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A shout-out to the folks at Delta Air Lines, who unrolled their own blog today.
Called "Under the Wing," the blog proposes to "take you under the wing and behind the scenes sharing stories on ideas, changes, our people, and their working lives."
Intelligent, fine, forward-thinking people over there at Delta. They've already added PlaneBuzz to their blog roll. ;-)
We're flattered.
Welcome to the neighborhood folks.
Technorati Tags: Delta Air Lines
Okay, I know. I'm supposed to be in my "beach mentality" mode this week.
But after reading a research note from Frank Boroch at Bear Stearns this morning, I felt compelled to come in and talk about the potential impact that Richard Anderson's appointment at Delta Air Lines may have.
It's really pretty simple to figure out.
It's a play on the old adage, "Follow the relationships." Oh, and yes, the money usually follows.
With Richard Anderson, ex-Northwest CEO now at the helm at Delta, I think it will only be a matter of time before we see Delta and Northwest hook up. More than a little ironic, considering that Anderson was on the Delta board when the "Keep Delta My Delta" refrain was echoing through the halls as US Airways made its play on the airline.
As one reader wrote to us yesterday, he sees a situation on the horizon that will be set up more like an Air France/KLM deal -- with a holding company astride the two existing companies. Would make sense, and would certainly make Doug Parker and Company out in Tempe look like the poster children for what other airlines do not want to duplicate -- in terms of union issues, employee integration and other various geographical and cultural turf wars.
Frank pointed out in his note that the merger could create $5 billion in value.
Yep. I am now officially taking bets that it won't be long before "Keep Delta My Delta" former board member now CEO Richard Anderson will be singing a very different tune.
Ticker: (NYSE:DAL), (NYSE:NWA), (NYSE:LCC)
Technorati Tags: airline CEOs, airlines, Delta Air Lines, Doug Parker, Northwest Airlines, richard anderson, US Airways
Just a note for those of you who are not PlaneBusiness Banter subscribers. (If you are a subscriber, you know this already!)
Yours truly, and the rest of the crack team at the Worldwide Headquarters are officially on vacation until after Labor Day.
Now you and I both know that doesn't mean I'm not going to post anything in here for the next two weeks. Just don't look for the usual level of activity!
Okay -- I'm not sure if I mentioned this here in the blog or it was in PlaneBusiness Banter, but months ago as the Delta CEO derby cranked up -- I said that my money was on Richard Anderson. (Anderson is, and has been a member of the Delta Board of Directors.)
I get a really gold star. Because this was months and months ago.
The news is scheduled to be announced after the end of the today's trading.
Ed Bastian, current CFO, moves up to President -- and Jim Whitehurst is out the door.
Anyone taking bets that Whitehurst shows up at Virgin America?
Technorati Tags: airline CEOs, airlines, Delta Air Lines
In this week's PBB, I wrote that I saw TPG's deal for Midwest strictly as a defensive play on behalf of Northwest Airlines. This deal doesn't signify a "trend" in regional consolidation. It didn't even seem, on paper, to be that "cheap" of a deal -- a requirement I once heard TPG partner Richard Schifter say was a necessary requirement of any potential TPG deal.
While it was clear this was the case -- I was surprised to hear Schifter admit as much in this morning's call on the deal.
Then again, that's Ric. He's not one to beat around the bush.
Schifter said this morning that the firm may eventually want to cash out of the $450 million deal and Northwest could acquire Midwest outright. But Schifter cautioned that could be several years out.
You can bet there is a side deal to this deal that protects whatever TPG has in the deal -- and it's got Northwest's name written all over it.
TPG has nothing on the line here. They'll be in the deal until Northwest pays them to get out, or a merger deal involving Northwest accomplishes the same thing.
Tickers: (NYSE:NWA), (NYSE:MEH)
Technorati Tags: airline stocks, airlines, Midwest Airlines, Northwest Airlines, TPG
Look, I am posting this, in the middle of the night in self-defense -- so that no more of you will feel the need to send me an email about it. <g>
There is news from Trebor Banstetter's blog over at the Ft. Worth Star-Telegram, and from about ten thousand emails I've received in the last 5 hours.
Well maybe not that many, but they're mounting up.
Trebor informs us that "the September issue of DallasCEO magazine, which is published by the good folks at D Magazine, touts AA chief executive Gerard Arpey as 'Dallas CEO of the year.' The cover blurb proclaims that "In just four years, Gerard Arpey steered American Airlines from the brink of bankruptcy back to blue skies, helping its stock soar more than 1,500 percent."
The magazine is going out to subscribers and newsstands today. No doubt the folks at American will be thrilled, while plenty of people on the airline's labor side will be enraged.
I don't envy the poor soul who edits the magazine's letters to the editor."
Amen to that. I think it might be time for an organized visit to the magazine's offices. By a lot of people.
Technorati Tags: airline CEOs, airlines, AMR
For those with inquiring minds, Midwest Airlines is holding a webcast tomorrow to go into more detail about the deal with TPG.
Company management will provide the update in a conference call with industry analysts and institutional investors at 11:30 a.m. Eastern time. All of us will be able to listen in to the call. (I would provide a link, but the link provide in the press release tonight is not working for us. Just check with the Midwest website.)
P.S. Attempts to reach Chip the Cookie for comment tonight have gone for naught.
PlaneBusiness Banter subscribers can access this week's issue here.
From the press release that just hit the wires:
"Midwest Air Group (AMEX: MEH),parent company of Midwest Airlines, today announced that it has signed a definitive merger agreement to be acquired by an affiliate of TPG Capital, L.P. in a transaction valued at approximately $450 million. The merger agreement was unanimously approved by the Midwest Air Group Board of Directors.
Under the terms of the agreement, each outstanding share of Midwest's common stock will be converted into the right to receive $17.00 per share in cash. On December 12, 2006, the last trading day before the public announcement of AirTran's indication of interest in acquiring Midwest, the per share price of Midwest's common stock was $9.08. Midwest has approximately 26.6 million shares outstanding, including shares subject to options, restricted share awards and outstanding warrants."
$17 a share. Who would have thunk it?
More follow-up tomorrow. Meanwhile, we've got to do a bit of editing.
Yikes. We're back on schedule! Look for this week's issue of PlaneBusiness Banter to be posted later tonight.
What a rock and roll day it was today on Wall Street.
At 1:00 P.M. EDT, the market was down about 343 points. At the close, which just occurred, the DJIA ended the day down by a few points. (The final numbers are still being calculated.)
As one of the guys on CNBC just said, "As I walked on the trading floor just now, I overheard one trader say, "I need a drink."
At the close, Continental Airlines had some company in the plus column, an improvement from earlier in the day.
The winners?
Allegiant was up about 1% to 30.18, Alaska was up 3% to 22.24, AMR was up 5% to 22.20, Continental rocked and rolled its way up a nice 9% to 28.82, Delta was up 1% to 15.76, Frontier was up 1.5% to 5.34, JetBlue was up 3% to 9.16, US Airways was up 4% to 26.64, Northwest was up 4% to 15.50, Republic was up 2% to 18.50, SkyWest was up 6% to 24.14, United was up 1% to 38.40, and ExpressJet shares were up a nice 7% to 4.12.
Technorati Tags: airline stocks, Continental Airlines, Delta Air Lines, ExpressJet, Frontier Airlines, jetBlue, Northwest Airlines, AMR, puppy, puppy, puppy, SkyWest, United
As we assumed, after looking at the state of the Asian markets overnight -- it's blood in the water today on Wall Street.
As of this posting, the DJIA is now trading down more than 300 points. The Dow passed the psychologically important "10% correction" level earlier in the morning. And it has continued to drop.
Airline stocks are being hit very hard -- with one exception. Shares of Continental Airlines are up 4% as of this posting.
The reason? A positive research note this morning from analyst Jamie Baker with JP Morgan.
Technorati Tags: airline stocks, Continental Airlines
It was reported today that Singapore Airlines is now set to take delivery of its first Airbus A380 on Oct. 15 and has set Oct. 25 as the date for its first commercial flight.
SIA says in a statement that the first A380 will be handed over to it by Airbus on Oct. 15 at a ceremony in Toulouse.
It says the first commercial flight, flight SQ380, will depart Singapore on Oct. 25 for Sydney in Australia. It will return to Singapore the following day.
Meanwhile, as had been earlier reported, tickets for that first flight will be sold on eBay. Those auctions, which will include seats in all three classes, are now set to begin on Aug. 27.
It looks like Thom McDaniel and the TWU are not happy again.
As you may remember, Thom was the head of the flight attendant union at Southwest Airlines three years ago during what were clearly the most acrimonious union/management negotiations that airline has ever experienced.
Well, he's baaaacccck.
Trebor Banstetter in today's Ft. Worth Star-Telegram reports:
Southwest Airlines flight attendants are blasting an airline practice that they say results in a "fake flight attendant" on many flights.
In typical Southwest fashion, attendants have harnessed their sense of humor to criticize the new policy, filming a music video with a jazz singer crooning the Cole Porter song It's De Lovely, but with new lyrics that complain "this is not our company at its best, this is not the culture of Herb's Southwest."
Southwest typically assigns three attendants to each flight, each assigned to "A" "B" or "C" positions depending on their responsibilities. A fourth position, dubbed the "D" attendant, has traditionally been assigned to trainees to gain in-flight experience, according to officials with the Transport Workers Union, which represents Southwest attendants.
But in recent months, the airline has begun assigning supervisors and managers to the "D" position -- a move that union officials say violates their contract, creates safety problems and confuses customers.
"A supervisor is not a flight attendant," said Thom McDaniel, president of TWU Local 556, in a recent interview. "Our members are very upset about this, it feels like fake flight attendants are being put in there to spy on them."
The union has filed a grievance over the issue, McDaniel said, and debuted the music video, titled Not D-LUVly, Wednesday on its Internet site.
Here are the lyrics, you can access the video here.
The flight is on, the skies are clear
The Southwest “D” Flight Attendants are near,
It's demeaning, it's deceptive, it's despicable.
I understand the reason why.
The D Flight Attendants are only here to spy.
It's demeaning, it's deceptive, it's despicable.
At first glance you would think you were on
Northwest, the old Eastern, Air France.
This is not our company at its best.
NOT THE CULTURE OF HERB'S SOUTHWEST.
Please be sweet and please take care and in a whisper please repeat:
It's demeaning, it's deceptive, it's despicable,
it’s deplorable, it's dilemma, it's demented, it's not Not D-LUVly.
Technorati Tags: airline unions, airlines, Southwest Airlines
Before we sign off for this evening -- just a word of caution concerning tomorrow's market activity. According to CNBC, the Asian markets are getting "hammered" in trading that is still ongoing. Japan's Nikkei Average is down 3.5%, and the South Korean KOSPI is now down about 7% as of this posting.
The yen has also hit a five-month high against the U.S. dollar.
Methinks it's going to be a rough one on Wall Street Thursday.
Technorati Tags: airline stocks, wall street
Before we let this day fade away, a moment of silence please.
Thank you.
Hard to believe that had Elvis lived, he would have been 72 this year. Alas, he died 30 years ago on Aug. 16.
Even harder to believe that Elvis once approached President Nixon, asking the President to be make him a "Federal Agent At Large."
Here's the letter:
Dear Mr. President.
First, I would like to introduce myself. I am Elvis Presley and admire you and have great respect for your office. I talked to Vice President Agnew in Palm Springs three weeks ago and expressed my concern for our country. The drug culture, the hippie elements, the SDS, Black Panthers, etc. do NOT consider me as their enemy or as they call it The Establishment. I call it America and I love it. Sir, I can and will be of any service that I can to help The Country out. I have no concern or Motives other than helping the country out.
So I wish not to be given a title or an appointed position. I can and will do more good if I were made a Federal Agent at Large and I will help out by doing it my way through my communications with people of all ages. First and foremost, I am an entertainer, but all I need is the Federal credentials. I am on this plane with Senator George Murphy and we have been discussing the problems that our country is faced with.
Sir, I am staying at the Washington Hotel, Room 505-506-507. I have two men who work with me by the name of Jerry Schilling and Sonny West. I am registered under the name of Jon Burrows. I will be here for as long as long as it takes to get the credentials of a Federal Agent. I have done an in-depth study of drug abuse and Communist brainwashing techniques and I am right in the middle of the whole thing where I can and will do the most good.
I am Glad to help just so long as it is kept very Private. You can have your staff or whomever call me anytime today, tonight, or tomorrow. I was nominated this coming year one of America's Ten Most Outstanding Young Men. That will be in January 18 in my home town of Memphis, Tennessee. I am sending you the short autobiography about myself so you can better understand this approach. I would love to meet you just to say hello if you're not too busy.
Respectfully,
Elvis Presley
P. S. I believe that you, Sir, were one of the Top Ten Outstanding Men of America also. I have a personal gift for you which I would like to present to you and you can accept it or I will keep it for you until you can take it.
I guess Elvis didn't consider prescription drugs "drugs" so to speak. I wonder what that "in-depth" study of drug abuse consisted of anyway? And yes, I certainly would have liked to have heard Elvis' comments on the finer points of Communist brainwashing.
Here's the infamous photograph from their meeting.
Oh, and what did Elvis give the President?
Just a little something to use at target practice. Did Woodward and Bernstein know he had this thing?
Thursday afternoon the board of directors of Midwest Airlines will meet to discuss the dueling offers it now finds on its table. Will it be TPG and Northwest, or will it be AirTran?
According to a release from the airline today, "There can be no assurance that the board will reach a final decision at that meeting or that any definitive merger agreement will be entered into."
Wouldn't you love to be a fly on one of those walls?
I know I would.
Technorati Tags: airlines, AirTran, Midwest Airlines, Northwest Airlines, TPG
I'm getting tired of this relentless heat.
Aren't you?
Don't know where you are located, but things here at the Worldwide Headquarters continue to be, well, damn dangerous if one has to be outside for any period of time. As long as I have lived in this part of the world, I can't remember a time when we've had a longer string of days -- all over 100 degrees -- with heat indexes in the 110s and 120s. And the 130s this last weekend.
No, this isn't like 115 degrees in Phoenix. I've been in that heat. This is like suffocating humid heavy air that makes it hard to breathe.
So I decided to come up with a new name for days like this.
It's so hot, it's a "Panting Cat Day."
We all know about the "dog days" of summer.
Well, this is for those days that go above and beyond.
Think about it. Cats have an image to protect. They aren't like goofy dogs. Dogs pant all the time. And slobber. And pant some more.
Cats are too sophisticated for all that nonsense.
Bottomline -- when you see a cat that succumbs to panting -- it's hot.
Well, I've got four of them, and I can tell you -- it's a "Panting Cat" kind of day. Again.
Then, of course, they come inside and it's a "lounge on the cool slate floor" kind of day.
Can't wait to see my electric bill this month. I paid enough last month to pay the monthly payment on a new BMW. Unfortunately it wasn't a payment on a new BMW.
Aside from all this, what's going on up on Wall Street today? Is it a "Panting Trader" kind of day?
Well, as far as airline stocks go, it's a "Sagging Fortunes" kind of day.
I won't go into the economic news of the day. Suffice it to say -- inflation is still creeping around, the DJIA is now down more than 100 points for the day, and the mortgage-induced mess is still with us. Trust me, that mess ain't going away anytime soon.
But the news that is of import to the things with wings today is oil.
The government releases its energy inventory numbers every Wednesday. Today, the numbers were not positive. As a result, the majority of airline stocks are wallowing in red.
The government reported this morning that crude oil inventories fell 5.2 million barrels to 335.2 million barrels in the latest week. This was about double the drop that had been expected. Gasoline inventories declined 1.1 million barrels to 201.9 million barrels, while distillate stocks, which include jet fuel, rose by 200,000 barrels to 127.7 million barrels.
As of this posting, oil is trading at 73.20/barrel, up almost a buck on the day.
Also -- just a reminder. It is hurricane season and we now have a tropical storm in the Gulf of Mexico headed towards Texas, but more importantly we've got a tropical storm named Dean that has formed in what we lovingly call "hurricane alley." I have no doubt that Dean will be a full-fledged hurricane by Friday.
So if you want to see oil prices go even higher -- be on the lookout for a forecast that sends Dean more towards the Gulf of Mexico than towards the Atlantic Coast. (Remember, all those oil rigs are out there in the Gulf -- some of which never came back in service after the one-two punch of Katrina and Rita.)
Technorati Tags: airline stocks, airlines, crude oil
And we only thought AirTran was out of the competition. (No, actually we didn't.)
This afternoon AirTran issued a press release in which it announced a new offer for Midwest Air Group.
"AirTran Holdings, Inc., the parent of AirTran Airways, today announced that, at the request of Midwest shareholders, AirTran has increased its offer for Midwest Air Group, to $16.25 per share in a negotiated merger transaction.
The offer includes $10.00 per share in cash and 0.6056 of a share of AirTran common stock. Based on the closing price of AAI on August 13, 2007, the total value of AirTran's increased offer represents approximately $445 million."
This news comes after the largest Midwest shareholder issued a statement today saying that said it was not convinced a sale to a private equity firm is a better deal than the one offered by AirTran.
Pequot Capital Management apparently told Midwest's board that it's not convinced the $16 cash offer per share from TPG Capital is a better deal than AirTran's when other factors are considered. AirTran had previously offered $15.75 per share.
The Pequot letter filed with the Securities and Exchange Commission claimed that there are a large number of synergies available in a Midwest-AirTran deal which might not be available with TPG.
Pequot managing director Steve Pigott said in the filing that TPG and Northwest may not be able to match the growth opportunities and job creation promised by AirTran.
Not surprisingly, these were basically the same arguments given by AirTran CEO Joe Leonard in this afternoon's announcement from AirTran -- as to why their offer is a better one for Midwest.
Tickers: (NYSE:AAI); (AMEX:MEH)
Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, TPG
From one of our readers:
Psychology of the Battered Woman Syndrome
FOUR PSYCHOLOGICAL STAGES OF
THE BATTERED WOMAN SYNDROME
DENIAL
The woman refuses to admit--even to herself--that she has been beaten or that there is a "problem" in her marriage. She may call each incident an "accident". She offers excuses for her husband's violence and each time firmly believes it will never happen again.
GUILT
She now acknowledges there is a problem, but considers herself responsible for it. She "deserves" to be beaten, she feels, because she has defects in her character and is not living up to her husband's expectations.
ENLIGHTENMENT
The woman no longer assumes responsibility for her husband's abusive treatment, recognizing that no one "deserves" to be beaten. She is still committed to her marriage, though, and stays with her husband, hoping they can work things out.
RESPONSIBILITY
Accepting the fact that her husband will not, or can not, stop his violent behavior, the battered woman decides she will no longer submit to it and starts a new life.
Psychology of the Battered Airline Employee Syndrome
FOUR PSYCHOLOGICAL STAGES OF
THE BATTERED AIRLINE EMPLOYEE SYNDROME
DENIAL
The employee refuses to admit--even to him/herself--that he/she has been hosed or that there is a "problem" in his/her employment. He/she may call each pay cut an "accident". He /she offers excuses for management's greed and each time firmly believes it will never happen again.
GUILT
He/she now acknowledges there is a problem, but considers him/herself responsible for it. He/she "deserves" it according to various forms of company propaganda, because he/she has defects in his/her job performance and is not living up to his/her employer's expectations.
ENLIGHTENMENT
The airline employee no longer assumes responsibility for his/her employer's greedy, abusive treatment, recognizing that no one "deserves" to be hosed. He/she is still committed to the job, though, and stays with his/her employer, hoping they can work things out.
RESPONSIBILITY
Accepting the fact that his/her employer will not, or can not, stop its greedy behavior, the battered airline employee decides he/she will no longer submit to it and looks for a new life (Emirates, Virgin, ANA, Asiana, Jet Airways -- or maybe early retirement).
Thanks to Terry Maxon over at the Dallas Morning-News, who writes this week in the DMN airline blog that analyst Bob McAdoo -- who we last heard from just before Prudential announced it was shutting down its equity research group -- has been hired as an analyst for Avondale Partners LLC of Nashville.
As some of you are aware, Bob had stints with People Express, Vanguard, and TWA, among others, before he switched to the "dark side."
Just two weeks before Prudential announced it was shutting down its equity group in June , McAdoo had made some news of his own -- as he issued a research note on Southwest Airlines that was particularly negative regarding the airline's strategic moves in the last several years.
Technorati Tags: airline stocks, bob McAdoo, Southwest Airlines
BoingBoing reports that Richard Branson and talk show host Stephen Colbert had their own version of a wet T-shirt contest during a taping of Colbert's show last week. Actually BoingBoing, after tagging it "naked water wrestling" concedes "Okay, not "naked water wrestling," but you know how stuff gets blown out of proportion on the internet, and that's how it'll be portrayed on the slash fiction sites anyway."
According to the report:
"At a taping of the Colbert Show last week, special guest Richard Branson dumped a mug of water on Stephen Colbert's head, and Colbert retaliated by pouring water on Sir Richard's head. The sources who alerted BoingBoing believed it to have been an unscripted, contentious moment so distressing for both host and guest that the Colbert Show producers would never, ever, air it."
Other reports suggest Sir Richard became irritated after he was told he could not give a direct plug for the new Virgin airline venture. This post on MediaBistro's Fishbowl NY apparently came from someone who was in the studio audience of the taping:
"I haven't posted a recap anywhere else, but I'll spill it here first. Branson was apparently upset that he wasn't able to give a direct plug to the new Virgin service and doused Colbert with his guest mug of water. Stephen was DRENCHED. He took a beat, then signalled for his own "ammunition" for about twenty seconds until Alison (Silverman) ran and gave him her bottle of water, and Stephen retaliated. The two of them sat for a VERY uncomfortable second looking like two wet cats. Then Stephen thanked him for coming. I really don't think it was planned, since Stephen had another bit to introduce and a full interview left to do. They had to get him a new jacket and even broke out a blowdryer. Everyone in the crew had a "WTF?" reaction."
Apparently Branson was appearing on the Colbert Report to announce Virgin America's new "Air Colbert" jet. You may recall that Colbert was supposed to be at Virgin's big launch party last week, but reports say he got stuck in the weather-related traffic and finally turned around and went back to Manhattan.
Interestingly, at first, it was reported that the show with the water fight would be re-taped.
However, then the PR folks at Virgin America began sending out the message that it was all in "good fun." Or as MediaBistro again reports, "Virgin USA contacted us to let us know that "the segment was never intended to air live" and that "Richard enjoyed his time with Stephen, and the splash was part of the fun."
Uh-huh.
Nice recovery.
For what it's worth, the episode is now set to air Aug. 22.
Technorati Tags: airline CEOs, airlines, Richard Branson, virgin america
In May of this year, we reported in PlaneBusiness Banter that former Frontier Airlines' SVP Sean Menke had purchased a home in the Denver area. We were contacted by a couple of folks we know at Frontier who expressed the opinion that they hoped this meant Menke was going to return to the airline as the new CEO. I also assumed this was probably the case.
But then a weird thing happened. Menke was named to a new position at Air Canada.
Hmmm.
But it looks like our hunches and those of the Frontier employees were on target after all.
Today it was announced that Menke will return to the airline in September as CEO.
What is so strange about all this is that, for Frontier, it's deja vu all over again.
Menke left Frontier a couple of years ago to take a position with Air Canada. Personally, it was my belief, and still is, that Menke left because the board of directors at Frontier would not give him the CEO position.
As Frontier watchers no doubt recall, current CEO Jeff Potter did exactly the same thing. He left Frontier and became the CEO at Vanguard years ago -- after he felt the airline was dragging its heels -- by not naming him the CEO.
Well, what do you know?
My take on the news is that this is a good move for Frontier. I think Sean is a sharp guy. And, he has that major airline experience that Jeff was lacking. I also think he is probably the one person on the planet who knows Frontier the way he does. Overall, this is a good move for the airline -- which is facing big challenges on almost every flank it has.
So remember -- follow those real estate closings. Never know what you may find.
Ticker: (Nasdaq:FRNT)
Technorati Tags: airline CEOs, airlines, Frontier Airlines, Sean Menke
Looks like the assumptions about Northwest doing a deal for Midwest were true.
Friday, AirTran's offer for Midwest was set to officially expire, but officials then had said AirTran would wait until Monday before making a final decision on an extension or change of the offer. Or a removal of the offer.
Tonight, it looks like AirTran is out, and Northwest is in, along with some help from a familiar source -- TPG.
According to a release issued late tonight, Northwest Airlines has confirmed it is a passive investor in the acquisition entity that TPG has created to pursue an acquisition of all of the outstanding shares of Midwest Air Group, Inc. at $16 per share. The bid submitted by TPG is subject to the satisfaction of "certain conditions." Total value of the offer is roughly $400 million.
The TPG offer was presented to the Midwest Air Group board of directors today.
According to the release, NWA, which is providing financing to facilitate the transaction, will not participate in the management or control of Midwest should TPG acquire Midwest. The previously announced codeshare agreement between NWA and Midwest Airlines will remain in place and the two airlines will explore cost reduction activities such as joint fuel purchasing.
And the most important part, from what we understand -- Midwest CEO Tim Hoeksema gets to stay put as the head of the new privately-held entity.
If this deal goes through, and at this point, I don't see why it won't, this will be the second major merger strike out for AirTran and Joe Leonard. Three years ago the airline lost out to Southwest Airlines as they sought a potential deal with ATA.
And, as expected, Joe Leonard is not going down without a fight. Today he was quoted in the Milwaukee Journal-Sentinel.
"Leonard said AirTran's purchase of Midwest Air would have resulted in a big increase in air travel from Milwaukee's Mitchell International Airport, as well as a major surge in local hiring for the airline."
According to Leonard, "Instead, the Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm and a so- called 'passive' investor whose involvement will surely raise antitrust concerns, casting doubt for shareholders on whether a transaction can, in fact, close," Leonard said, referring to Northwest's involvement."
He continued, "Furthermore, private equity investors are laser focused on generating short-term returns and the only way to accomplish that goal is to slash costs by cutting back on service and eliminating jobs," Leonard said. "If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest's customer service is sure to suffer."
Reports tonight say a formal agreement is expected to be announced by Wednesday.
Tickers: (AMEX:MEH), (NYSE:NWA), (NYSE: AAI)
Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, Northwest Airlines, TPG
Midwest Air Group announced tonight that it has entered in to an agreement with TPG Capitol to sell the Milwaukee-based airline holding company for $16 per share in cash. This comes just hours after AirTran allowed its hostile tender offer to expire.
No mention was made of any other investors, such as the "passive" investor mentioned by AirTran, in Midwest's statement, but The Milwaukee Journal Sentinel is reporting that the investment group does include Northwest Airlines.
AirTran's offer was valued at $15.75, a mix of cash and AirTran stock. Midwest Air Group is the parent of Midwest Airlines and Skyway Airlines.
We're still waiting for comments from Chip the Cookie, the Midwest Airlines mascot.
[Read "Private equity group to buy Midwest Air" at The Milwaukee Journal Sentinel.]
Usually Sunday night is fairly quiet for airline news, but we see now that AirTran has issued a press release stating that their tender offer for Midwest Air Group has expired.
AirTran's language indicates that its not the end of this soap opera as another suitor or suitors, private equity and a "passive" investor, are going to be the winners of the Milwaukee cookie race. Rumors about an investment from Northwest have abounded in the last week.
Milwaukee news outlets are indicating that we should hear more from Midwest tonight. Stay tuned.
[Read "AirTran halts negotiations with Midwest" at The Milwaukee Journal Sentinel.]
All I-don't-know-how-many printed pages of it this week.
PlaneBusiness Banter subscribers can access this week's issue by clicking here.
Have fun!
Guys, we're continuing to have some tech issues tonight -- I think we may have an, eek, late, late Friday, er, Saturday posting of PBB this week.
We're still working. But it looks like we may be fighting with cartoons in the morning for bandwidth. ;-(
Okay, I know. I know. We have an issue of PlaneBusiness Banter to get out this week. But frankly, I am more interested in what is going in the markets today.
If you want to see a fight to the death -- just check in on what is happening to the Dow Jones Industrial Average. The markets opened with a sharp decline, then went back up, then down again. Then up, then down, then back up in positive territory, then down again. About 100 points down the last time we looked.
About the only good news that is a result of all this upheaval -- the price of oil continues to decline, as markets assume the end result of all this is going to be a slowing in demand for energy products. Not so sure of that -- especially in light of the fact the International Energy Agency said Friday that it is holding to its original 2007 and 2008 oil demand forecasts, as a surge of demand from Japan has apparently offset downward revisions from China and the former Soviet Union.
But what the hey. We'll take any reduction in the price of oil we can get. As of this posting, oil is trading at about 70.78/barrel.
On the not-so-good side of this market upheaval, a morsel for your consideration. If the credit crunch continues to take no prisoners, as I think it is going to do -- this could have an affect on the airline industry in another way. It could dry up financing resources available to invest in any mergers or deals that, just six months ago, would have been an easy thing to pull off.
On that note, we've got to get back to work.
Talk to you later.
Technorati Tags: airlines, wall street
Just an advisory to those who may be trying to reach our subscription manager or myself using a Planebusiness.com email address. The company who handles our email had their servers go down last night and they are still down. There had been hiccups previously this week -- but now there is nothing.
So no planebusiness.com email for us. At least not as of now. And nothing as of about 5:30 last night.
Yeah, makes trying to publish a real treat too.
The web. Never a dull moment.
No surprise here. Another heavy earnings week (we're playing catch-up with the overflow from last week) means another Friday posting for PlaneBusiness Banter subscribers. Yee haw. Guess this means we'll get to see what happens in the market tomorrow as well before we post this week. Can't wait.
The Dow ended the day down 387.18 points, with a hefty chunk of that coming in the last 7 minutes of trading. And yes, curbs were in place.
As you can see, airline stocks had a pretty rough day, with a very few exceptions.
Technorati Tags: airline stocks, airlines, wall street
'We are not quite at the panic stage yet, but this is beyond jitters.'
— Martin Slaney, GFT Global
A wild day on Wall Street today as the fallout from the artificially-propped up mortgage market continues to unwind. And it's not pretty.
According to MarketWatch, "Black Mesa Capital, a hedge fund firm that uses computer models to track down investment ideas, has told investors that at least one very large hedge fund or investment bank is liquidating "massive" trading portfolios, according to a letter the Santa Fe, NM-based firm sent to investors on Wednesday.That's causing disruptions and triggering big losses among other so-called market-neutral hedge funds, Black Mesa said in its letter, a copy of which was obtained by MarketWatch on Thursday."Clearly, something is amiss in the markets that few in our strategy, if anyone, have experienced before," Black Mesa's managers Dave DeMers and Jonathan Spring wrote. DeMers declined to comment on Thursday."
Oh, let me go back and find those comments from economists and other industry analysts from just a few months ago -- saying that the "housing mortgage problem was nothing to worry about."
Right. Yep. Sure. Okay.
This news comes after BNP Paribas, one of the largest banks in France, said this morning that it will stop valuing three of its funds and is suspending investor withdrawals after U.S. subprime-mortgage woes led to the "complete evaporation of liquidity."
Don't you just love Wall Street "speak?" The "complete evaporation of liquidity."
That one deserves a gold star.
Anyway, yep, it's a tense market out there today. At last look, the DJIA is down more than 300 points. Let's see what the last hour brings.
Oh -- and the price of oil? Closed at $71.50 today.
Airline stocks? A sea of red numbers, for the exception of AirTran, JetBlue, and Alaska Air Group.
Tickers: (NYSE:AAI), (Nasdaq:JBLU), (NYSE:ALK)
Technorati Tags: airline stocks, AirTran, Alaska Airlines, BNP Paribas, hedge funds, jetBlue, wall street
Technorati Tags: Barry Bonds
If any of you watched the AFL-CIO debate with the Democratic candidates for President last night, you know that the most riveting part of the hour and a half came not from a candidate, but from a disabled retired steel worker, who used to work for a now bankrupt steel company. He has seen his pension shredded, and as he said, he cannot now afford health insurance for his wife of 36 years. The two of them can barely afford insurance for him. Steve Skvara stood in line, with the help of arm braces, to ask the candidates a question. What's wrong with America and what will you do to change it?
His comments hit directly on the issue of companies wiping out employee pensions and retiree healthcare benefits in bankruptcy, disproportionate CEO pay versus that of employees, and other such issues that also loom huge in this industry.
One of our airline buds dropped us a note tonight, noting that he was shocked to hear a Republican candidate for the Presidency pick up Mr. Skvara's reasoning on an appearance on "Hardball" tonight. But of more interest to those of us in the airline industry -- it's the first time I've heard any Presidential candidate mention the airline industry in any direct way. And his comments were not kind.
The candidate? Mike Huckabee.
The youtube clip is here.
Technorati Tags: airline CEOs, airline unions, airlines, Overpaid CEOs, presidential candidates
Not a very auspicious start to Virgin America's appearance on the domestic airline scene this morning, as bad weather in the New York area caused more than a few problems for the airline. First, weather in the New York area was not just bad, it was horrid, with subways and train service suspended because of flood waters.
Cable comedian Stephen Colbert, who was supposed to be on the first flight from JFK to SFO apparently spent about 4.5 hours in a car, trying to get to JFK before he gave up and went back to his office.
Not surprisingly, the first Virgin flight was late in taking off.
But in a scene that must have given the DOT heartburn out the wazoo, Sir Richard Branson was the star of the show -- as the airline held its kick-off festivities. Why? Because Fred Reid, Virgin America CEO, could not get into New York because of the weather.
Ah, the irony.
You better believe Sir Richard loved it. All of it. Especially those mimosas being served to those in attendance.
(Photo courtesy of Jaunted)
Technorati Tags: airlines, puppy, Richard Branson, Stephen Colbert, virgin america
Anyone flying Virgin America tomorrow? Let us know about your flight experiences.
Oh, and yes, apparently the final approvals for the airline to fly tomorrow just came in this afternoon. Whew. Talk about cutting it close.
Meanwhile, the AFA-CWA, which represents 55,000 flight attendants in the U.S. said it was filing preliminary court papers in San Francisco today to challenge the U.S. government's approval of Virgin America.
AFA spokesman William McGlashen (Hey there Bill) said Virgin America had "circumvented" the rules on domestic control - a precedent that could threaten American aviation jobs, according to the challenge.
"We strongly believe that to protect our members, these laws need to be upheld," he said. "It is ultimately, we think, a job security issue."
He added: "We can't allow our laws to be circumvented and we can't allow our jobs to be threatened."
Technorati Tags: airlines, airline unions, virgin america
Well, the cat's outta the bag. And it's a very nice Dolce and Gabbana bag at that.
Instead of going crazy running an airline, Frontier CEO Jeff Potter is going to leave the company to become CEO of Denver-based Exclusive Resorts, a privately held company that leases out luxury homes to wealthy vacationers. Financed by former America Online executive Steve Case, Exclusive Resorts owns $1 billion worth of luxury residences in 40 of the world's top vacation destinations.
You can read more about Jeff's nice new gig here.
Ticker: Nasdaq: FRNT
Technorati Tags: airlines, Frontier Airlines
In case you are wondering why stocks of regional airline stocks took a nosedive Monday -- the answer is pretty simple. But it's not one that the managements of these airlines like to admit. That answer is this -- prices paid to these airlines to provide services to the major airlines are going to continue to decline.
As regular readers of PBB know, I have not been a keen fan on investing in this particular subset of the sector for years. Why? Because the writing was on the wall. Major airlines were not going to sit idly by and watch regional airlines continue to rack up profits -- while the major airlines themselves continued to post losses.
As a result -- the regionals have been under more pressure than ever to perform as efficiently as possible. But -- at the beck and call of their major airline partners. And at lower reimbursement levels.
Not a business plan I particularly like.
Last week, the arbitrator who was handling the case between Continental Airlines and ExpressJet over the issue of contract payments ruled -- and ExpressJet lost some $14 million in compensation as a result of the decision.
While $14 million is not that much in the bigger scheme of things -- it does reflect what is happening with the regional sector as a whole.
Investors took the news as it hit Monday and ran with it -- right out the door with regional airline shares. Not one regional airline stock was immune from the sell-off. Today, results are a bit mixed, with some stocks back to where they were (more or less) before the news hit, and some still trading lower.
Coupled with the increasing issue of trying to hire and keep flight crews, increased pressure from major airline partners to become more efficient, and with regional airlines taking the brunt of much of this summer's delay problems -- no, it's not a business plan that looks particularly attractive right now.
Technorati Tags: airline stocks, airlines, Continental Airlines, ExpressJet, regional airlines
A story yesterday in the Washington Post talked about how the idea of forming a "union" for bloggers had been tossed around at this year's Daily Kos convention. While some media outlets took the topic and approached it more or less as a trivial matter, there was a very good underlying reason for the discussion. The reason is so that those of us who write for a living and spend way to much time with a keyboard under our pillow would be able to group together and perhaps get lower medical insurance premiums as a result.
Blogger Kirsten Burgard, aka Bendy Girl, was quoted as saying,
"Blogging is very intense _ physically, mentally," she said. "You're constantly scanning for news. You're constantly trying to come up with information that you think will mobilize your readers. In the meantime, you're sitting at a computer and your ass is getting wider and your arm and neck and shoulder are wearing out because you're constantly using a mouse."
She's right.
But this is no different from writers who have done the same thing for years. Including me. It's just that bloggers seem to be gaining a bigger "platform" so to speak then that of your typical freelance or independent journalist.
Oh, and for those of you who wonder what this self-employed writer/editor/publisher pays these days for health insurance -- with a $10,000 deductible -- it's now $931 a month. And by health insurance standards, I'm in excellent health.
You can spit that coffee out on the keyboard now if you would like.
Just make sure there's no sugar in it.
If there is anyone out there in the airline industry paying more than I am for health insurance, please let me know.
Technorati Tags: blogger unions, blogs, self-employed, health insurance, web warriors
Just cruising through the DOT June Air Travel Consumer Report for this week's issue of PBB. Short and sweet? They were pretty fugly.
29% of all flights in the U.S. were late in June, lost baggage reports were up, passenger complaints were up, and more flights were cancelled in June than last June. Or this last May, for that matter.
Here's the link to the summary page of the results on the DOT site.
While DOT operating numbers for American and American Eagle both have not been anything to write home about the last couple of months, June set a new low for both airlines.
American saw only 57.9% of its flights on-time while American Eagle had only 60.5% flights report on-time.
In all fairness, remember that Dallas, American's hub, was underwater for much of June.
We'll see how both airlines do in July.
Meanwhile, while Northwest took all the "flights cancelled" headlines in June -- Mesa Air Group actually cancelled more flights in June than any other airline. Mesa cancelled 6.4% of its flights. Northwest cancelled 5.3% of its flights.
We pinged some folks we know at 7 major airlines today. We asked if the new TSA activities were slowing down boarding. 6 of 7 said.....yes. Some were a little m