problems after the fact.
Though the decision is tentative, the DOT's rulings in such matters have historically not been overturned. The DOT said "interested parties may file an objection to the proposed decision within 21 calendar days."
It wasn't immediately clear just how soon Virgin America would begin flying after the obligatory 21-day period has passed.
The Beast Has Arrived
For you true airline geeks out there, yesterday and today are big days. The Beast, aka the Airbus A380 made its first arrival in the U.S. yesterday at New York, Dulles and Los Angeles. Today -- it has just touched down in Chicago.
I'm sure you've seen plenty of the pictures and/or seen videos of its various arrivals.
Interesting thing about the Beast. In talking to a couple of pilots who have seen data from the aircraft's proving runs, and after reading a report from a team of pilots working the initial runs, it appears that the aircraft is surprisingly nimble. And powerful. Not beastly or sloth-like at all in the way it can perform emergency actions or avoidance maneuvers. Bottomline seems to be that the aircraft is surprisingly agile.
Cool. I certainly hope I get the chance to fly on one at some point.
March 16, 2007
DCA
Jonathan reports that his US Airways flight to Indy is now boarding. They've been advised of how long the crew has before they go illegal (sounds like there is plenty of time) and that they will be delayed a bit after they taxi out while the plane is de-iced.
Nice move on the part of US Airways to tell the passengers that their crew is not in danger of going over their time limits.
Anyone else doing this?
Aside from that, he said the airport was a mess, and that it seemed like 10,000 people were trying to use their cell phones. Consequently, cell service sucked.
Lovely.
As for here, it's currently a toasty 96 degrees in Spring Training Land, aka Phoenix.
PBB is Now Posted
This week's issue of PlaneBusiness Banter is now posted. Subscribers can access this week's issue here.
Checking In
We're on track. No problems. Which is more than I can say if you are traveling in the Northeast today. Our web editor left his place of work about an hour ago for DCA and a supposed flight to Indianapolis.
Why do I find his optimism to even make the attempt to go to the airport somewhat endearing?
I wouldn't even want to bet on this one. But I know I'm going to get a message here shortly and it's not going to be a good one.
Meanwhile, we -- that would be the cross-country split Worldwide Headquarters staff -- is in final edits on PlaneBusiness Banter. Look for it to be posted, oh, in about two hours or so. Maybe a little sooner.
In the meantime, watch out for those ice pellets.
March 15, 2007
PBB Posting Update
Okay, no unexpected delays this week. Just a pre-announced Friday posting!
Heh.
Yep. Because I was otherwise occupied all week -- first at the ISTAT conference and then at the US Airways' media day yesterday -- I'll be posting Friday this week.
Thanks guys!
Holly Takes On the Track
The F1 Track that is.
Figured you guys would get a kick out of seeing yours truly before my big race Tuesday night. That's me along with Derek Kerr, CFO of US Airways, before our heat at the F1 Racing facility in Phoenix.
Yes, thank goodness I wasn't in the same heat as US Airways President Scott Kirby. The guys in that heat were far too competitive for me. Melanie Trottman from the Wall Street Journal, Doug Parker, CEO of US Airways, Mary Schlangenstein from Bloomberg, Bob Mann, Scott Hamilton, Derek, Andrea Rader, director of corporate communications at US Airways, and the red-hot Elise Eberwein from US Airways, were some of the folks in my group.
So who won? Motor-Mouth, er, Elise. (Motor-Mouth was her racing name.) No, I didn't come in last. But I didn't exactly tear up the track either. I can see that the more you do this, the better you get. And I, after all, was a mere rookie.
I tell you what. It was certainly easy to tell which one was Elise, as she didn't have a suit on and as she flew by you, you'd just see her hair flying past you. I think she passed me at least three times.
She and Melanie also got tangled up on one of the curves. I managed to avoid the fray.
Oh, yes, Doug came in second. And he was not happy about finishing second to a. .....girl. He claimed the time-keeping mechanism for the race must have been off. (You don't race laps, you're simply racing against the clock, as each cart is electronically tracked.)
It was a blast. These things go about 45 miles an hour, and I tell you what -- racing these gives you a much better appreciation for the stamina and strength it takes to race bigger things. Your upper body strength has to be pretty damn good!
Good time was had by all. This was a great way to kick off media day festivities at US Airways.
March 13, 2007
For You Airline Leasing Observers Out There
More from ISTAT.
One of the more interesting comments made from one of the participants of a panel discussion yesterday afternoon on aircraft finance involved the handful of aircraft leasing entities who have gone public.
Companies like AirCastle or AerCap for instance.
As one person said yesterday, the leasing market used to be dominated by two players -- GECAS and ILFC. With deep pockets tied to huge parent companies, these two have had the financial flexibility to outmuscle their competitors for years.
But with public equity markets now giving more financial heft to smaller players -- this trend should start to change the dynamics of this playing field.
March 12, 2007
Daylight Savings Time Sucks When You Are in Arizona
Yikes. It's only 5:27 here. But, it's 8:27 in New York.
The day is gone. Where did it go?
Hi there. Reporting in from today's session at the ISTAT Conference being held at the J.W. Marriott Desert Ridge Resort.
Quick fact: There are more than 1000 people registered for this event this year. Just amazing.
Everybody seems to be happy. Lessors are making money. Banks are making money. Investment firms are making money. Airplane manufacturers are, for the most part, making money.
That is why this conference is usually much different than one that concentrates on airline people. At this one, everyone is usually making money. Good economy, bad economy. It really doesn't make much difference.
We heard from John Leahy today, head of Airbus. I have to say, it was probably the most humble presentation I've heard him give at ISTAT. Ever. And that was a good thing. He made fun of the company's predicament -- wrapped around slides that showed why the Airbus A330 still kicks butt, why the A350 will out-perform the 787, and why the A380 is still a wanted beast -- at least for passenger airlines.
One thing is for sure -- John is one of the best salespeople out there. Period. And he was in rare form today. Humble, apologetic, and humorous. It was the only way to play the situation -- and he did a good job at it.
Tomorrow, it's Scott Carson's turn to give us his dog and pony show about Boeing and its current status. As my seat mate said to me today, "Tomorrow all those columns will be reversed and the Boeing airplane will be the one that is least expensive, most efficient, and better on the environment."
No doubt.
US Airways' CEO Doug Parker kicked off the conference this morning -- speaking mostly about industry consolidation. He says, and his comments were echoed by several panelists later in the day, that for now, consolidation in the industry is a dead issue. Airlines are feeling too fat and happy now -- everyone will have to wait for the next downturn.
I agree.
Speaking of, there doesn't seem to be much positive sentiment for the AirTran deal out here. At least not with the folks I've talked to. What's the biggest reason I hear for a lack of support? Bad timing.
They should have tried to make a play for Midwest, or pushed the issue, when Midwest was barely alive and gasping for air. Not now.
More later.
March 11, 2007
A Sunday Hello
Hi guys. Just thought I'd drop in and say hello on what is a drop dead gorgeous day here in the Valley of the Sun.
I'm in Phoenix for the annual ISTAT conference that starts today and really gets cranking tomorrow.
Ah, and about Foto Friday last week -- no, I didn't forget. We'll play catch up this week. As I wrote last Friday, I had some elder care issues that I had to deal with Friday -- and that kind of backed me up on a lot of fronts.
But you know -- we're all going to be there someday. Old that is. So that's just the way things are. I figure my parents put up with me when I was little and a pain in the neck -- this is the least I can do for them.
Heh.
But have no fear. I'll have some new shots for you this Friday.
As for the trip report out here -- I was a happy camper as I once again scored a cheap first class seat on my Southwest nonstop flight. Yep, even though I was about 12 out in the "A" group, my uncanny ability to persevere came through again. I shared the first class emergency row exit with two nice people as well -- was almost as much fun as the old lounge lizard days.
We arrived 20 minutes early and my bag was out pretty quickly.
Great flight.
While the flight experience was good yesterday, I have to ask the powers that be -- what the heck has happened to the Southwest Airlines' in-flight magazine? Oh, I know it's not being published by the folks over at AMR anymore. I know the change took place in January. This is more of a rhetorical rant than an actual question.
Has anyone else seen one? This was the first revamped issue I had seen. I hate it. Just simply hate it! Spirit always had excellent, well-written stories. It was the best in-flight magazine out there. I rarely left a plane without taking the magazine with me, because of one or more things in there that were worth keeping.
This thing? In-your-face big typefaces that seem more adept for a first grade reader, writing that is surface and shallow, nothing but one page fluff stories.
Seriously -- somebody needs to do something about this -- because if I were an advertiser, I'd not be very happy with this product.
Okay, there's my one allowed rant for the day.
Talk to you later guys! Have a good rest of the weekend!
March 9, 2007
Are We There Yet? Are We? Are We?
I need a vacation. Or maybe just a margarita.
Actually a clone would be nice.
Whew.
Okay folks. This week's issue of PlaneBusiness Banter is now ready to be read. Again, my apologies for the delay today. I had fully expected to have this week's issue posted this morning -- but well, as I explained earlier, stuff happens.
Talk to you later!
PBB Posting Update
Hi guys. I just walked in the door. Am now back at my appointed post.
I had a bit of an eldercare issue pop up this morning. For those who don't know, I'm the main caregiver for my two elderly parents, and most of the time, small emergencies that crop up during our writing/posting period can be taken care of by me saying, "I'll be over tomorrow."
Well, I'm leaving town tomorrow, and we had a situation come up that I had to take care of. Today.
PBB is pretty much done, I need to do some final tweaks -- we'll be up as soon as possible.
Thanks!
March 8, 2007
PBB Posting Update
Hey gang. It's a Friday Feeling I'm getting. Yep, look for this week's issue of PlaneBusiness Banter to be posted Friday.
More later!
March 7, 2007
Misleading Traffic Headline for the Day: FRNT
And I quote the Associated Press,
"Frontier Airlines Feb. traffic Climbs"
While Frontier Airlines saw the number of revenue passenger miles "climb" 10.6% for February, it also saw that 10.6% increase come as the airline pushed 13.8% more capacity out the door.
Translation? The airline's load factor dropped back to 70.8% for the month, down from 72.8 percent in 2006.
So you could have just as easily said, "Frontier Airlines Load Factor Drops in February."
Big difference in perception.
Speaking of Frontier, Mike Linenberg, analyst with Merrill Lynch, put another "Sell" rating on the airline's shares today.
I say "another" because Linenberg had previously had a "sell" rating on the stock last year. In his note on the change, Linenberg said,
"Frontier indicated that the snowstorms that hit its Denver hub in late December and early January will affect its March Q results. As such, we are widening our Mar Q loss per share from $0.10 to $0.27 (consensus loss forecast is at $0.14) to reflect the lower demand and higher costs resulting from the inclement weather.
Looking forward into 2007, we think Frontier's margins will continue to be under pressure as the company embarks on a growth plan that is well above the industry's growth rate and too aggressive given its recent financial performance (see Chart 1). Moreover, we view Frontier's main hub as arguably one of the most competitive and challenging revenue markets in the country as United, Southwest and Frontier are all committed to their strong growth and presence. Given the earnings outlook concerns, we are lowering our FY 2008 (March YE) diluted EPS forecast from $0.20 to a loss of $0.10 (vs. consensus EPS of $0.12)."
Ticker: (Nasdaq:FRNT)
No, It's Not News of the Weird....Just Airline Normal
Not sure if you've been keeping up with the latest spate of weird news stories concerning the airline industry, but it does seem like this past week has produced a bumper crop of strange ones.
First, there was the Northwest Airlines' off-duy employee who is accused of masturbating on the back of a semi-sleeping female passenger on a Northwest flight.
Lovely.
Then there was the story in the Manchester Evening News about the German banker who was flying Delta Saturday between Berlin and New York. Bert Niepel apparently decided he didn't like sitting in coach. So he got up and plopped himself into an empty seat in first class.
After refusing to go back to his seat, after flight attendants repeatedly asked him to do so -- it appears there was some type of altercation between him and a flight attendant that ended up with the flight attendant being pushed to the floor.
Not smart.
The Captain diverted the flight to Manchester, where the man was arrested.
In reading over the notes from the court hearing, Delta first officer Douglas Smith is quoted as saying, "Niepel had responded that he would pay for an upgrade and would "die" if he returned to economy class."
Ah. Haven't we all felt that way at times?
If that wasn't enough Tuesday it was reported that a woman came screaming out of a restroom at the Ft. Lauderdale/Hollywood International Airport after she said a man had stuck his head under the stall as she was using the toilet.
But it gets better. Or worse, depending upon your viewpoint.
The guy she accused of looking at her while peeing?
He was a rather old man, and was using .....a walker.
Roger Escobedo told officials, "I was released from the VA, and I'm taking so much medication that I fall asleep."
Yeah. Right. Whatever.
I guess maybe he just fell under the stall and couldn't get up?
Okay, I'll stop with this nonsense. Still, it is kind of hard -- not to chuckle, that is.
Weekly Energy Inventory Numbers Push Oil Prices Higher
"Surprises never cease in this economy. If one was to look at energy demands, it certainly would not lead to a conclusion we are entering a recession."
— John Person, NationalFutures.com
Amen.
Today the Department of Energy issued its latest energy inventory figures. As regular readers of PlaneBusiness Banter know, we track these numbers every week -- because of their implications to jet fuel prices.
Today, the government reported that for the week ending Mar. 2, crude oil inventories were down for the first time in three weeks. Both distillate inventories (which include jet fuel) and gasoline inventories had already been posting steady weekly declines prior to this week's latest update.
The upshot? Crude oil prices have jumped today. Last time I checked, a barrel of crude was trading up over a buck and change at $61.70/barrel.
March 5, 2007
Mondo Monday
Yo.
So how is everyone today?
It's a beautiful day here in our neighborhood, but alas, our ISP has been having problems with its mail servers all weekend.
So this means no mail for any planebusiness.com associated web address since Friday night. Oh, we can get to all the messages that are backed up -- they are all accessible via the web mail option. But it's been one of those IT mornings that I so love around the Worldwide Headquarters this morning, although there's not much we can do on our end. Now it's just a sit and wait process.
Meanwhile, in the airline industry, a couple of newsy notes.
One, another airline analyst bit the dust today.
David Strine, who was voted Institutional Investor's best airline industry analyst last year -- is leaving Bear Stearns. Shame. He is one of the best in the business. But, if I were in his shoes, I'd try to make the most of my award last year, and go on the buy side, too.
Which is exactly what he is going to do, apparently.
I really enjoyed reading David's research -- I'll miss his take on the industry. He was one of the best.
This past weekend was the much-anticipated reservations cutover at US Airways. As you know, the airline has been running with the two separate res systems from both airlines -- but this last weekend they made the switch to one SHARES system for both operations.
And, just as we had surmised going into this -- it has not been a pleasant undertaking.
Not surprisingly, the worst problems appear to be occurring with the old US Airways' hubs -- particularly Charlotte. Although problems also are now being reported in Pittsburgh and Boston. This figures, as the airline is migrating from the US Airways' SABRE system into the resident America West SHARES system. Or rather, the original AWA SHARES system on steroids.
Makes our little pididdly IT issues look like chicken feed.
The last major reservations cut-over for an airline was AirTran last year when they shifted to a new version of the Open Skies reservations platform - and that was not a walk in the park either.
Makes me think about my dad telling me how they used to manually move little pieces of paper and wooden blocks around on a big board on a wall in New York. That is how they scheduled reservations for Eastern Airlines.
Granted, this was in 1946.
March 2, 2007
Foto Friday
This week to kick off our Foto Fridays, I decided we'd go with two shots.
The first is one of the reasons that pilots tell me their job is one of the best anyone can have. It's the view from the office. Here, James Nichols with American Airlines sends us a wide angle shot he took at daybreak. Anyone recognize the location? That's right. You're looking from the cockpit of a DC-9-82 looking east at DFW holding short of 17C with the hotels on Highway 114 in the background. Oh, and of course the brakes were set with an indefinite ATC delay. (James told me to make sure I said that.)
Great way to start the day if you ask me.
And, thanks to another American Airlines' pilot, Kent Wien, who sent me an email directing me to this shot on Flickr. We sent the photographer a note and asked him if he would mind us posting it here, and he said no. His name is Enrique Morales, and he told us, "It would be nice that airline geeks, pilots, everyone get to see this picture."
Well, here you go. Cool shot. Sharp, great angle, and vortices no less.
Anyone know where the shot was taken?
That's right. It's the Tegucigalpa airport.
UPS Pulls the Plug on Airbus Order
Well, yesterday in PBB we wrote about the latest delay in the UPS A380 freighter order that was announced last week.
Today -- that news is old news.
Today UPS canceled the order. Kaput.
Airbus now has NO orders for its A380F.
Ho, Ho, Ho: Now THIS is an Airline CEO with a Really Serious Problem
Thanks to a PBB subscriber who took the time yesterday to alert us to this interesting piece of news, tagged with a subject line entitled, "Holy Crap!"
Subject lines like that usually pique my interest.
According to media reports out of Vancouver late yesterday, Dr. David Ho, heir to the Hong Kong tobacco fortune and head honcho of Vancouver - based Harmony Airways was pulled over by Vancouver Police at 5:30 a.m. a couple of days ago in Vancouver's seedy east side for erratic driving.
With Dr. Ho in his Porsche Cayenne were apparently two, er, ladies of the evening and, oh yes, a bag of "what was believed to be" crack cocaine was found on the rear seat.
Dr Ho, who has, according to the media report, made numerous donations to the Vancouver Police Dept. over the years, was overheard by the officer involved calling the VPD Chief and asking him" to do something" about the issue.
Harmony currently has four 757's, but is dropping back to three in April. The airline is pretty much getting hammered financially.
Conventional wisdom in the Canadian market has been that Ho wants out but does not want to incur loss of face in the very large Vancouver Chinese community.
As our subscriber said, "You gotta believe getting caught on the east side of downtown Vancouver at 5:30 a.m. with some lovely ladies and a bag of rock pretty much ensures loss of face."
If not more.
March 1, 2007
PBB is Posted
PlaneBusiness Banter subscribers can now grab this week's issue. Just go here.
PBB To Be Posted Later Today
We'll post today as usual. For those of you who are PlaneBusiness Banter subscribers, I'll let you know here when the latest issue is available for reading.
Included in this issue is our Fourth Quarter PlaneBusiness Airline Industry Relative Performance Analysis.
All 20 some-odd pages.
It'll give you something to read this weekend.
More later.
DHS Apparently Set to Roll Out Plans for "Real ID" Act
"My concern is that even if they water [the Real ID Act] down a bit, DHS will try and accomplish what they want to with some other legislation," Guest said. "Homeland Security has total control; there is no judicial or legislative control over this. Once they issue [the Act] there is no way of stopping them."
-U.S. Representative Jim Guest
Apparently the Department of Homeland Security is now up to new tricks. Not content in trying to make flying an aircraft an exercise in secret database surveillance, now it appears that DHS wants the states to cooperate in a new plan to implement "readable technology" in all new driver's licenses.
But not if Missouri Representative Jim Guest, along with a coalition of as many of 38 states has anything to say about it.
Click here for more details.
More Delta Feeder News Coming Today?
Looks like we may hear about more regional airline contracts involving Delta and other regional partners today. Stay tuned.
And yes, as one reader just wrote me, "SkyWest shouldn't be too disappointed with the news today. After all, Delta tagged SkyWest to operate 12 more CRJ700s in November."
Correctomundo. That agreement gave new flying to SkyWest that had previously been operated by Comair.
Delta and ExpressJet Announce Capacity Agreement
Well, like I always say. You never know what you're going to wake up to in this industry.
Today Delta Air Lines and ExpressJet announced a new two-year capacity agreement that will cover 10 ERJ-145XR aircraft that will be placed into service during June 2007.
It would appear that the new agreement will see ExpressJet taking over routes that were previously operated by Atlantic Southeast.
This seems to be the deal that ExpressJet execs alluded to was "in the making" during the airline's last earnings call.
Ah, ironies of ironies.
Delta sells off Atlantic Southeast to SkyWest, along with all its inherent problematic operational issues. Now Delta decides to shift its regional service out of Los Angeles to ExpressJet. Oh, and in the press release Delta issued, the following statement was made: "We are pleased to have ExpressJet join the Delta Connection Program," said Shawn Anderson, Delta's vice president in charge of the Delta Connection program. "We decided to partner with them because of their strong operating performance and the capabilities of their ERJ-145XR fleet that will enable Delta to offer customers more choices to and from the Western ski markets and into Delta's hub in Los Angeles."
What is that noise? Ahhh, must be SkyWest CEO Jerry Atkin hitting his head against the wall of his office.
Ticker: (NYSE:XJT), (OTC: DALRQ.PK)