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What happens when Memphis ATC goes down? DFW becomes a huge parking lot.
My thanks to one of our longtime American Airlines' pilot readers who snapped this as he arrived in DFW this week. That was after he had taken the long way home to DFW, via Alexandria, LA.
Whew. I think I need a beer.
This has been one busy two days. Thank you to all who have been bombarding me with emails the last couple of days. It's been like information central around here. That's great. Just makes it hard to get an issue of PBB out the door!
PlaneBusiness subscribers -- you can now access this week's rather long issue of PlaneBusiness Banter.
Heh. Talk about ...rewriting. Whew.
Yes, it's been a bit active this evening here at the Worldwide Headquarters with all the Mesa news flying around.
As a result, we're going to post this week's issue of PlaneBusiness Banter tomorrow.
Talk to you then.
Here we go. Here's the breaking story at the Star-Bulletin.
Yet another person we know who was there in the courtroom today has sent us a note updating us on today's events. Yes, the story gets even more bizarre as the days go by.
In reading through the notes it appears that Mesa's attorney informed the court today that it had possession of two hard drives that were supposedly hidden by Mesa CFO Peter Murnane until 9/13 but only disclosed to Hawaiian attorneys and the court this morning as a basis for the judge not to rule on the motion for sanctions, and to delay ruling on the trial. This goes to the argument that Mesa was trying to show again how they were victimized by their own CFO.
Hawaiian's attorney Sidney Levinson then apparently pointed out that this stunt was another example of how Mesa was trying to forestall a decision on the motion by only providing evidence to Hawaiian and to the court when it is convenient for them.
Levinson noted that instead of "firing this CFO who was victimizing them," Mesa put him on paid administrative leave and gave him a "warm pat on the back" in a press release, commending him for his fine work.
Judge Robert Faris denied Mesa attorney Maxwell Blecher's request not to rule, noting that the discovery deadline had passed and if Mesa could not produce documents that was Mesa's fault.
Both sides then made their closing arguments to the judge.
Drumroll please.
And as for the judge's ruling?
Judge Robert Faris ruled today that Mesa Air Group did intentionally destroy evidence that could have been used by Hawaiian Airlines in the lawsuit against its competitor.
Faris also found that Mesa executives made their decision to start a their low fare airline in 2006 based on information they got while looking at Hawaiian's books -- when the airline was still in bankruptcy protection.
The amount being sought by Hawaiian in damages was also disclosed today in court documents. That amount is $173 million.
Hawaiian Airlines is also seeking an injunction that would block Mesa's interisland carrier, go!, from operating in Hawaii for a year.
Ticker: (Nasdaq:MESA), (AMEX:HA)
Technorati Tags: airline CEOs, Hawaiian Airlines, Mesa Airlines, puppy
Okay all you airline nerds out there. (And you know who you are!)
Here is something that I think is really cool.
MIT's International Center for Air Transportation and the Global Airline Industry Program is making available to the public a new website hat for the first time collects a comprehensive data set looking at individual carrier and industry trends. The Airline Data Project (ADP) represents an ambitious effort to compile key data for 15 of the largest U.S. airlines.
Why is this so cool?
Because while the information used in this project is all "out there," this is the first time this information has been put together in a way that is quickly accessible for normal people like you and me. And it goes back to 1995.
Thanks to Bill Swelbar, Research Engineer at MIT, who let us know about this nifty new toy.
I just received a spam email with the subject heading, "Be a Real Man with A Real Penis."
I wonder if this would pass the Mesa-Porn-at-40-Feet Test?
Ticker: (Nasdaq:Mesa)
In an earlier missive, I said that the entire page of notes that I received from the hearing in Hawaii Wednesday would be published later today on the MesaLies blog.
My bad. That will not be the case.
My apologies for the mix-up. Doing too many things at once today. Post has been duly corrected.
We all knew this was coming when FL Group continued to build its stake in AMR.
Today FL Group said in a statement that "FL Group believes that opportunities remain to unlock shareholder value and that the AMR management team and board of directors should actively pursue all such opportunities. Simply blaming high fuel costs and investor sentiment is not a sufficient response.”
They forgot to mention the weather.
Anyway, we know how this game works. Hedge fund takes stake in airline. Hedge fund increases stake in airline. Hedge fund then starts pushing management to "unlock those assets." (Kind of like 'Extreme Makeover' when they scream "Move that BUS!")
FL Group now controls 8.25% of AMR shares.
"After taking a close look at the company over an extended period of time, our suggestions include monetizing assets, such as AAdvantage, that can be used to reduce debt or return capital to shareholders,” FL Group CEO Hannes Smarason said in the firm's missive. “We believe that there is no time to lose given the recent developments in the market place."
FL Group estimates that spinning off AAdvantage could increase shareholder value by more than $4 billion.
Terry Maxon, with the Dallas Morning News wrote about this today, adding that,
"Credit Suisse airline analyst Daniel McKenzie, in a report Tuesday, estimated that AMR’s 'noncore holdings' could bring more than $5.5 billion, compared to AMR’s current market value of $5 billion.
'Add $5.7B cash to this and you've got real value, even if we're heading into a downturn,' Mr. McKenzie wrote, referring to AMR’s available cash and short-term investments.
Mr. McKenzie identified the potential targets for spin-offs as AMR’s financial arm, American Beacon Advisors Inc., which runs a family of mutual funds; its regional airline unit, AMR Eagle Holding Corp.; American’s aircraft maintenance and repair operations; and AAdvantage."
But, but, BUT.
If the airline spins off all this cash -- then what is it going to tell its employees about how times are tight, raises are few and far between, and costs must be kept under control?
Same thing United Airlines is going to tell its employees when it starts racking up the bucks by selling off its parts. Only difference is at least American employees still have their pension plans intact.
For now.
Ticker: (Nasdaq:UAUA), (NYSE:AMR)
Technorati Tags: airline CEOs, airline stocks, airline unions, airlines, American Airlines, FL Group, United Airlines
As I am working on this week's issue of PlaneBusiness Banter today, I am not going to write too much on the ongoing sad and sorry saga that continues to unfold in a Hawaiian courtroom.
However, here is one update for you to peruse. Here is the Honolulu Star-Bulletin's daily update on the proceedings.
I also received an update from Mike Uslan. You may recall that Mesa sued Uslan, who was involved with the H.E.R.O website (Hawaiian Airline Employees Repelling Ornstein.) In this case, "Hawaiian" referred to the state, not the airline, as Aloha and Hawaiian airline employees were involved in the group.
Keeping that in mind, Mike sent us a pretty long summary of what transpired yesterday in court -- penned by a friend of his. According to the report, one could hear the "Darth Vader" theme being hummed by members of the gallery when Mr. Ornstein strode up yesterday to testify.
The notes on the day's activities continued,
"On day two Mesa finished Pappaianou's testimony and then presented three witnesses: Mesa's IT manager, McKay Monson, their V.P./ Chief Info Officer Jeffery Hornberg, and CEO Jonathan Ornstein. I'll abbreviate the first two witnesses, as J.O.'s testimony outshines anything that they testified to.
Pappaianou testified that he was able to see from 40+ feet away that Murnane was looking at porn, but stated that he took no action against Murnane at the time. [Some in the gallery suggested that we should do a CSI-like porn/ not-porn test from the same distance away in the courtroom. . .]"
The report continues, "There was more testimony from Pappaianou and the other two that basically discredited Mesa's porn theory and made it quite obvious that the story was concocted recently. For example, the alleged porn that Pappaianou and Hornberg saw Murnane looking at happened in 2004. Since then the next time that Hornberg even thought of it was when he was asked to come and testify, last week. The evidence destruction happened in 2006."
After Jonathan took the stand, I thought Hawaiian attorneys were right in making the point that there were potential Sarbanes-Oxley issues involving a recent Mesa press release. I had thought the same thing. According to the notes we received, this was the recent press release,
"in which, while stating that Mesa maintains the "highest ethical
standards," Mesa fails to disclose to shareholders that Mesa's CFO –the person responsible for public shareholder reports – was facing allegations of destruction of evidence that he was federally-mandated to preserve. J.O. admitted that he had reviewed and approved this press release. J.O. got flustered here and blurted out that they had no responsibility to issue any information at all under NASDAQ rules.
Hawaiian then established that in spite of Mesa's 'highest ethical standards' they did nothing in the face of Judge Faris' ruling that Murnane had lied. Hawaiian attorneys then brilliantly confronted J.O. with the Wall Street Journal article in which J.O. stated that 'he took exception with the court's conclusions'. As 'the court' was Judge Faris -- the very man that J.O. was sitting in front of -- this caused a bit of squirming on the Mesa bench."
Oh boy. Who needs a new TV season when we have entertainment like this every day?
As for Ornstein's testimony, as well as that of other Mesa employees, well, let's just say it's worth more commentary than I have time to give it today.
Ticker: (Nasdaq:MESA), (NYSE:HA)
Technorati Tags: airline CEOs, airlines, Hawaiian Airlines, Mesa Airlines
Cranky's got a couple of actual Spirit livery photos on his site.
Not sure I like it any better on a real airplane.
US Airways, which is, as we all know, the the result of a merger between America West and US Airways two years ago -- officially became one airline in the eyes of the Federal Aviation Administration today as the FAA granted the airline a single operating certificate.
Yee haw.
Good news for the airline. Would be even better news if all employee groups at the airline were now working under single contracts.
But we all know that road is one with a huge ugly "Slow: Road Work Ahead" sign blocking speedy progress.
Technorati Tags: airlines, US Airways
One of our readers just sent me a copy of an artist rendering from Airliners.net, which is supposedly the new Spirit livery.
As our reader noted, "Ugly, boring, hideous. I am not sure if that is the correct term but I don't think I like it."
I think the correct term might be...."Blecccch."
What do you think?
Technorati Tags: airlines, Spirit Airlines
You know, we all knew this Hawaiian-Mesa trial was going to be fun to watch from the bleacher seats, but little did we know just how much.
Yesterday, we finally got to hear the Mesa defense side of just why it was that CFO Peter Murnane seems to have deleted lots and lots and lots of material from more than one computer. Some of it, according to Hawaiian attorneys, was information that would prove that Murnane and Mesa used confidential material they obtained from Hawaiian -- as part of their Hawaiian regional airline start-up planning.
The reason? Peter apparently likes naked girls. (Or boys -- they were not specific.)
In what has to be one of the more creative, er, desperate, defense strategies I've heard in a long time, Mesa defense attorneys yesterday argued that the reason Murnane erased bulk amounts of material from a number of computers is because he had been cruising porn sites and his computer (s)? had become infected with a virus.
Yes, apparently Luscious Lips Linda is the real cause of this problem. Not Rosemary Woods.
I don't know whether to laugh or throw up.
But, as we all know, nothing is ever as it seems, or as one reader commented to me today, "You know Peter knows where the skeletons are at Mesa, so you can be sure if he is now "taking the rap" for this -- in an attempt by Mesa to avoid being found guilty of the bigger offense -- Murnane is not going to be left out in the cold -- penniless. Ain't going to happen."
Good point. And I would agree.
Which makes the whole thing even more sleazy.
Speaking of porn, that reminds me. A couple of years ago I was told that Mesa CEO Jonathan Ornstein was part owner of a "gentlemen's club" in Phoenix. Anyone know if that is still the case?
I mention this because, as we've seen Mesa do in the past, often the airline can be its own worst enemy -- and once again I'm not sure they have thought out the potential bigger picture ramifications of accusing its CFO of sitting around accessing porn sites all day.
I think it's called, "Digging the hole deeper."
Meanwhile, you can read the latest creative storytelling from the Hawaiian courtroom here.
Ticker: (NYSE:HA), (NYSE:MESA)
Technorati Tags: Hawaiian Airlines, Mesa Airlines
Getting caught up on my Flight International reading tonight (this morning) and I saw an interesting tidbit from Monday about Spirit Airlines. Actually I was looking for a pic of the airline's new livery.
Does anyone have one?
Instead of new livery pics, I found out instead that the airline is apparently in talks with Aires, the Colombian airline about a potential deal that would see Spirit take an ownership position in the Latin American airline.
According to the post, Colombia's recent award to Aires of daily flights from Bogota to Fort Lauderdale prompted the talks.
Technorati Tags: Spirit Airlines
According to CNN, the problem was in the telephone company's switching offices.
No firm numbers on how many flights were affected by the problem in Memphis today, but it sounds like the after-effects are still being felt from one side of the country to another.
From a reader -- an American Airlines' pilot:
"Yea we were just north of PHL when we got our reroute. EWR to DFW via AEX (Alexandra, LA). We came down through ZDC, ZTL and ZHU airspace which tacked on about 20 minutes to the total time. Other then the additional flight time the controllers work load didn't seem any greater.
About thirty airplanes on the east side of DFW on the ground stop at 3:00 pm but I didn't see what the west side looked like."
So what caused the ATC outage in Memphis in the first place?
Several reports say the problem was caused by a cut in the main fiber optic cable leading into the center.
Which begs the question....is the cable going to the ATC operations not important enough to make sure this does not happen?
Or as one person said on another airline-related message board, why wasn't the fiber run in a SONET ring. What is a SONET ring?
According to this cable person, "It is a self-healing fiber optic ring that has the ability to send the same data in 2 directions. If the fiber gets cut somewhere, the light passing through it is instantaneously redirected around the other side of the ring and no one (customer wise) knows that there is a problem. The damaged fiber is repaired and the ring is ready to take another hit."
Reports say that the Memphis Center ATC lost all frequencies about 2 hours ago and that its airspace was shut down.
The Fox television station in Memphis reports that FAA spokeswoman Kathleen Bergen said a ground stop had been in place for any flight that would transition through the airspace. "We held them on the ground wherever they were, whether it was Miami, Seattle, Los Angeles, Boston," she is quoted as saying.
The airspace was completely cleared at 1:30 ET.
The reason being given for the shutdown?
"Equipment failures."
Play virtual pilot with Lufthansa and see how many destinations you can find within 10 seconds.
Thank you Doug Abbey!
Monday the markets took shares of AMR, parent of American Airlines to the woodshed, after the airline issued revised downward guidance for the third quarter. Actually the market took shares of most airline stocks along for the unpleasant ride.
Today, Southwest said that it now expects CASM to rise between 4% and 5% for the third quarter. This is up from a previous estimate of 2%.
So why are shares of Southwest only down 1.5% as of now -- instead of the 14% beating AMR shares took on Monday?
Because in the case of Southwest, the airline says that most of the additional cost is a result of the airline's recent "buy out" deal that attracted more than 600 employees. The airline said it will be taking a $25 million pretax charge as part of the buy out deal.
"Southwest guidance suggests a third-quarter profit below both our own estimate and that of consensus," said JP Morgan analyst Jamie Baker in a note this morning.
He lowered his third-quarter earnings estimate to $0.20, down from $0.23.
Ticker: (NYSE:LUV)
Technorati Tags: American Airlines, Southwest Airlines
Who wants to go to China?
We do, we do! Please. Please! PLEASE.
Today the DOT, in a rather timely fashion for a change, announced which airlines are the latest to have been given new rights to fly between the U.S. and China.
All six of the legacy carriers scored new service.
Delta Air Lines notched its first China route as it was given permission to fly Atlanta-Shanghai on a daily non-stop basis.
Almost simultaneously with the announcement, Delta said ti will begin flying the route March 30.
United Airlines has been granted the authority to begin daily non-stop service between its San Francisco hub and Guangzhou. This will mark the first non-stop flight between that city and the U.S. by a U.S. carrier.
US Airways was successful with its bid to fly its daily non-stop service between Philly and Beijing (the first China route for them); Continental got the nod for daily non-stop service between Newark and Shanghai; Northwest received the okay for non-stop daily service between Detroit and Shanghai and American was given the okay for daily non-stop service between Chicago and Beijing.
Ticker: (NYSE: AMR), (NYSE:LCC), (NYSE: DAL), (NYSE: CAL), (Nasdaq: UAUA), (NYSE:NWA).
Technorati Tags: airlines, American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines, US Airways
(Photo Credit: Cindy Ellen Russell)
The day of reckoning for Mesa Air Group is here.
Hawaiian Airlines goes to court today in its effort to prove that Mesa Air Group used information that it obtained under a confidentiality agreement while Hawaiian was in bankruptcy - as a part of its competing regional airline start-up.
While the suit here has been moving along for more than a year -- in the last two weeks, we've seen a couple of bombs land in this one and it would be safe to say that Mesa CFO Peter Murnane has been the target.
Murnane, who was already at the center of the Hawaiian complaint against Mesa, is now alleged by Hawaiian in a separate complaint of having deliberately "scrubbed" hard drives of pertinent information pertaining to the case. Three computers and a server (I would presume this was the Mesa Air Group server) were allegedly purged of information pertinent to Hawaiian's complaint.
From recent filings, it appears Hawaiian has proof that Murnane sought advice on how to clean the hard drives in a way that it would not appear they had been tampered with.
In layman's terms, it's usually called "obstruction of justice" and is a felony.
In normal terms, it's called, "Just Plain Stupid." Oh and you can throw arrogant in there as well. (To think you can do this and get away with it.)
Over the weekend, we then saw Mesa trying to "distance" itself from Murnane, following the news last week that Murnane had hired a noted criminal defense attorney to represent himself in the proceedings.
I must admit, I had had a good chuckle at the release the airline issued on ...Saturday. (Insert normal comment about "trying to bury the news" here.)
And I quote,
"The administrative leave will be for a period of up to 90 days, pending the Company's completion of its review of this matter. The Company cannot predict the outcome of this investigation. Until the investigation is complete, William Hoke, Vice President of Finance will continue to be responsible for the financial and accounting functions of the Company and will perform the duties of Mr. Murnane.
Mr. Ornstein continued "Our policy is to comply with only the highest ethical standards of conduct and, if we become aware of a potential or alleged violation of such standards, to conduct an appropriate investigation and to take appropriate remedial action when warranted. We will report the outcome of the Company's investigation as soon as it is completed."
Uh-huh. Right.
I guess Mr. Ornstein thinks he can fool some people with this PR positioning blather, but I think most of us know that the ties between Murnane and Ornstein are thick, long, and wide.
We were told Monday that the "scrubbing" filing will probably not be the only surprise we may hear about as part of Hawaiian's case against Mesa.
We're all ears.
Great summary of all this mess at the Honolulu Star-Bulletin.
Ticker: (Nasdaq: Mesa), (NYSE: HA)
Technorati Tags: airline CEOs, airlines, Hawaiian Airlines, Mesa Airlines
After UBS analyst Kevin Crissey's less than enthusiastic take on AMRs reduced guidance late yesterday, it's no surprise to see the rest of the analyst herd chiming in on the airline's revised numbers today.
As a result, shares of AMR are down more than 12% as of this posting.
Ticker: (NYSE:AMR)
Technorati Tags: airline analysts, airline earnings, airline stocks, airlines, American Airlines
Just taking a look here tonight at a note from Kevin Crissey, analyst with UBS.
It seems that American Airlines tried the old, "issue the news late on Friday and maybe no one will notice " trick last Friday.
After the close, American issued updated third quarter and full year guidance.
The skinny?
The airline's revenue performance is looking weak, compared to American's peers and costs are going up.
Consolidated passenger revenue per available seat mile (RASM) is expected to be up 3.7-4.7% and mainline passenger RASM up 4-5% in Q3. "These figures are in line with our forecast but are disappointing relative to recent competitor results," Crissey noted.
American management also guided non-fuel unit cost (CASM ex-fuel) upward by roughly 1%. Put this together with a higher fuel cost estimate for Q4 and you get lower Q3 and Q4 EPS estimates. Crissey said, "Our Q3 EPS falls to $0.78 from $1.03 and Q4 moves to -$0.06 from $0.26."
Pretty significant drops. And yes, that translates into a loss for the fourth quarter.
What did we say last quarter -- that we didn't think all the negative numbers the airline posted were because of "bad weather?"
Looking more and more like that was the case.
Ticker: (NYSE:AMR)
Technorati Tags: airline analysts, airline earnings, airline stocks, airlines, American Airlines
Gobble gobble. There was an interesting European airline deal announced this week -- as Air Berlin announced a deal to take over charter airline Condor in February 2009.
Thomas Cook, the travel conglomerate, said this week that it would exchange its 75.1% stake in Condor for just under 30% in Air Berlin and an undisclosed amount of cash.
Depending upon Air Berlin's stock price in 17 months, the deal could be worth between $705 and $845 million.
Only one interesting part to all this. Lufthansa owns 24.9% of Condor and reports this week indicated that the deal was put together without Lufthansa's blessing.
This is no small thing as Air Berlin is now Lufthansa's biggest domestic rival. (Air Berlin is on a merger tear, having already purchased German carriers DBA and LTU.)
In addition, Condor and LTU are Germany's two biggest charter carriers, according to the Financial Times.
Dunno. 17 months is an eternity in this business.
Will be interesting to see how this one pans out. As for Air Berlin, I think it currently has its hands full trying to put the pieces together with DBA and LTU.
Technorati Tags: Air Berlin, airlines, Condor, Lufthansa
Hey, I need to make sure I can take pictures when the trees fall through the roof Saturday night.
Heh.
More later.
You may recall that after AirTran and its pilots came to terms on a tentative agreement this year -- union officials went back to the airline after beginning their road shows and told management essentially that the agreement was not going to fly.
So back to the table both sides went.
Today, it was just announced that the pilots at AirTran have voted down the successor to that TA -- and by a resounding margin.
Pilots voted voted down the proposed agreement by a margin of 61.37% to 38.63%. 87% of the pilot group voted.
There were 1,477 eligible pilots and 1,284 voted.
After being informed of these results the National Mediation Board, which has been overseeing negotiations since September 2005, put talks in recess until after the New Year.
Technorati Tags: airline pilots, airlines, AirTran
Let's see. My Mickey Mouse hands show 12:02.
Yay! By DOT standards, we're ontime!
I know, not saying much, but hey. Just trying to interject some humor here.
Subscribers to PlaneBusiness Banter can now access this week's issue here.
The rest of you -- well, I guess you can now catch the rest of Jerry Springer.
Hang in there. We're coming up here shortly.
Won't be too late tomorrow. We are basically done with this week's issue, but it's been a hectic day here at the WWH, and I want to give it a once over in the AM with clear eyes before putting it out for public consumption. We've also had a number of changes come in tonight including an update from Alaska on the Horizon situation with their Q400s, a couple of stock rating changes from Goldman Sachs, and ATA RASM figures for August just came out as well.
Besides, it will give you something to look forward to.
By the way, condolences to you in parts of Florida. Looks like you're taking a beating from whatever this thing is in the Gulf.
Talk to you guys later.
MarketWatch reports:
"The House of Representatives has passed a bill authorizing $68 billion in funding for the Federal Aviation Administration over the next four years, underwriting a major upgrade to the nation's air traffic control system, paid for partly by higher jet fuel taxes. It also gave airports the ability to raise passenger facility charges to $7 from $4.50 a ticket and requires airlines to have plans to remove passengers from planes after long ground delays. The bill increased the mandatory retirement age for commercial pilots to 65 from 60. Representatives voted 267 to 151 in favor of the bill, H.R. 2881, which falls short of the two-thirds majority necessary to override a veto. The White House said Wednesday it would veto H.R. 2881."
Throw in a Gulf of Mexico storm to the existing market concern over lower crude inventory levels and here you go. Oil was up a whopping $1.39 today.
Gasoline was also up. Unleaded gained 4 cents on the day to $2.14. (Remember this is a raw number, without taxes or anything else added to it.)
Because today is the day we do the weekly energy numbers for PlaneBusiness Banter as well, here is a treat -- updated jet fuel numbers. Gulf Coast jet fuel closed up 3.5% this week to $2.34 a gallon, with New York jet fuel closed at $2.39, up 2% on the week.
Same caveat to the jet fuel prices. These numbers are "raw" numbers.
A number of you have dropped me notes commenting on the change of boarding procedure at Southwest, and essentially you are all asking the same question. Don't I think this is just an interim move to an eventual reserved seating process?
Probably.
Then again, I can't believe they are also not going to try and "up the ante" to become a "first-boarder." In other words, they will either start charging a surcharge for emergency row "first class" seats, or they may offer some way to "bump" up your place in line.
For a fee of course.
On what should be our big day of writing and editing PlaneBusiness Banter -- unfortunately my day has so far turned into a day of going through check lists (cat food- yes, dog food- yes, people food, needs work, water- need more, yard- stuff needs to be brought inside, PlaneDad - he needs to go get food, gasoline, etc.)
Why is this, when if one goes to the National Hurricane Center website they say there is "no cyclonic activity" in the Gulf/Atlantic?
I don't think they are going to be saying that after their recon plane gets back to Keesler Air Force base after its 11:30 run. This water vapor image from this morning shows you why.
As I said earlier this week when this thing was flopping around over Florida, I just am not in the mood for Jerry. (I didn't check to see if "Kramer" is the next name on the list, but interestingly, there is another suspicious looking tropical disturbance right behind this one.)
Yippee.
Name of the bail bond company that provided the bond for O.J. Simpson today.
No, really.
And hey, if you're wondering what this has to do with airlines -- here's your ten second airline quiz of the day. Which airline did O.J. take from Las Vegas to Florida this afternoon.
Bzzzzt.
US Airways.
There.
Technorati Tags: you_ring_we_spring, O.J.Simpson, US Airways
The improved third quarter guidance issued by United Airlines in an SEC filing.
The company said in the filing that passenger revenue per available seat mile, or the amount the airline makes for each seat flown, is now forecast to increase by 7.5 to 8.5% for the quarter.
But, while RASM appears to be on the upside -- the airline also said that costs are now trending higher than expected for the quarter as well.
Growth in Q3 cost per available seat mile excluding fuel and special items (CASM ex-fuel) is expected to now come in between 5.25 and 5.75% y/y. This is 1.25% higher than prior guidance – due to higher profit sharing and a non cash charge for surplus and obsolete maintenance inventory.
As a result, the general takeaway from the notes we read was that the news is not that earth-shattering. Especially considering the current state of fuel prices. Or as Kevin Crissey, analyst with UBS said today, "Fuel prices continue to rise and are really ugly now."
Yep. Roger over. We hear you.
Ticker: (Nasdaq:UAUA)
Technorati Tags: airline analysts, airline earnings, airline stocks, airlines, United Airlines
Southwest Airlines said today that it is going to modify its boarding procedures beginning in November.
Based on the airline's trial runs in San Antonio -- the airline says it has decided to stay with open seating, but with a twist.
Beginning in early November, passengers will be assigned a letter and a number on their Southwest boarding pass when they check in for a flight (for example: A32).
This combination will be, in effect, a passenger's position in the onboard process. Meanwhile, boarding positions will be separated into groups of five. When a passenger's boarding group is called, they will find their designated place in line to board the aircraft.
According to the release, the A group will queue first in two lines: A1-30 on one side of marked columns and A31-60 on the other side, followed by two groups of B, and then the remaining Cs.
You can access a video of the new process here.
While the change initially seems confusing, the part I like about it is that when you check-in online, you will get priority -- and you will know your position in your respective group immediately. No having to get to the airport earlier anyway and sit on the floor, just to make sure you have a high boarding priority.
From what I can tell at this point, I think the airline has found a great way to accommodate both camps of passengers pretty well - those who want assigned seats, and those who don't.
Ticker: (NYSE:LUV)
Technorati Tags: airlines, Southwest Airlines
Hey, you think I put potential Gulf of Mexico storms on here only because the Worldwide Headquarters is located in the swamp?
Au contraire.
Think beyond the obvious!
And I quote,
"Shell has begun evacuating non-essential personnel from its platforms and operations in the Gulf of Mexico in advance of a tropical disturbance off the Florida coast. Precautionary evacuations began today in which 300 people were brought inshore. The company plans to evacuate about 400 more people Wednesday, the company said. Production has not been impacted."
That's all the info oil traders need to start the engines revving tomorrow.
Technorati Tags: crude oil
So apparently this weekend a Houston television station felt compelled to jump on the Kyla bandwagon. Only this time the station rehashed what is a familiar story about some Southwest passenger who was told he had to buy another seat on the airline in the past, because he weighed over 400 pounds at the time.
The difference between now and then? Obviously now it's a race for reporters who obviously don't have any better things to do than to root out other passengers who have been "demeaned" or "embarrassed" by Southwest Airlines. And clearly there are those folks out there who see this quest as a chance for them to be on television.
And I quote,
[J.R.]Hill says for him that meant being pulled out of a line in front of more than 100 passengers and being told he was too fat.
“I hate to admit it but I was in tears,” said Hill.
Hill decided to speak out after hearing about a woman who claimed Southwest made her " cover up" with a blanket, and about another woman whose mini skirt was said to be too provocative to fly."
The man weighed 435 pounds at the time this happened. I'm sorry Mr. Hill. But you should have been told to buy another seat.
Remember when we had to endure a series of copy cat "I found a [fill in the blank here] stories? You know, "I found a dead rat in my Wendy's chili." Or, "I found a dead mouse in my Wendy's salad?"
So here's the question for the day. What new story will hit the airwaves this week? Someone was too tall to fly on Southwest? They were too ugly? Too old? Someone found a sunflower seed in their bag of LUV nuts?
<Shaking my head>
Ticker: (NYSE:LUV)
There goes the weekend...
I certainly hope this area of tropical disturbance does not go ballistic when it hits that hot water of the Gulf of Mexico. I'm just not in the mood.
Last Friday we noted here that we had heard of a potential contract extension deal in the works between TWU and American.
Today Trebor Banstetter at the Ft. Worth Star-Telegram confirms that information, citing letters the TWU has posted on the union's website which detail a contract extension proposal that would link pay raises for mechanics and other ground workers to company performance.
According to Trebor:
"The proposal, made late last week, stems from an August meeting between Gerard Arpey, American's chief executive, and Jim Little, the TWU's international president. At the meeting, Little told Arpey that union members are willing to continue collaborating with management, but only for some type of additional compensation, according to sources familiar with the negotiations.
Little followed up with a letter to Arpey outlining his concerns, and Arpey responded with a letter in which he said he is committed to maintaining their collaboration.
"As a result of a letter from Little to Arpey, the company approached the negotiating committee with a proposal to explore the possibility of seeking non-traditional compensation, and a possible contract extension," union officials told members in a message. Labor leaders said they have appointed a committee to examine the proposal during the next two weeks."
Ticker: (NYSE:AMR)
Technorati Tags: airlines, American Airlines, AMR, TWU
Southwest has scheduled a press conference for tomorrow. We now know at least one thing they are going to announce. Families with small children will no longer board prior to other passengers.
Hmmmmm.
It will be interesting to see what else is announced tomorrow.
Technorati Tags: airlines, Southwest Airlines
In the last two days, two major Wall Street analysts have chimed in with their take on how they see higher fuel prices and a recessionary environment affecting the airlines in 2008.
Monday, Robert Barry with Goldman Sachs said in a note to investors that he remains "unenthusiastic about most airline equities" and has "little conviction recommending that investors buy U.S. airline equities." His top pick is Delta Air Lines, which he rates "Buy," followed by "Neutral"-rated Northwest Airlines.
Friday, Goldman Sachs upped its oil price forecast for $80 and $90 a barrel for 2008 and 2009, up from the $68 it had previously had in place.
The investment bank also raised its refining cost estimates by $2 a barrel each year.
In Barry's note Monday, he noted the upped estimates, saying, "If the forecast proves correct it would imply a potentially severe cost and earnings headwind for airlines."
Tuesday, JP Morgan analyst Jamie Baker said in a note that while normally legacy carriers lose billions during recessions, if one holds fuel and supply constant (a big IF, considering the last couple of days), the sector could still be expected to post a $1.4 billion profit in 2008.
Baker also pointed out that unlike 2001, this time legacy carriers have "nearly triple the cash, half the aircraft orders, & a Legacy-Discount cost spread at its narrowest ever. Pension reform and consolidation pressures further reduce Ch11’s appeal. We view risk as far lower than any prior recessionary precipice."
But what hasn't changed? "Legacies remain highly leveraged to Tech and Financial sectors, and labor is soon going to make a grab at shareholder profits, potentially spurring M&A. While Aug. data confirms leisure demand is alive & well, we believe Sept/Oct will test for critical corporate resilience."
Baker also initiated coverage on both Delta Air Lines and Northwest.
Both were rated "overweight." Baker sees both stocks as being "equally cheap." Delta, US Airways and Northwest are now Baker's top picks.
Technorati Tags: airline earnings, airline stocks, airline analysts, airlines, wall street
I know. Speaking of records, I sound like a broken record.
Crude oil hit another new high today. $81.51/barrel.
Technorati Tags: crude oil
The Federal Reserve announced a little while ago that it was cutting its overnight interest rate by a half of a percentage point -- the first cut in that rate in more than four years. The rate is now at 4.75%.
The result on Wall Street was dramatic.
At last look, the Dow Industrials were up about 326 points.
The Fed also cut what is called the discount rate by half a percentage point -- down to 5.25%.
Put it all together and you have the reason why the Dow Jones Industrials were up about 326 points the last time I looked. These moves by the Fed were broader than what most folks had anticipated.
Of course these moves are nice for some people, but the bigger picture here is that the Fed must feel that the threat of recession is bigger than that of inflation.
We'll see how the rate happy hangover affects the Street tomorrow.
Next up? Oil prices.
Technorati Tags: wall street
I'm here. I was here yesterday as well. Just not online.
Alas. My adventure to install a new hard drive in my laptop turned into a more harrowing experience than I had hoped for.
Take one hard drive bracket and a stripped screw in that bracket and a hard drive that is not seated correctly and no way to remove the screw that is stripped, and well -- the afflicted machine is now in the hands of an Apple certified worker bee.
And I'm working on a desktop machine from an external hard drive.
Hey at least I backed up my laptop before beginning this rather sad mess. So everything is just a bit inconvenient -- and not nearly as fast. And this dorky Microsoft keyboard bugs the bejesus out of me. But..... I'll manage.
In the sake of full disclosure, that was not all I was doing yesterday.
What if I told you I was reading former Fed Chairman Alan Greenspan's book, "The Age of Turbulence?"
(Economic turbulence mind you, not the kind in the sky.)
If that confession doesn't make me a geek, I don't know what does.
Airlines? Airplanes? Enough of my technological and economic ramblings.
A couple of comments to get this week rolling to a somewhat late start.
One -- on the Southwest Airlines PR debacle involving short skirts, tight tops and publicity-seeking passengers. In response to more than a couple of you -- no, I did not like the hokey press release the airline issued last week. I thought Gary Kelly sounded foolish. I thought the press release was foolish. Yes, the airline could have used a touch of humor when it finally responded to the bruhaha, but it also needed to convey the impression that it was not making fun of its accuser.
Don't think that happened.
I would have preferred to have heard Gary come out fairly seriously, apologize, and maybe make one humorous comment. That would have conveyed the message that the airline took the incident seriously, but would also have sent the message that it was keeping the entire mess in perspective.
Instead, the airline didn't do itself any favors.
On the news front today, the Seattle Times is going with a story that details how a former senior aerospace engineer with Boeing is going public with concerns that the new 787 aircraft structure is unsafe.
In the sake of full disclosure, Vince Weldon was fired last year under what the paper calls "disputed" circumstances, but I think the article is worth a read. Weldon contends that in a crash that would be survivable in a metal aircraft, the new jet's composite materials will be more prone to shatter and/or burn, which would then release toxic fumes.
He backs up his opinion with emails from other engineering colleagues at Boeing -- as he claims the company is not doing enough to test the aircraft's "crashworthiness."
You can read the entire article here.
More to come. I'm off to see if I can update the software for this clunky keyboard.
Technorati Tags: airlines, Boeing, kyla Ebbert, Southwest Airlines
In the middle of the Kyla notes from PBB subscribers and Buzz readers, I also had a couple of notes that said there are rumors out there this afternoon that TWU and American AIrlines are going to announce a contract extension late today.
I can't find that anything has happened yet.
Anyone got anymore intel on this?
Yeah, yeah, I was slow on the apology news today.
And for a very good reason.
I decided that I could replace the hard drive in my laptop.
Now, as far as I know, I managed to reconnect everything and replace all screws and other items correctly. And in the proper order. I even had a full color cheatsheet to use that took me through the process.
Yes, well, after this ordeal, I crank it up and the computer runs just fine. I'm using is now. But I'm also tethered to my firewire external drive.
Yep, you got it. No hard drive being recognized by the laptop.
Sigh.
Then I come online and am bombarded by notes concerning the Kyla saga.
That's what I get for being offline.
Thursday night in PlaneBusiness Banter as I was bringing subscribers up to speed on where I thought the Southwest/Cover-Up fiasco stood, I wrote,
"While traditionally airlines are loathe to go public when an employee is involved with a passenger dispute, and while clearly there is litigation involved, I think it would have been a good idea if the airline had "gotten out in front" of this one with an accounting of what went down (sorry). Part of the problem with this PR nightmare is that by not coming out publicly with a response -- Southwest has left the story to be managed by its accusers.
If the flight attendant did in fact overreact and handle this situation improperly, then go ahead and admit it, and apologize.
But, if the airline believes that we're not getting the whole story, then it's time to get its version of the whole story out there."
Today it appears that someone at Southwest read our latest issue, as apologize is exactly what the airline did.
But the apology came only after Southwest President Colleen Barrett told a group at Texas Christian University Thursday, where she was speaking as part of the Tandy Executive Speaker Series that she doubted the airline would apologize, saying, "I just can't do that to the customer service supe (supervisor)," she said. "He handled the situation discreetly and with patience, and he did not deny her boarding."
Today, the airline's stance took a 180, and as we had suggested, the airline apologized. It also issued a release that tied "shrinking fares" to getting caught "with our pants down" -- in reference to the negative publicity the situation has caused.
CEO Gary Kelly, who has apparently been out of town, told Dallas Morning News reporter Terry Maxon today, "I don't think our people did anything wrong. I don't think Kyla in our evaluation of the facts did anything wrong. I don't think either party did anything wrong. But I do think we could have handled it from beginning to end this week better," Kelly said.
Technorati Tags: airlines, kyla Ebbert, Southwest Airlines