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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
Subscribers can access this week's issue of PlaneBusiness Banter here. Dig in!
Hey folks. For those of you who are subscribers of PlaneBusiness Banter, look for this week's issue later this evening. As usual, I'll drop a note here when the issue is posted.
Talk to you later.
Heh. So much for Houston getting drenched by Tropical Storm-Hurricane-Tropical Storm Humberto. Here at the Worldwide Headquarters, just north of the Crescent Ciy -- we've been getting heavy weather in the usual Tropical Storm band formation since last night.
And it looks like the fun is just beginning.
According to the National Hurricane Center a few minutes ago, Humberto intensified at the fastest rate in history yesterday, before making landfall this morning as a Category 1 hurricane.
You think the NHC is trying to cover its rear with that statement?
There were no tropical storm warnings, no nothing for those folks in Southwest Louisiana and southeastern Texas who were awakened this morning by 85 mile an hour winds.
Technorati Tags: Tropical Storm Humberto
Flying in or out of Houston tonight or tomorrow?
Good luck.
Tropical Storm Humberto looks like one big lumbering rain event. No advisory press releases yet from Continental Airlines.
Technorati Tags: airlines, Continental Airlines, Tropical Storm Humberto
Just nine cents away from a very important psychological number.
Will we end the day tomorrow over $80? We'll have to wait and see, but the tea leaves seem to be lining up more and more in that direction.
Technorati Tags: crude oil
From MarketWatch:
"US Airways said Wednesday it plans to hire more than 350 new pilots with training dates beginning in November 2007. The Tempe, Ariz.-based airline also said it will move 140 pilots, who currently fly for US Airways Express carriers, back to mainline flying after they were furloughed several years ago. US Air said its pilot staffing needs are being driven primarily by retiring pilots. US Airways shares fell 3.9% to $29.94 in Wednesday morning trade."
Speaking of falling airline stocks -- it's not just LCC. With oil prices hitting new all-time highs, it's not a good day for airline stocks across the board today on Wall Street.
Technorati Tags: airline stocks, airlines, US Airways
It always saddens me to hear that a group of attorneys might be denied the right to make a fair wage.
Bankruptcy lawyers for Northwest Airlines Corp. were denied $4.2 million in "end-of-case" bonuses Tuesday, after the judge ruled that their average rates of about $500 an hour had already provided adequate compensation.
U.S. Bankruptcy Judge Allan Gropper rejected a $3.5 million bonus for Northwest Airlines' lead law firm, Cadwalader, Wickersham & Taft LLP, which ushered the airline out of bankruptcy in May. A law firm representing creditors, Otterbourg, Steindler, Houston & Rosen, was also told to forget a $700,000 bonus.
Gropper said that for the attorneys to deserve a so-called fee enhancement, their work should have a remarkable result that couldn't be expected from lawyers being paid their regular fees.
The flight attendants at Northwest, represented by the AFA, as well as the U.S. Trustee and a creditor-turned-shareholder objected to the bonuses, arguing they were unjustified. Those groups said Northwest's bankruptcy had not produced a remarkable result, since its share price has dropped 22 % since the company emerged from court protection on May 31.
The AFA also objected on the grounds that pilots and flight attendants took pay cuts and schedule changes to help the airline out of Chapter 11.
Small victory in the big scheme of things, but a victory nonetheless.
In other action, Gropper agreed to paying the law firms involved their submitted bills for their work on the bankruptcy. Gropper approved a total bill of $118.8 million in fees and $5.4 million in expenses.
Cadwalader earned $35.4 million in fees and $2.2 million in expenses. Otterbourg got about $7 million in fees and $210,231 in expenses.
Ticker: (NYSE:NWA)
Technorati Tags: airlines, Northwest Airlines
Today Bombardier told airlines to ground 60 of its Q400s after two of the planemaker's aircraft experienced landing gear failures in one week.
According to Bloomberg, "All Q400s with more than 10,000 cycles -- comprising a takeoff and landing -- should be grounded until they're inspected, Montreal-based Bombardier said today." The landing gear was made by Goodrich Corp. of the U.S., Bombardier added.
The grounding does include aircraft flown by Alaska Airlines regional airline, Horizon Air, as well as a number of international airlines.
Apparently both landing gear incidents occurred in Europe and neither incident involved any fatalities.
You can read the article here.
Ticker: (NYSE:ALK)
Technorati Tags: airlines, Alaska Airlines, Bombardier, Horizon Airlines
Last week we heard good news from US Airways as they named a new COO who appears to be just what the doctor ordered. Not to be outdone, this week JetBlue announced that Russ Chew, who joined the airline this spring as its new COO, will now add on the title of President to his business cards.
Good move.
Dave Barger remains as CEO of the airline.
We see this as a very positive move for JetBlue.
For those of you who are not familiar with Russ, he came to JetBlue after a stint as COO of the FAA. But prior to that, Russ had been with American Airlines for almost 20 years. He last gig at AMR was head of the airline's System Operations Control. He was also in charge of Strategic Operations Planning at the airline.
And yes, Chew can also fly a mean airplane. While at American he was a line-qualified pilot for the Boeing 767, Boeing 757, and Maddog.
Was just reading over some recent analyst reports over the last week and in more than one the issue of the "lower price of fuel" was mentioned in the same sentence as third quarter forecasts and fourth quarter estimates.
Hmmmm.
You might want to think about those comments after the last three days in the futures markets.
We noted yesterday that the price of a barrel of crude had hit a new all--time high.
Today, after the government reported very weak energy inventory numbers, it has been off to the races for oil traders.
As of this posting, crude is now trading at a new high, at 78.90. Intraday, the price has already shot up beyond $79.
The price of a barrel of crude oil hit a new record high today at the close of trading in the commodities markets.
And that price was? $78.23.
To put this number in perspective -- this new high comes without a major hurricane having come close to the Gulf this year, and after OPEC said today it would boost oil production.
Okay, I just had a little email conversation with Brett Snyder, aka Cranky Flier. He told me that because he had admired the fact that I honor the airline employees who perished on 9/11 every year in PlaneBusiness Banter, he had done the same today in his blog. As he said, it should be a tradition.
Which got me to thinking. Yes -- it should be. And it should be one that is expanded upon. It's one thing for me to honor these people in a subscriber publication. But I think we need to make sure that as many people as possible remember. Every year.
Here are the names of the airline employees who lost their lives as a result of the events of September 11. They all deserve to be remembered and honored this day by all of us who love this industry.
American 11 (Boston to Los Angeles)
Crashed into World Trade Center
John Ogonowski, Dracut, Mass., Captain; Thomas McGuinness, Portsmouth, N.H., First Officer; Barbara Arestegui, flight attendant; Jeffrey Collman, flight attendant; Sara Low, flight attendant; Karen Martin, flight attendant; Kathleen Nicosia, flight attendant; Betty Ong, flight attendant; Jean Roger, flight attendant; Dianne Snyder, flight attendant; Madeline Sweeney, flight attendant
United 175 (Boston to Los Angeles)
Crashed into World Trade Center
Victor J. Saracini, Lower Makefield Township, Pa., Captain; Michael Horrocks, First Officer; Amy Jarret, flight attendant; Al Marchand, flight attendant; Amy King, flight attendant; Kathryn Laborie, flight attendant; Michael Tarrou, flight attendant; Alicia Titus, flight attendant
American 77 (Washington/Dulles to Los Angeles)
Crashed into the Pentagon
Charles Burlingame, Captain; David Charlebois, First Officer; Michele Heidenberger, flight attendant; Jennifer Lewis, flight attendant; Kenneth Lewis, flight attendant; and Renee May, flight attendant
United 93 (Newark to San Francisco)
Crashed in Shanksville, Pennsylvania
Jason Dahl, Colorado, Captain; Leroy Homer, Marlton, N.J., First Officer; Sandy Bradshaw, flight attendant; CeeCee Lyles, flight attendant; Lorraine Bay, flight attendant; Wanda Green, flight attendant; Deborah Welsh, flight attendant
This year was the first year I had the courage to watch MSNBC's replay of the live NBC coverage from the morning of September 11, 2001.
I had thought about doing it last year, but nah, I just wasn't ready.
This year, for some reason, I was.
This morning MSNBC replayed the first two hours plus of the "Today Show" that aired that day.
I couldn't help but feel the irony when thinking about Matt Lauer and his coverage -- juxtaposed against that totally inane interview I saw him do Friday with the Hooters waitress.
But trust, me, that was a very small fleeting thought in the big scheme of things. Actually in listening to the coverage this morning again -- it seemed Matt was the one most concerned with the welfare of those in the buildings and the most affected when they went down. Katie Couric was trying her best to be the "stoic anchor." Then Tom Brokaw, then- Nightly News anchor arrived -- and clearly he felt it necessary to began pontificating on the "big picture" impact of the events.
But I digress.
Watching the footage this morning I kept thinking for some reason of American Airline's flight attendant Betty Ong. Ong was working American's flight 11, scheduled to fly Boston-LAX.
It was Ong's voice, recorded on AMR's SOC tapes, and played for the 9/11 Commission, that resonated in my mind this morning. It was Ong who identified the hijackers on that flight to operations by seat. It was Ong who stayed as long as she could on the line.
Then I thought of a former cohort and columnist at TheStreet.com, Bill Mehan. One of the nicest people you'd want to work with -- and always happy to answer a question when I had one. (As opposed to some diva columnists who would not have done the same). Bill worked for Cantor Fitzgerald -- located on the top floors of One World Trade Center.
And, hand in hand with Bill, I thought of my former editor at TSC at the time, Charlotte-Anne Lucas. CA is a great journalist --and was always a wonderful mentor to me. Even though Charlotte-Anne worked for TSC, she worked from her home office in San Antonio.
I've saved Charlotte-Anne's take from that morning, as was published in TSC:
At 8:26 a.m. I sent an Instant Message to our market columnist, Bill Meehan, asking if he'd be sending me his column at midday. His reply was a simple, "yup." A few minutes later, television started carrying live images of the inferno coming out of the top of one of the World Trade Center towers. Then another columnist for the site pinged me with a frantic question: Isn't that the building Meehan is in?"
I looked at the television again, then pulled up Meehan's Instant Message window to ping him and see if he was OK. But I was too late. The IM window said it all: Wmeehan100 signed off at 8:49:35 AM.
There I was in my office in San Antonio, Texas, watching television images of a tower burning half a country away. And yet the message on my computer screen made it personal. Horrifying. And close enough to touch."
As I have since those horrible events, I will pay tribute to the airline employees who lost their lives that day in this week's PlaneBusiness Banter.
Lots more memories -- but I'm sure you have them too. Frankly, unless something important occurs today, this is probably the only note I'll post today.
Take care everyone.
Jamie Baker, analyst with JP Morgan issued a note this morning in which he talked about the effect of two fare increases last week (Southwest and Delta) and revenue trends.
While Delta's $5 one-way domestic fare increase came late last week, Baker argues that the earlier increase in the week by Southwest was more meaningful in that there are higher traffic volumes associated with the lower end of the fare structure. (Where most of the Southwest fares are located.)
Jamie says we should count on "Southwest continuing to behave in a manner that helps, not hurts, industry pricing. With 60% of its fare increase occurring over holiday weekends, we’ll be watching for a sixth potential 2007 fare increase from Southwest this Thanksgiving."
In addition, we are coming to the close of the third quarter. Jamie reminded investors today that Continental will issue updated cost and non-passenger revenue guidance this week, followed by AMR & US Airways guidance towards the end of the month.
As Jamie points, out, "given the strength in August data thus far (with particularly healthy revenue trends reported by CAL, JBLU & LCC), 3Q consensus is likely to begin rising concurrent with issuance of updated guidance. 4Q consensus may rise as well given the current downward sloping fuel curve, implying (at least for now) that industry fuel expense may be slightly lower in Q4 than Q3 (which was not what airlines guided to in July, particularly in United’s case)."
Tickers: (NYSE:LCC), (NYSE:AMR), (NYSE:CAL), (Nasdaq:JBLU); (NYSE:LUV)
Technorati Tags: airline earnings, airline stocks, airlines, AMR, crude oil, Delta Air Lines, jetBlue, Jamie Baker, Southwest Airlines, United Airlines, US Airways
What a week in the industry. First we hear that Nepal Airlines sacrificed goats to the Sky God in order to get their planes flying. Now today, the saga of the Southwest Airlines' fashion police and the Hooters waitress, Kyla Ebbert is taking center stage.
Ya know, if this woman was so humiliated, then why did she wait two months to alert the press to her "pain and suffering?"
I mean, as her own mother told a columnist for the San Diego Union-Tribune, "My daughter is young, tall, blond and beautiful. She is both envied and complimented on her appearance. She dresses provocatively, as do 99 percent of 23-year-old girls who can. But they were out of line.”
So apparently a Southwest Airlines' flight attendant asked her to "cover herself up a bit more" before letting her sit back down in her seat on a flight from San Diego to Tucson.
And for this, the woman is now on the "Today Show" and has hired an attorney?
Pahleez. And how long before we hear about the contract with Playboy? A week?
One of you wrote me a note this morning after watching Ms. Ebbert on the show and said, "Holly, you've got to see the video of this. The woman is sitting there in a skirt so short you can see right up her dress. And here she is, going on about how she was treated so badly?"
I haven't seen the video yet -- but am about to go find it.
I do know Media Bistro noted in its blog today, "At one point in the sit-down interview Matt asks Kyla to stand up to show what she is wearing. It's the same outfit that nearly got her bumped from the flight. As she sat back down on the couch, her skirt rode up, revealing what was probably going to get her kicked off the flight in the first place. An astute TVNewser reader noticed when he watched the Today show in the central time zone, that editors had digitized Kyla's privates (in all honestly, it was just a glimpse of her panties.) What's more, the interview re-aired on the third hour of Today at 9:09ET. This time, the interview was fixed in editing, and her sit-down was covered completely with a cut-away shot of Matt."
Oh, and apparently her MySpace site is full of Ms. Ebbert in revealing photos. An emailer to Media Bistro reported that after other morning shows did their homework on Ms. Ebbert's background -- they chose to pass.
One thing I do know. I think the whole story actually sheds more light on how inane and superficial the "Today Show" has become, more than anything else. I was stunned when a commercial appeared last night during the football game on NBC promoting her appearance on the show this morning.
Ticker: (NYSE:LUV)
Technorati Tags: airlines, kyla Ebbert, Southwest Airlines
Look at this Beast. Not to mention the lovely Texaco refueling truck.
Love those colors on the prop tips.
Just one example of plane porn I uncovered as I was searching through some of my parents' slide carousels recently. Yes, remember them?
Granted, year-over-year the airlines did have easy revenue comps for August -- considering the Heathrow terror incident ripples the industry experienced last year.
But even with that give-me, as more and more airlines report their August traffic numbers, the news looks even better than anticipated.
This week both Mike Linenberg, analyst with Merrill Lynch, and Jamie Baker with JP Morgan, upped their third quarter estimates on Continental Airlines -- based on the airline's August traffic and RASM numbers.
Today, Lehman Brothers' Gary Chase said in a note:
"Traffic reports this week have pointed to August revenue performance that is better than expected. We believe the combination of slowed capacity growth, easier comparisons, as well as continued strength in underlying demand is driving the better than expected revenue results. CAL disclosed Tuesday that August consolidated RASM increased 6.5% to 7.5% while mainline RASM increased 8% to 9%, both well ahead of our expectations (5% to 5.5% consolidated, 6% to 6.5% mainline). LCC disclosed August RASM increased over 5%, in line with our expectations for the guidance (but hard to know just how strong given a wide range in how LCC discloses results, typically 5 percentage points on RASM). JBLU today disclosed August RASM increased 15%, also well above our expectations. DAL also added some color, commenting on strong August revenue performance. We expect that ATA RASM results, expected around September 20th, will also point to strong revenue performance in August."
He concludes:
"We expect September RASM will remain strong, but likely be lower than August comparisons as we move into a seasonally weak month. We continue to model a slowing in underlying revenue trends in 4Q, but remain positive on the group
given significant cash generation, minimal capacity growth for the foreseeable future and little capital expenditure, particularly for legacy carriers."
The most recent jobs numbers were issued today and the news was anything but good.
This turn of events apparently surprised a lot of people, but given the sharp increase in layoffs in both the housing and financial sectors, I'm scratching my head as to why anyone should have been surprised.
Short and sweet -- the number of Americans with jobs fell in August for the first time in four years.
The Labor Department report showed was a net loss of 4,000 jobs in the month, down from the 68,000 increase in July, which was also revised lower. Economists surveyed by Briefing.com had forecast an increase of 110,000.
I really don't know where those economists have been hiding out, but they certainly don't seem to be talking to the same people I talk to.
So yes, this is why the markets took a steep downhill climb this morning.
Of course if you are a die-hard Wall Street type, you will sit back with this latest news, prop your feet up on the desk and let out a big sigh -- as you assume that this news will probably force the Fed's hand to lower interest rates the next time they meet.
Yes, Wall Street is a very weird place.
Of more direct interest to the airline sector, while it does look like the country is continuing to slide more and more into a recession, the price of oil refuses to do what it would normally do in such a situation. Instead of declining, the price this week has continued to increase. As well as the price of jet fuel.
As of this posting, the DJIA is down 165 points, but more importantly, crude is up to 76.50/barrel.
Okay, don't gasp in shock and awe.
But I'll have a nifty plane porn photo for you later today.
Hey, I said here that winning in the dome in Indy was difficult.
(Actually I think I said "the damn dome.")
Anyway, yep, the only good thing about a game that is a lost cause is that it does offer one a chance to jump back online.
;-)
Late this afternoon US Airways announced a number of upper level management changes.
As we had talked about here earlier this week -- the airline did indeed name a new COO today.
Robert Isom, a former exec at both Northwest and America West was named to the newly created position of executive vice president and chief operating officer, effective immediately. In this position, Isom, 43, will head up the airline's operations, including flight operations, inflight services, maintenance and engineering, airport customer service, reservations, cargo and the Express operation.
The airline also named Daniel Pon to the position of vice president, human resources and Kerry Hester to the position of vice president, customer service planning.
The airline also announced that Anthony Mule, Senior Vice President, Customer Service is retiring. Mule has been in the industry for more than 35 years -- a good chunk of that with American Airlines, before he moved over to America West, and then US Airways.
Not sure how many of you know Anthony, but he's a real trip. Happy retirement Anthony. Enjoy yourself.
And yes, we're happy with Isom's hiring. We've heard good things about Isom's earlier tenure while at America West.
Ticker: (NYSE:LCC)
Subscribers can access this week's issue of PlaneBusiness Banter here.
I'll going to tell you straight up. If I'm not finished editing this week's issue before the Saints and Colts kick off -- it will be posted after the game is over!
But we should be up before that becomes an issue. ;-)
For those of you who don't have the perk of non-rev tickets, (and that includes me), I have to agree with Tim Winship at Smarter Travel. Southwest Airlines usually never offers a really "good" promo. As Tim writes today, "On the scale of promotional activity, Southwest usually scores somewhere between "Rare" and "Infrequent."
But they are offering one now -- and it's not a bad deal at all.
Southwest is offering Rapid Rewards members a free ticket for flying two paid long-distance round-trip flights between September 1 and November 15. (For purposes of this offer, 'long distance' is defined as flights of 1,250 or more miles each way, including stops and connections. There's a list of eligible routes on Southwest's website.)
Qualifying tickets must be purchased on Southwest.com. A maximum of two awards may be earned during the promotion period.
Normally, Rapid Rewards members earn a free round-trip after every eight paid round-trips.
Of course, those of us with financially-inclined minds have to wonder -- if the airline is doing this does this mean that bookings are looking a bit slow as they look out over the fall period?
I don't think there's any need to take any bets on that one.
Technorati Tags: airlines, airline fares, Southwest Airlines
From Bloomberg:
US Airways Group Inc., grappling with the U.S. airline industry's worst service and on-time rankings, may hire an operations chief 11 months after deciding not to fill the position.
"We've been telling employees all summer long that we understand a chief operations officer is something we ought to consider doing," said Andrea Rader, a spokeswoman for the Tempe, Arizona-based carrier. "It's beyond the we think it's a 'nice idea' stage."
Hiring a chief operating officer would mark a change of strategy. Late last year, President Scott Kirby took on oversight of flight, maintenance and safety operations after the resignation of operations chief Al Crellin, 59. The airline said then that Kirby would keep the duties "long term."
It's about time. Although I don't think, as this article implies, that Crellin's departure was the problem. I think it's clear that there was too much responsibility spread too thinly across too few people -- after the airline did not reappoint a COO, following Jeff McClelland's death in '06. This occurred before Crellin left the airline. (Although this decision probably hastened his departure.)
Ticker: (NYSE:LCC)
Technorati Tags: airlines, US Airways
As if enduring the frustrations of the last two years here in the swamp is not enough, apparently last week the Air Force decided to give everyone in Louisiana a little unintended thrill. But we didn't know about it until today.
The Army Times first broke the story, reporting that six nuclear warheads on air-launched cruise missiles were mistakenly carried on a flight from North Dakota to Louisiana last week, prompting a major investigation.
The plane flew the cruise missiles from Minot Air Force Base in North Dakota to Barksdale Air Force Base outside of Shreveport, LA., for decommissioning last Thursday, the Air Force has confirmed.
Needless to say, the warheads should have been removed from the missiles before they were loaded on the B-52 bomber, according to military officials.
Not to mention the fact that according to treaties the U.S. agreed to years ago -- flying nuclear weapons is prohibited. Instead, weapons that have to be broken down and decommissioned are transported by truck to the appropriate location. One of those locations being Amarillo, TX.
Nice going fly boys.
What I want to know is -- how does something like this happen? I mean, really. How do you "mistakenly" put armed nuclear weapons on a plane and send it off into the wild blue yonder?
We have a new addition to our blog that some of you have asked me about. Down there on the right column at the bottom.
He is a Blue Dog, festively attired in a New Orleans Saints Jersey.
The Blue Dog is a creation of the artist George Rodrigue, and this particular rendition of the Blue Dog is just one that Rodrigue created after you-know-what. (Starts with a "K," ends with an "A.")
Sales of this print, as well as several others he did after the storm, have been donated to various good causes in the New Orleans area.
This particular print was the one Rodrigue did to commemorate the Saints return to the New Orleans Superdome last September.
Since it is once again football season, and since the Saints and Colts open up the NFL season tomorrow night -- it was time we showed our colors.
(Then again, Peyton Manning is a New Orleans native, so what the hey?) Nah, we still want the Saints to win. Pretty hard to do in that damn dome up there in Indy though.
Technorati Tags: Indianapolis Colts, New Orleans Saints
I just had a reader send me this note:
"Ahwwww, now you're bashing a pilot's favorite newspaper and with your retired WN brother haven't you heard this one?
How do you get an airline pilot to come out of his hotel room?
You put a free newspaper at his door!
If you don't get a chuckle out of that your brother will.
So if UAL ALPA had run it in the Wall Street Journal then no pilot at UAL would have seen it unless they were foraging for newspapers in the seat backs after the passengers had deplaned. How many Motel 6s, Days Inn or other flop houses that we have been reduced to staying at do you find the WSJ for free?"
Exactly.
So why did the United pilots run the ad in the first place? So other non-United pilots would see it? That is certainly preaching to the choir, dontcha think?
And as far as United pilots are concerned, isn't that what internal ALPA communications are for?
Thanks for the note!
Technorati Tags: airline pilots, airline unions, USA Today, Wall Street Journal
MarketWatch reported today that according to a survey in August of 770 part-time and full-time workers in the U.S. -- 48% of those workers said they were not motivated to go back to work after Labor Day.
Guess the United Airlines' pilots would fall into that category. Check out the full page ad the pilots ran in USA Today.
My only comment would be -- why didn't they run it in the Wall Street Journal? Questionable media buy in my opinion.
Ticker: (UAUA:Nasdaq)
Technorati Tags: airline CEOs, airline pilots, United Airlines
One of the most circulated email news stories from today is the one concerning Nepal Airlines.
According to Reuters, It seems that officials at Nepal Airlines, Nepal's state-run airline, have sacrificed two goats to appease Akash Bhairab, the Hindu sky god, following technical problems with one of its Boeing 757 aircraft, the carrier confirmed Tuesday.
Nepal Airlines, which has two Boeing aircraft, has had to suspend some services in recent weeks due to the problem.
The goats were sacrificed in front of the troublesome aircraft on Sunday at Nepal's international airport in Kathmandu in accordance with Hindu traditions, an official said.
"The snag in the plane has now been fixed and the aircraft has resumed its flights," said Raju K.C., a senior airline official, without explaining what the problem had been.
More than one reader has suggested that perhaps a similar type of sacrifice of some airline execs might be more effective here in the U.S.
I can hear it now.
"Spokesperson Mamie Smith confirmed that shortly after the airline's CEO was offered up to the sky god of on-time arrivals, Erasmus B. Dragon, the airline's on-time record suddenly improved by more than 20%."
Technorati Tags: airline CEOs, Nepal Airlines
As we said when Airbus was in the throes of its angst in regard to the A-380 delays -- there was a good reason the guys at Boeing were not being too openly obnoxious about the ills of its competitor.
Today -- the main reason reared its ugly head. Fact: new aircraft rarely meet original timetables for anything.
After assuring investors on the most recent earnings call that yes, the 787 was still going to roll out on schedule -- despite was was becoming an ever-increasingly tight timeline -- last month the company revised that estimate, saying that the first flight of the new bird had now been pushed back until at least October.
Today, Scott Carson, CEO of Boeing Commercial Airplanes said that Boeing's new 787 jetliner will not begin flight testing until mid-November or mid-December, because it's taking longer than anticipated to get the first plane ready.
For what it's worth, Boeing also said that the 787 remains on track to deliver its first plane to ANA next May.
What's the rush? I'd rather see Boeing take its time and do the flight-testing of the aircraft right -- then with the now scheduled faster rate of flight testing the company now has on the books.
Major news sources are reporting that an air search is under way for air adventurer Steve Fossett, who was last seen Monday morning taking off from a private Nevada airstrip in a small, single-engine aircraft, according to the Federal Aviation Administration.
The 63-year-old, who in 2002 became the first person to complete a solo circumnavigation of the globe by hot air balloon, was reported missing Monday night by a friend, according to the FAA. Fossett had not filed a flight plan for his Monday morning departure.
Fossett departed in a single-engine Citabria Super Decathlon, Civil Air Patrol spokeswoman Maj. Cynthia S. Ryan told the Record-Courier newspaper of Nevada, ABC News reported.
Three crews are in the air looking for Fossett's blue and white aircraft above rural western Nevada, Ryan told the newspaper, and more are en route to help in the search. "We will be launching more shortly," Ryan told the newspaper.
Authorities have some idea where Fossett may have been heading, according to the FAA. The search was being coordinated by the Air Force's Rescue Coordination Center in Langley, Va.
Fossett has set a number of aviation records, including the hot air balloon trip in 2002, a 67-hour around-the-world trip without refueling on the Virgin Atlantic GlobalFlyer in 2005 and the world glider altitude record, which he set with a co-pilot more than 50,000 feet above the Andes Mountains. In July, Fossett's flight accomplishments earned him a place in the National Aviation Hall of Fame.
"I'm hoping you didn't give me this award because you think my career is complete, because I'm not done," Fossett said at the July induction ceremony in San Diego, Calif., adding that he would be in Argentina in November to try to break another glider record.
Fossett, who has also broken more than 20 speed sailing records, was reportedly in Nevada in August working on a jet racer to try to break the world land speed record.
Technorati Tags: FAA, steve fossett, Virgin Atlantic
Yes indeedy.
Welcome back my friends to the show that never ends.
It's the day after Labor Day, and that means it's time for us at the Worldwide Headquarters to get back to business.
It also means it's birthday time here at the Worldwide Headquarters. Yes, the one and only PlaneBusiness Banter was first published 10 years ago this month.
Thanks to all of you who are subscribers -- and for those of who are not -- what's wrong with you? Get with it.
After all, don't you really want to know if it's true Nicole Richie is carrying Glenn Tilton's love child?
Heh.
It's good to be back.
