PlaneBuzz

I downloaded the DOT application for Family Airlines yesterday and although it is a 355 page document, beyond the pro forma stuff required for the application and the numerous resumes, I don't see the case being made as to why the world (or at least Las Vegas) would be better off with Family Airlines. The concept isn't new, the strategy isn't real clear, and there doesn't seem to be a compelling reason to locate in Las Vegas except that some of the principals live there.

One of the confusing things about the application was that the facts listed on their website don't always jive with what is listed in the DOT application. In the first paragraph of the Company Information page they list the seating configuration of their 747-400 aircraft as 539 in Coach and 42 in their version of business class (called Office Class) in the upper deck. In the DOT application the configuration is listed as 482 in Coach and 42 in the upper deck business class. The web site also lists the pitch in Coach as 31-32 inches. Not being an expert in the 747-400 I will defer to those who are, but I'd be interested to learn if it is possible for a 31" pitch with 539 seats.

Another interesting feature is that Family Airlines forecasts that 50% of its revenue will come from things like selling food, entertainment, and internet access onboard. They will also take every opportunity to sell consumer ads on, in, and around their airplanes. The CEO Barry Michaels is quoted on the web site "I'm a believer that everything you see or touch should be paid for by advertisers."

Family Airlines says it will start with two airplanes flying JFK-LAX-MIA (reminiscent of another and defunct 747 operator - Tower Air) with fares ranging from $19 to $69. Apparently the inflight personnel will also be entertainers, at least according to their promotional information.

Where do I start.

First, the airplane. Four engines. Four HUNGRY engines. Second, the "hub". Remember National Airlines? They flew 2 engine B757's and they got killed on the short legs from LAS (LAS-PHX, LAS-LAX, etc.), and that was at $50/barrel oil. I have no idea of the operating efficiencies of a B747-400 but I would guess that on anything less than 1,000 miles it is pretty ugly.

Third - multiple profit centers. At $19 per passenger on the (proposed) LAS-LAX leg you better be selling dinner at $50 a plate and rowing a banner begind the airplane if you want to make a profit on that sector.

There is more, but it's like clubbing a baby seal. This is just a bad idea and nobody I have talked to thinks it is a good idea. I understand the excitement of building a new airline and trying to do something different. But this ain't it. There is nothing here that hasn't already failed before.

You need more than low fares to be successful in this business.

Posted by Godzilla at 7:53 PM | Permalink | Comments (2)

JetBlue has been tossing around the idea of a deal with Aer Lingus since before then-CEO David Neeleman left his post.

Today, reports say the airline will finally announce a deal with Aer Lingus Friday morning in Dublin.

The WSJ reports online today that the deal will be a strategic partnership that will allow passengers to make reservations on flights between Ireland and more than 40 U.S. destinations, with connections at JetBlue's hub at New York's John F. Kennedy International Airport.

Ticker: (Nasdaq:JBLU)

Posted by Holly at 3:25 PM | Permalink | Comments (0)

"Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So you gotta let me know
Should I stay or should I go?

It's always tease, tease, tease
You're happy when I'm on my knees
One day is fine, the next is black
So if you want me off your back
Well come on and let me know
Should I Stay or should I go

Should I stay or should I go now
Should I stay or should I go now
If I go there will be trouble
And if I stay it will be double
So you gotta let me know
Should I commit or should I blow"

Because as one of our readers noted, "By waiting until the last day it gives
the company less time to react to you not showing up to work the DFW-NRT
trip tomorrow."

According to one of our American pilot sources, "Friday at noon the Old Geezer Bodycount was 128 system wide retiring by the end of the month with 55 of those being DFW based.  I don't have the break out of what equipment but most would be concentrated on the 777 & 767 with a few sprinkled in with the 737 & DC-9.  The union gets a copy by the middle of the next month so we'll know more then."

Why the rush to retire?

Pilots close to retirement age at American are able to lock in the value of a portion of their retirement benefits for a 90-day period. Dozens of American pilots took that option Oct. 31.

Should I stay or should I go?

Complicating all this, of course, is the fact that pilots do not now HAVE to retire at age 60.

APA officials this week estimated the airline may see as many as 150 pilots opt for retirement by the end of the day.

Then, be prepared for a whole new round of finger-pointing concerning potential flight cancellations, how many, and how big a deal this is from both the airline and the APA.

Posted by Holly at 9:59 AM | Permalink | Comments (0)

Midwest Airlines said Wednesday that Justice Department regulators had closed their investigation of the Northwest/TPG acquisition of Midwest. The deal is expected to close today.

Midwest said trading of its shares on AMEX is expected to conclude today as well. Shareholders of record will be notified of the process to surrender their stock for $17 a share in cash.

Winners in this transaction? Institutional shareholders of MEH who got in when the stock was less than a couple of bucks. Not to mention Tim Hoeksema and his management team, who kept their jobs, and who will no doubt walk away from what remains of MEH at some point with nice financial packages.

Oh, and AirTran.

Yes, AirTran is a winner here. No matter what Joe Leonard might think. Or say. The airline is much better off having not gone through with a deal here.

Losers? Employees of Skyways, Midwest's regional airline, and, as time goes by, employees of Midwest, because I think we all know why this deal was done. It was done as a defensive play by Northwest to keep AirTran out of its backyard. What happens from this point with Midwest is not really all that important - except in relation to how it benefits Northwest.

Ticker: (AMEX:MEH), (NYSE:NWA),(Nasdaq:AAI)

Posted by Holly at 5:57 AM | Permalink | Comments (0)

Actually it isn't my first blog, but I don't think it is official blogging if nobody reads what you write, which I am pretty sure is what happened to my first effort at this some time ago. It's kind of like that tree falling in the forest with nobody around to hear it; if nobody reads your blog, did you really blog at all?

Blog. The word itself is pretty interesting; it can be both a noun and verb, and perhaps even an adjective (e.g. 'That guy is a real bloghole'). Perhaps it's just me (it usually is), but it sounds like something your dog might do in the back of your car on the way to the vet. "Nikko blogged all over the back seat and I had to clean it up." Apparently anyone who can type can be a blogger. Kinda like karaoke; give a drunk a microphone, some background music, an audience, and viola (a stringed instrument similar to the violin) - a singer is born.

However, as those who watch American Idol can confirm, there are good singers and bad singers. And as those who read blogs can confirm, there are good bloggers and bad bloggers. Holly has done quite a job of building a great reputation and providing good content. Being a novice at this I will endeavor to be a good blogger by sticking to two simple rules:

1) Only talk about stuff I know something about.

2) Provide the reader with a good ROI for the time spent reading the blog.

I will also eventually figure out how to use this blogging software as time goes on and be able to put in pictures and links and stuff. For now I am just trying to make sure the paragraphs line up and I can get spell check to run.

I encourage comments and emails from people who agree with my opinions, and you can send them to Godzillaspeaks@gmail.com. Just kidding. People who disagree can also send email, I just won't read them.

I'll come back at this soon when I have something perhaps more substantive to offer; perhaps after I have a chance to dig into the JetBlue decision to make like a legacy carrier and [gasp] begin offering refundable fares.

Posted by Godzilla at 6:43 PM | Permalink | Comments (0)

If you can't say anything else about this industry, it's this: We certainly see some strange bedfellows show up every now and then.

Today we have news of just such an example.

JetBlue has agreed to license its LiveTV product to Continental Airlines. This system will include 36 channels of DIRECTV. Oh, and yes, this deal will also include onboard email and instant messaging.  All "new generation" aircraft will be equipped, i.e., no 737-500s or 737-300s.

On the one hand, this is great news for JetBlue, as the deal will bring the airline a nice chunk of change. It could also mean that other airlines may now be more inclined to fork over their dineros to JetBlue,  one of their competitors.

On the other hand, until now, you could argue that JetBlue was the largest domestic airline that held a competitive advantage in terms of inflight IFE.

With Continental now putting the same product on the majority of their aircraft -- that will no longer be the case.

My only beef with this deal is that the email capabilities are, at this point, just as limited as they are for the email service that JetBlue has been experimenting with. The JetBlue system will only allow users to access email utilizing Yahoo accounts, and Crackberrys.

And, as I understand it, there is no web-surfing ability.

This is different from systems currently offered from Row 44 and AirCell.

This is a limitation that I feel will need to be resolved at some point. Hopefully by the time CAL begins to unroll it (next January), this will no longer be the case. Then again, maybe the promise of those Continental dollars is just the investment "kick in the pants" the folks at LiveTV needed to get them across that next development hurdle.

Tickers: (NYSE:CAL); (Nasdaq:JBLU)

Technorati Tags: Continental Airlines, jetBlue

Posted by Holly at 1:08 PM | Permalink | Comments (0)

Another week, another week of airline earnings reports.

Today we had three airlines spill the beans from last quarter. Three airlines. Three losses. But losses or no, all three either posted better than expected numbers or hit the bullseye, in terms of what analysts were expecting. 

Short and sweet? AirTran Holdings lost $2.2 million, or $0.02 in the fourth quarter. The year prior, it lost $3.6 million, or $0.04. This result was dead-on with the airline's forecasted results.

JetBlue also posted a loss for the quarter. The airline posted a Q4 loss of  $4 million or $0.02, which was, according to the latest analyst consensus numbers, a better than expected result. Analysts had forecast the airline would post a loss of $0.05.

The airline also managed to post it first profitable full year of operation in three years. For the full year, JetBlue earned $18 million, or 10 cents a share, versus a loss of $1 million, break-even on a per-share basis, in 2006.

Finally, Northwest Airlines reported a loss of $8 million, or $0.03 cents per share, for the quarter. This was a touch better than the analysts' consensus -- which had forecast a loss of $0.08.

That's also better than the $267 million loss, or $3.06, the airline posted in the fourth quarter of 2006. Then again, that was one of those bankruptcy "kitchen-sink" quarters.

Fourth-quarter numbers also  included a $14 million pre-tax charge tied to the sale of Northwest's stake in regional carrier Pinnacle Airlines. Excluding that charge, Northwest said, it would have broken even for the fourth quarter.

Posted by Holly at 11:29 AM | Permalink | Comments (0)

One of our readers just sent me a note and said, "Holly I noticed the picture of Godzilla on Planebuzzz - - - that looks like the original "Gojira" monster.....Here is the last iteration of Godzilla from "Godzilla - The Final Wars."

Hah! Okay, well, we'll let Godzilla himself decide which one he prefers when he decides to make his presence known. Oh, and if anyone else has another suggestion, feel free to pass it along.

Posted by Holly at 10:55 AM | Permalink | Comments (0)

I think we've found the right photo for Frank. I'm also going to set Frank up with a separate category. The category will be entitled, appropriately  "Godzilla Speaks."

Makes sense, eh?

Posted by Holly at 10:14 AM | Permalink | Comments (0)

My intent when I started this blog was not to be the lone voice in the concourse.

But one person went off and started his own blog, another one got a nice new job and a big promotion, and well, then there was the other person -- but he's now back working for an airline again.

Needless to say, if I am going to have someone in here providing some additional commentary, chances are they are NOT going to be currently gainfully employed in the airline industry.  Unless they post anonymously -- and I would not be in favor of that.

These limitations, my friends, tend to limit the talent pool.

But hark. This week we welcome a new contributor to PlaneBuzz who, not coincidentally, recently left his position as Executive Vice President of Amadeus Revenue Integrity Inc.  Frank Arciuolo had been EVP of the company since 1995, when the company was known as  Airline Automation Inc. Amadeus purchased the company in 2003.

But hey, if you think this makes Frank a "suit," think again. In fact, before he left Amadeus, I believe his usual working outfit was a sleeveless T-shirt, flip-flops, and shorts.

Then again, his office was in Tucson.

Frank first began working in the airline bidness in 1974 -- and he held various positions with Allegheny Airlines, Eastern Air Lines and New Air. His big Hollywood break came while he was a Station Manager for NewAir, a local regional airline. Frank apparently didn't have anything better to do, so he sat down and wrote out an aircraft schedule for the company pointing out what he thought were better ways to utilize the fleet. Shortly thereafter he was made Director of Marketing, with responsibilities for aircraft scheduling, pricing, reservations, and passenger service.

A star was born.

Frank became Vice President of Marketing for Business Express in 1984. There he was responsible for scheduling, planning, pricing, revenue management, electronic distribution, and coordination of the Delta Connection program with Delta Air Lines. Business Express began an explosive growth period that saw the airline grow from a fleet of 26 aircraft to a fleet of 70 aircraft, including 5 regional jets. Promoted to Senior Vice President - Marketing and Planning in 1991, the responsibilities of Sales, Advertising, Crew Planning, and Inflight Service were added to his department.

Business Express underwent a sweeping management change in 1994 (translation – Frank got canned by the new CEO).  In his 20 year airline career Frank went through 2 merger/acquisitions, bought stock in his airline that was then worthless a year after he bought it, experienced pay cuts too numerous to list, and finally, got canned by a new boss.

After doing a variety of consulting gigs for 18 months, Frank went to work for AAI and began running their BIDT audit service. These audits served to partially recover an airline's fees and provide airlines with recommendations on how best to control the cost of booking fees. This service then evolved into an automated flight firming process that AAI provided on a service bureau basis from its computer center in Tucson.

The rest, as they say is history, and trust me, if you knew what this company's profit margins were, you'd understand why it was the best career move of his life. When Frank left the company, it's clients included many of the largest airlines not only in the U.S., but the world.

Finally - Frank is also a pilot. His pilot ratings include CFI/A/I/ ME and Airline Transport Pilot. He also just went and blew big bucks to get his Citation CE500 type rating and currently is a part-time flight instructor in the Tucson area.

But aside from all that -- Frank is one of the few people I know, who knows this industry, who just tells you what he thinks. All the time. Whether you want to hear it or not.

So who better to come in and be the PlaneBuzz wingman?

Look for Frank to come in and add his two cents (or two bucks) worth whenever he's got a bee up his, er, whatever. And I warn you in advance, I think you are going to hear a lot about his dog Nikko. I just have this gut feeling this is going to be the case.

Frank should drop in later today. We're still looking for a photograph or a graphic that illustrates Frank -- that we can use every time he posts. But it's not been easy.

I'm still looking.

But God knows I don't want some of you to get confused and think that's me talking when he's in here.

Posted by Holly at 10:09 AM | Permalink | Comments (0)

Are you a retired United Airlines' pilot?

If so, a retired pilot group in Chicago is attempting to estimate precisely just how many United pilots who lost their defined-benefit pension plan and ESOP shares are alive and kicking.  (Probably screaming as well, but that is another issue.)

We were asked if we could help this effort by publicizing their call for information.

To add your name to the official headcount, or if you have any questions about this effort, please contact Dave Wickersham at MacWicker "at" aol.com.

(Address listed that way to prevent Dave from being overwhelmed with unwanted spam.)

Posted by Holly at 5:23 PM | Permalink | Comments (0)

This week's issue of PlaneBusiness Banter is now posted.

Subscribers can access this week's copy here.

Posted by Holly at 11:16 AM | Permalink | Comments (0)

Stop the incoming! Stop! Stop!

No question. This week is the heaviest week we will see this quarter in terms of major and not-so-major airline earnings reports.

And on top of all the biggies who had already reported this week, then Frontier had to go and add its numbers to the mix last night. Thanks guys.

Looking at where we are in the writing and editing process -- I am forecasting either a very late posting tonight for this week's issue or it may be Saturday. Big, big, issue this week.

But that is one of the beauties of Internet publishing. We can either give you something at the same time every week -- or we can give you the full story we think is important when we get finished writing and editing it.

As I once told a subscriber who wrote to me and complained that we did not post at the same time every week, "We are not a print publication. We are an Internet-based publication. That is an advantage. I think our subscribers would rather have the full enchilada then just a piece of one -- which is then pushed out the door in an attempt to meet some arbitrary deadline."

That's so dead tree media.

I was glad to read the editor of Texas Monthly more or less talk about the same thing recently, as he explained why it was that the publication is now using its website to release singular stories on a totally "as warranted" basis -- instead of waiting for the normal print publishing deadline for its dead tree flagship publication.

Then again, I guess I could clone myself. That would solve the problem and increase my productivity by 100%.

Heh. This is starting to sound like one of those goofy Southwest Airlines commercials.

One bullet point before I leave -- as of this posting, crude futures are back up over $91 and change.

Have a good Friday everybody. I'm off to dig through spreadsheets, earnings call transcripts and analyst reports.

Posted by Holly at 11:50 AM | Permalink | Comments (2)

It's been a long week for earnings.

And it's not over yet.

Tomorrow Frontier Airlines will give more color to the information behind its press release that was issued late today.

You can access the press release, including all the gory details here.

Bottomline? These are very ugly numbers folks. No other way to put it.

For the quarter ending Dec. 31, Frontier Airlines Holdings, parent of Frontier Airlines, reported a consolidated net loss of $32.5 million, or $0.89 per diluted share, This compares quite unfavorably to last year when the airline posted a net loss of $14.4 million, or $0.39 per diluted share, for the same period.

CEO Sean Menke said in the release, "The two primary drivers for our loss were the 16.3 percent year-over-year increase in fuel cost per gallon and losses from our regional fleet operation. To some extent these losses were generated by sub-optimal scheduling in our Mexico flights, both those originating in Denver as well as from other cities in our network, and schedule adjustments required to cover the delayed start-up of our Lynx service."

Should be a rather somber earnings call tomorrow.

Posted by Holly at 8:25 PM | Permalink | Comments (0)

Nice while it lasted.

I guess.

Today it looks like the price of crude will end the day up about 2.4%, closing at $89.42. Or thereabouts.

Posted by Holly at 2:06 PM | Permalink | Comments (0)

Our PlaneBusiness Brown Bag Analyst sent me a note last week after Fitch Ratings published their credit update on the airline sector, and he asked me, "How long do you think it will be before one of the airlines has its credit rating downgraded?"

I should have made a contest out of it for all of you.

Then again, it didn't take long.

Today Fitch Ratings downgraded the debt of Southwest Airlines. The downgrade affects the issuer default, senior unsecured debt, and bank credit facility ratings of Southwest, and applies to about $1.6 billion in debt. Fitch said its rating outlook for Southwest is negative. The issuer default, senior unsecured debt and bank credit facility ratings were cut to 'A-' from 'A'.

We noted in last week's PlaneBusiness Banter that Southwest had announced a new $500 million stock buy back -- and as longtime readers of me are aware -- generally I am not a big fan of buy backs.

In this case, given the industry metrics we are looking at, I thought the announcement by Southwest was ill-timed. It  appeared to me that  the airline was making a play to increase market support for its stock price, at a time when it might be a better idea to keep its cash in the bank.

Today the airline paid the price for the move, made as it was against an increasingly problematic industry financial background. Fitch noted the buyback in its reasoning for the downgrade, adding that the downgrade reflects its expectation that a fragile airline industry over the next few quarters will weaken Southwest's credit profile.

Ticker: Southwest Airlines, (NYSE:LUV)

Technorati Tags: airline stocks, airlines, debt ratings, Southwest Airlines

Posted by Holly at 11:19 AM | Permalink | Comments (0)

Hi guys. Just testing our new Movable Type software update. You can go back to your regularly scheduled programming now.

Posted by Holly at 6:42 PM | Permalink | Comments (0)

One of the most glaring good news/bad news situations we have on Wall Street in regards to the airline industry is, of course, the issue of oil prices.

The generally accepted economic theory is that when the economy tanks, oil prices should drop because it is expected that lower economic activity means lower demand for energy products.

Unfortunately, while many kept thinking this scenario would happen in 2007 -- given the growing banking, real estate, and mortgage mess -- it didn't.

But now, at least for the time being -- it does appear that the markets may finally be thinking, "Okay, this is really going to be a global slowdown --and if it is a global slowdown, oil prices need to come down."

That's the good news. Of course the bad news is we would not be having this conversation if the economy was rockin' and rollin'.

Then again, with oil prices where they are now -- one has to wonder if the rules regarding this economic  situation have not been somewhat modified over the last few years. In other words, oil is still, even after a week or so of continued declines, trading at $86 a barrel.

But I digress.

The long and the short is that oil prices continued to drop today. And hey, we'll take it. At the close of trading, crude oil was at 86.99, down more than 2% on the day.

Posted by Holly at 4:28 PM | Permalink | Comments (0)

This week we've now had three major airlines report earnings for the fourth quarter -- United, Delta and Southwest. They join American and Continental, who reported earnings results last week.

Tomorrow we have two more major airlines spilling their fourth quarter and year-end beans -- US Airways and Alaska Airlines.

Just one comment on the United earnings call from yesterday. 

United CEO Glenn Tilton disappointed us this quarter.

Readers of PBB are aware that every quarter Glenn usually puts forth some heavy-duty corporate jargon in these calls. This quarter, however, I must say I did not find any overt abuse of such words as "disaggregation." Glenn pretty much behaved himself in that regard.

United Airlines Earnings Call Transcript
Bloomberg Summary of United Results

Meanwhile, the headline of the day award has to go to this story. It's an Associated Press story by Harry Weber. I read it on the Rocky Mountain News website.

Headline: Egos Slow Airline Merger Talks.

I'm shocked, I tell you. Yes, simply shocked.

Actually I'm more swamped than shocked.

Talk to you guys later. I have earnings calls to listen to.

Posted by Holly at 10:48 AM | Permalink | Comments (0)

Flight International is reporting today that Airbus is now looking at a potential 2017-2020 timetable before the airline will have a new single-aisle aircraft ready to roll.

This push back confirms what was being bandied around last year at the ISTAT conference. The problem is fuel consumption. Before Airbus and Boeing can guarantee that a new aircraft is 15-20% more fuel efficient -- they are not going to put out a new airplane. And if  they can't post at least that level of efficiency improvement, airlines are not going to want any of the new airplanes.

So -- it all goes back to the engines.

According to the article,

"Airbus's chief operating officer customers, John Leahy, says the development of new engine technology is dictating the pace of new narrowbodies from Airbus and Boeing. "The engine-makers say the technology won't be around until 2015, so we're looking at 2017-20 for the next-generation single-aisle," he says.

This is later than Airbus previously indicated, having until now maintained that it expected the next-generation aircraft to be available from the middle of the next decade - a schedule with which its rival Boeing concurred last year."

Trust me. Boeing doesn't have a hot shot rocket engine parked on the back forty that burns 20% less fuel either.

Clearly one of the U.S. airlines most affected by this delay is American Airlines -- which now finds itself in the unenviable position of sitting on an increasingly expensive fleet of older MD-80s it would like to get rid of sooner than later. But with no new single-aisle aircraft now on the horizon for possibly another 10 years from either Airbus or Boeing -- this is going to leave American in the position of having to beef up its fleet with existing generation aircraft.

Bad timing.

Posted by Holly at 8:46 PM | Permalink | Comments (0)

As most of you know, today was a national holiday, the observance of Martin Luther King's birthday. As a result, I have no bad news or good news to report concerning U.S. airline stocks because the equity markets were closed.

Having said that I would advise that you batten down the hatches tonight.

Why?

Because in the rest of the world stock markets fell sharply today. In fact, some declines were as steep as those we saw post - September 11.

Meanwhile, U.S. stock index futures reflected these heavy declines in the overseas markets, as they ended the day down more than 4% -- a harbinger of a highly probable sharply lower opening for stocks on Tuesday.

Yep, looks like there might be another reason, besides the bone-chilling cold, to get out your own Ratty Old Bear Suit out of the closet this week.

Posted by Holly at 5:49 PM | Permalink | Comments (0)

You have to hand it to the Brits. Especially their sense of humor. I've always had a soft spot myself for that British wit. I always enjoy a good go-round with my British friends -- their view of the world is just so civilized, yet so irresistibly cheeky.

Speaking of cheeky -- while kudos continue to roll in for the excellent job the British Airways' flight crew did in bringing their mysteriously disabled 777 flight  to what proved to be a very successful completion -- the British tabloid press has given us the real scoop --  on Captain Peter Burkill's rowdy early days. Before the crash, and before he worked for British Airways.

Thanks to one of our American Airlines' pilot friends, who sent us the latest from the U.K's News of the World, which today proudly posted photographs of then British Caledonian Airways pilot Peter Burkill, enjoying what someone who was at the festivities called a "total sex-fest."

The subheadline? "Hero pilot likes crew girls licking chocolate off his naked body."

Yeah baby. Now we're talking.

I especially like the pic of him on his stomach with licorice sticking out of his bum.

For some reason all of this British sex tittering reminds me of the fact that Henry Harteveldt (he of Forrester Research) alerted us this weekend that a revival of the 1960s British sex farce  "Boeing-Boeing," which has been a hit on London's West End, is coming to Broadway this spring.

As Playbill describes it, "The romp (whose punny title refers to the aircraft manufacturer Boeing and evokes the bouncy onomatopoeic word "boing") evokes the good old/bad old days when "air hostesses" and "stewardesses" were playthings rather than "flight attendants."

Have to admit, there's a sweet retro quality to all of this that seems to be sadly lacking in these days of high load factors, high fuel prices, and management/employee pay fights.

Posted by Holly at 1:01 PM | Permalink | Comments (2)

Subscribers can now access this week's issue of PlaneBusiness Banter.

Posted by Holly at 1:22 PM | Permalink | Comments (0)

As I've been writing on and off all day, I'm sure I've been no different than many of you other geeks out there who have been mulling over the details concerning the sliding  bellyflop landing of a British Airways 777 at Heathrow today.

The mishap is perplexing for a number of reasons.

I mean, what happened? The pilot has been quoted as saying he "lost all power" and basically glided the big jet to the ground.

But passengers who were on the plane don't seem to have thought the plane had lost power. (Although that is not a reliable indicator.)

Wind shear? The weather did not look to be particularly prone to creating wind shear. Looked pretty calm.

Did the plane run out of fuel?

Did both engines really just shut down?

Bird strike?

Dunno. This one is one of those that makes you shake your head and wonder.

Thankfully no one was apparently seriously hurt. That is the best news.

But the more interesting question for those of us who love anything that has a wing attached to it is the question .....what happened?

This one will be interesting to follow.

Posted by Holly at 10:02 PM | Permalink | Comments (0)

Yee haw. How I love the smell of airline earnings every quarter.

Or something like that.

PlaneBusiness Banter subscribers -- we'll be posting this week's issue in the morning. I'm just finishing up our in-depth look at Continental's results the airline announced today. Then all we need to do is our final edits. But we'll wait to do that with fresh eyes. Mine are a bit crossed right now.

Something I noticed that was a bit unusual in the CAL call today. Usually the folks at Continental are obsessively conservative when it comes to talking about trends. The airline is not noted for its overly optimistic spoutings.

But today, against the backdrop of the tone we heard in American's call yesterday -- the folks at Continental were almost, well, borderline giddy talking about how they saw demand -- going forward.

Okay, so maybe they weren't giddy, but there was sure more optimism coming over the lines today from the folks at CAL than I had anticipated.

Again, PBB subscribers -- we'll post tomorrow in the AM.

Ticker: American, Continental (NYSE:AMR), (NYSE:CAL)

Posted by Holly at 9:48 PM | Permalink | Comments (0)

The Continental Airlines' earnings call just began. It didn't take long for a little "intra-Texas" two-step kick from CEO Larry Kellner, who was all too happy to thank his "co-workers" right off the bat -- as he announced the airline will distribute $158 million in profit sharing checks to employees......on Valentine's Day.

Posted by Holly at 9:18 AM | Permalink | Comments (0)

Just in case anyone has been sidetracked this week with delusions of merger madness, Fitch's latest comments on the airline industry should serve to bring all you poor souls back to earth.

Here is a short take on their latest full report on the airline industry. The complete report, Airline Credit Navigator,  can be accessed here.

The largest U.S. airlines enter 2008 with a more uncertain operating environment
threatening to undermine further credit quality recovery, according to Fitch Ratings.

Developments in the fourth quarter of 2007 - notably, spiking
jet fuel prices and growing concerns about U.S. macroeconomic
risk highlighted the industry's extreme vulnerability to
rapidly changing operating conditions and external shocks. As a
result, Fitch views 2008 as a year of increasing financial
uncertainty for the industry, with all U.S. carriers focusing
more attention on disciplined capacity management, strict
non-fuel cost control and liquidity conservation.

'Changes in cash flow profiles will be important to monitor
over the coming months in light of the deteriorating operating
outlook for the industry,' said William Warlick, Senior
Director, Fitch Ratings.

The timing and direction of moves towards industry
consolidation will probably remain the issue of greatest
interest to creditors during 2008. Some merger-related
synergies are clearly achievable in most legacy carrier
combinations, particularly on the revenue side with post-merger
capacity rationalization supporting long-term passenger yield
growth. Still, execution risk related to industry merger and
acquisition activity remains high in light of organized labor's
desire to capture a greater share of the financial upside in
any prospective merger transaction.

The openness of debt capital markets moving into 2008 will be a
critical factor in determining whether legacy carrier deals can
be financed efficiently without layering on substantially higher
debt service obligations after the mergers are closed.

The 'Airline Credit Navigator' is a periodic report by Fitch
Ratings designed to provide investors with a summary of key
airline industry credit and operating trends, recent industry
financial developments, liquidity, cash flow, fleet plans and
financing activity. The report focuses on eight of the largest
U.S. airlines, seven of which are currently rated by Fitch. Key
credit and operating trends for each of the eight airlines are
provided in the report.

Posted by Holly at 9:38 PM | Permalink | Comments (0)

American Airlines kicked off the fourth quarter/year end earnings season today, reporting a $69 million loss.

The airline's  $0.28  loss compared with year-earlier net income of $17 million, or $0.07 cents.

No real surprise here.

Excluding special gains and losses, the airline posted a loss of $0.74 a share, which compared favorably to a forecasted loss of $0.76 a share, according to estimates of 11 analysts polled by Bloomberg.

The boogie man here was fuel. Fuel exceeded labor costs as American's biggest expense last quarter, and will push costs higher this quarter and in 2008, the airline said in its earnings release. CASM for the mainline airline was up 10% for the quarter, while RASM increased 5.5%.

Other tidbits from the airline's results included the fact that the company's pensions are now funded at 96%, and the airline has now reduced its total debt down to $15 billion, with the level of net debt now at $11 billion.

In an internal communication to employees this morning, CEO Gerard Arpey announced:

"While our 2007 earnings were not enough to trigger profit sharing, I'm very pleased to share with you that in recognition of the collective effort of the people of American Airlines, and the special circumstances that we battled in 2007, the AMR Board of Directors has approved a one-time payment under the Customer Service Component of the Annual Incentive Plan (AIP) of $800 for every eligible employee. Checks will begin arriving in the workplace today, and continue over the next few days. Please pick up your check from your supervisor along with our thanks and appreciation for a job well done."

Nice gesture, but it would have been better had it come a year earlier. Given the timing now, and all that has transpired in the interim -- the gesture loses a lot of the positive impact it could have had -- had the company given employees some type of special recognition bonus proactively, ahead of last year's management level bonus payments.

Tomorrow? Continental Airlines reports in.

We'll talk about both airlines  and their earnings calls in-depth in this week's PBB.

Ticker: NYSE:AMR

Posted by Holly at 4:31 PM | Permalink | Comments (2)

Hello everyone.

Warning. I'm on pain pills for a tooth I just had to have repaired, so if I say anything strange, that's my excuse.

The things with wings are having themselves a nice busy week this week with Delta now actively progressing on their quest to find the perfect mate -- and it looks like the process is more and more resembling a 60 second round-robin dating party. Okay, nice to meet you too, now on to the next potential partner. Okay, thank you, now let's make a decision.

I'm going to talk more about this in this week's PBB, but I think the thing we all have to remember in looking at all of this craziness is this -- what do you think the main motivating factor is in all of this activity?

Oh, there is the improved route structure theory, economies of mass theories, the normal "bigger is better" theory, the "if we don't do this now, the new regime in Washington might not let us do it later" theory, and so on and so on.

My take on this is pretty simple. It's really not that complicated.

It all comes down to making sure an airline has enough capital in its cupboard -- for when times get even tighter.

Or to put it another way, about the only way an airline can effectively raise capital these days is by merging. The deal involving US Airways and America West is the most recent living, breathing example of this.

With airline stock values plummeting and the recessions signs continuing to sprout on every street corner -- those who are strategic thinkers are thinking, "We need to get the money in our corner now -- while we can".

And the easiest way to do that is to merge with another airline.

It has nothing to do with which deal "works" the best. It has nothing to do with which airline has the best "fit" with another in terms of fleet mix.

What it has to do with is this -- which deal is going to give Delta Air Lines the best infusion of capital going forward.

While I have said all along I think the airline has had its sights on Northwest for more than a year -- the economic facts also suggest to me  that if the money behind a potential United deal is better -- that could swing the vote in the favor of the guys in Chicago.

Wall Street Journal 787 Delay Story: Another Story Without Proper Attribution

Today the Wall Street Journal is going with a story that opens thusly:

Jan. 15, 2008

Boeing, already six months behind schedule on its new 787 Dreamliner jet program, is close to announcing additional delays that could hurt its ability to deliver as many airplanes as promised during the initial year of production. The jet maker has faced difficulties in getting the first plane ready to fly, and now the 787 may not make its first flight until June, according to people familiar with the situation.

"People familiar with the situation?"

I'll tell you why this bothers me. And it bothers me big time. It seems to me that the WSJ is, more and more, taking stories that are broken by bloggers or internet publishers, and then not giving them proper attribution. I've noted this problem  in the past with stories from PlaneBusiness Banter, and here's another example.

Last week Flightblogger, who does a bang-up job in following all things Boeing, was the first to post a note about the latest delays. I noted his comments in last week's PlaneBusiness Banter, USA Today's Ben Mutzabaugh gave him props in that paper's Today in the Sky blog, the Seattle Post-Intelligencer noted his comments, and other news outlets also cited his post.

But no, not the Wall Street Journal.

I think it's way past time for the WSJ to establish an editorial policy which gives credit where credit is due. No matter who breaks the story and in what medium.

Because the problem here of course is this -- if the WSJ believes a story, or material to be factual to the point of publishing it -- then they need to give proper attribution as to where they got it.

Period.

Otherwise, some people could think they are trying to make it appear as though their reporters are actually doing something, rather than merely repackaging the work of other writers, bloggers, and journalists -- before posting it on the WSJ site, or printing it in the printed version.

Frankly, I thought we were past all this nonsense. Even the New York Times now openly cites bloggers, websites, and other "non-traditional" media sources in their stories.

Ticker: Boeing, (NYSE:BA)

Posted by Holly at 8:10 PM | Permalink | Comments (0)

I have no idea what these weird posting times are all about. I  don't think it has anything to do with my repaired tooth. Or the pain pills.

And yes, I hate Ecto all over again. Previous post is now cleaned up and I'm off the Movable Type basement to see what the heck is going on with the time stamps.

Posted by Holly at 4:37 PM | Permalink | Comments (0)

You can certainly tell what time zone I'm in this week.

The latest issue of PlaneBusiness Banter is now posted. Subscribers can access their copy here.

Posted by Holly at 2:10 AM | Permalink | Comments (0)

Last week in PlaneBusiness Banter I told subscribers that based on our read of the "chatter" coming to us from various sources, it looked as though we could hear in the next week or so news concerning a potential Delta-Northwest deal. Or at the very least it was pretty clear that the airline would be talking about this at its upcoming board meeting.

Today the Wall Street Journal has just gone with a story that says yes, the Delta board will be discussing a potential deal -- but according to their story Delta will be looking at both a potential deal with Northwest and with United.

My take on the news?

I still think that Delta's CEO Richard Anderson would prefer to do a deal with Northwest, if it can be structured accordingly.

However, he's also one of the smartest CEOs we have in the industry right now, and as a result, he knows that he needs to look at all current options -- and these are the two main options right now.

I still think there is more push coming from the United side on a potential deal here, than vice versa.

But again, Anderson and the board are doing what they should be doing -- evaluating the possibilities.

This WSJ news really shouldn't come as a shock to anyone. If not, they've not been paying attention.

Ticker: (NYSE:DAL); (Nasdaq:UAUA); (NYSE: NWA).

Posted by Holly at 2:27 PM | Permalink | Comments (0)

It's going to be kind of hit and miss the next five days as I make my way out to the land of little sunshine, lots of drizzle, and nice new airplanes.

That's right. I'm off to Seattle in the early hours tomorrow.

While there I'm looking forward to speaking to the Boeing North American Sales and Marketing team Friday. In addition I'll have a chance to take a tour of Boeing's various facilities, and yes, I hope I get to see a 787 in some state of production.

Won't be back to Terra Firma South until the middle of the night Sunday.

PlaneBusiness Banter subscribers -- we may be posting as late as Saturday this week -- as a result of my trekking about.

But don't forget. We have an interview in this week's issue of PBB with former Southwest Airlines' CEO Jim Parker -- who sat down with us recently to talk about his new book, "Do The Right Thing; How Dedicated Employees Create Loyal Customers and Large Profits."

Jim is one of the "good guys" in this industry. And he is an avid sports fan. So you know we had a good time.

He's also enjoying his new-found fame as a Dallas Cowboys' head coach Wade Phillips look-a-like. Yep, more than one person has apparently stopped him of late and congratulated him on the team's season. Jim told me he just thanks them and goes on with what he was doing. Just too difficult to try and explain they have the wrong guy.

Posted by Holly at 4:01 PM | Permalink | Comments (0)

Sorry for the previous ugly post that has now been cleaned. Ecto (web editor) was up to its usual tricks, dropping in errant ugly html code wherever and whenever it felt like doing so.

Posted by Holly at 3:29 PM | Permalink | Comments (0)

Hello everyone.

It's Tuesday. I know. I was not here yesterday.

It's a local cultural thing. The National Championship was played in the Louisiana Superdome last night. So for all practical purposes, it was "Mardi Gras Light" in this part of the world starting last Thursday and running through last night when the LSU Tigers once again shamed the National Championship Big Ten Conference opponent, er, victim, Ohio State.

Geaux Tigers. And bravo to the incomparable "Golden Band from Tigerland," all 355 strong.

One of these days I'm going to take a fall off and write a book, "My Life With the Band." That's after I convince the LSU music director to let me tag along for a semester.

I have a question for you Ohio State alums out there. Does the football team get motivated by that "gladiator" music the band plays? Whew. As an ex-band member -- I must say that group did not look like a very happy and spontaneous bunch last night. Then again they are forced to wear those  beret-topped uniforms, while playing gladiator music.

Speaking of marching bands -- Mardi Gras is February 5 this year. Yes, very, very early.  Parades start in New Orleans in another week.

Then, one week after Mardi Gras, New Orleans will host the NBA All-Star game. Woo hoo.

Now, to make the full 180 degree shift here -- what does any of this have to do with airlines?

(Insert sound of "Jeopardy" here.)

A lot, if you are an airline and you are currently looking at the possibility of a rather bleak first quarter. Granted, first quarters are usually the weakest quarter of the year. But this year, with crude still trading around $96-97 a barrel as of this writing -- and demand showing signs of increased weakness -- an early Mardi Gras signifies something positive to the industry.

This means (have you looked at your calendar for 2008 yet?) that Easter is very, very early as well.

In fact, it lands in the third week of March, March 23.

So, amidst all the negative news regarding the prospects of the first quarter revenue front -- a small bit of blue sky. The industry will see a nice added bit of revenue in the first quarter as a result of an unusually early Easter.

In other airline-related news today, a couple of tidbits.

United Stock Not Having A Good Day. Again.

United Airlines looks to be the biggest loser today in the sector, hands down. The drop comes as a result of analyst Jim Higgins research note that hit the wires yesterday. In his note, Higgins, who is with of Soleil Securities Group said there is "rising evidence" that actions by pilots contributed to the carrier's bad December in which it had double the industry average number of delays. He said "such actions are legal but threaten the company's profits."

Duh.

Yesterday the stock dropped back 6%. Today? It's now down another 16% the last time I looked, trading at around 24.53.

Hey, I don't feel sorry for those investors. If they read PlaneBuzz, they would have been out of that stock a long time ago, and certainly after we wrote this recent column.

Singapore/China Eastern Deal Collapses

We've been following this merry-go-round for months, and today, it all came down to the China Eastern Airlines' shareholders meeting. According to the Associated Press, shareholders in China's third-largest airline have rejected the bid by Singapore Airlines to buy a minority stake after Air China offered more money.

China Eastern Airlines supported the Singapore bid, but nearly 78% of shareholders rejected the deal.

The rejection is seen as a blow  to Singapore's efforts to gain a foothold in China's booming air travel market. China Eastern Chairman Li Fenghua said the carrier would now look for other ways to cooperate with Singapore and rejected any partnership with Air China.

"We will never consider Air China as a strategic investor," Li told reporters. "The most important thing is not the price. The most important thing is to improve China Eastern Airlines' brand and management."

Other Airline Stocks? The Airline Limbo Continues

While United is having a particularly bad day -- a word for the squeamish. Don't look at the rundown of today's market moves in the airline sector if you are wearing a pacemaker. Or can't take bad news very well.

As I write this, stocks are continuing to trend downward, so I don't think we've seen the worst for the day -- yet. Bad day on Wall Street today with more bad housing news (no, we are not surprised) in addition to rumors of a potential Countrywide Mortgage bankruptcy.

Just a small selection of the redder numbers I can see on our stock screen right now include: AirTran down 6% at 6.60; AMR, parent of American Airlines, down 10% at 12.02; Continental Airlines down 10% to 18.25; Delta Air Lines down 11% to 11.89; Southwest Airlines down 3% to 11.47; US Airways down 7% to 11.41; Northwest Airlines down 5% to 11.84.

Someone cut the limbo music. Please!

Technorati Tags: airline industry news, airline stocks, AirTran , American Airlines, AMR, Continental Airlines, Delta Air Lines, Southwest Airlines, US Airways

Posted by Holly at 3:01 PM | Permalink | Comments (0)

Subscribers of PlaneBusiness Banter can now access the first issue of 2008. Woo hoo.

Off to send out our emails.

Posted by Holly at 10:01 PM | Permalink | Comments (0)

It's another chilly morning here at the PlaneBusiness Worldwide Headquarters.

No, that's not actually the Worldwide Headquarters, that is the Ice Hotel in Jukkasjarvi, Sweden.

But hey, after four mornings of sub-freezing temperatures in this part of the world, it's a fair equivalent. Kind of. At least the four-legged members of our staff think so. Their forays outside have been, let us say, minimal. To say the least.

Later today, subscribers to PlaneBusiness Banter will get to read their latest issue. This week we'll do our usual review of the latest DOT operational stats, we take a look at the capital structures of the major airlines we track -- as of the end of the third quarter. We'll also go into much more detail concerning the huge drop in airline shares over the last quarter, and particularly the last month.

I'll post one or two of those airline stock performance charts in here next week if you guys behave yourselves between now and then. My New Year present to you.

Meanwhile, that story continues to be written -- as they say -- as today the airline sector is taking yet another major body blow. 

The airlines taking the biggest hits this morning?

Shares of ExpressJet are being hammered. Shares here, as of this posting, are down 6.3%, to 2.23.

Shares of United are not having a good day either, down 5% to 30.33.

Shares of Mesa, which we noted here yesterday were the sector's biggest loser, are now down 3.4%, down to 2.59, although shares were as low as 2.29 earlier in the day -- the lowest price level in 17 years, according to MarketWatch. 

JetBlue is not having a good day either. Shares here are down 4%, at around 5.21, while shares of Frontier are down 5.5%, down to 4.85. Shares of US Airways are down 4% to 12.24 as of this posting.

Two foreign flyers are having an awful day as well so far this Friday.

ADRs of GOL are down almost 8% to 21.63, while shares of Ryanair are not having a ducky day either, as ADRs here are currently trading down 5% to 34.60.

I hate to ruin your mid-morning snack, but if economic conditions continue to push in the same direction they are pushing now, jet fuel continues to wobble around record highs, and market valuations of airlines continue to drop like rocks -- the issue in the next six months for this industry is not going to be consolidation. It's going to be survival.

I look for us to hear about at least one major deal in the industry this month, and we may also hear about at least one other smaller one.

As for Chapter 11 filings, I think SkyBus is in trouble. They are holding a $20 fare sale -- and remember -- this fare level would be in addition to their "guaranteed" bank of $10 seats on every plane.

The airline had a horrendous Christmas season -- with many operational difficulties and many unhappy customers.

This $20 fare sale the airline just announced? Familiar with the phrase, "Must raise cash?"

And hey, while we are dragging out phrases from the "Airline Bankruptcy Primer" remember the term, "pre-packaged bankruptcy?"

I would not be surprised if we don't already have one of those sitting on the shelf. Or if it is not already on the shelf, an older version that was on the shelf is in the process of  being edited now to reflect changed conditions.

Any bets as to which airline I'm talking about?

I'll give you a hint. They fly lots of airplanes that go through a lot of jet fuel.

And a pre-packaged bankruptcy would be one way to make all of those airplanes go away. Rather quickly.

It would also do other things.

We'll see, but I'm afraid, unless economic conditions dramatically improve (and PBB subscribers know I am in full Ratty Old Bear Suit regalia on that question) -- we are looking at a dramatically difficult six months ahead in this industry.

Posted by Holly at 10:27 AM | Permalink | Comments (3)

As you would expect, the continued market obsession with the price of oil has airline stocks on the run -- again.

Yes, folks, this is pretty serious stuff.

A look at the usual suspects today shows an average decline of 2%-3% being posted by most of them, although one airline stock is really taking a beating.

Shares of Mesa Air Group were down more than 7% the last time I looked, a drop which has brought the shares down to $2.78.

Seems that the folks on Wall Street were not impressed by the airline's press release today, which announced a number of management moves, along with the announcement that it had named Jorn Bates as COO of the airline.

Bates is an ex-Delta guy -- who was brought over to Mesa last January.

All of the moves announced by the airline were internal shuffles. No big changes here. Or as one person said to me today, beating me to the obvious, "This look a little like a re-arranging of the deck chairs."

Last five days of trading in Mesa Air Group stock:

Ticker: (Nasdaq:Mesa)

Posted by Holly at 1:57 PM | Permalink | Comments (0)

Another day, another blockbuster day for oil prices.

After hitting $100 briefly yesterday, and then retreating, oil prices today hit $100 after less than expected oil inventory figures were reported this morning by the DOT's Energy Information Agency.

Today, the price stuck above the historical mark a little longer, although in the last update I saw, the price had dropped back to $99.05.

And for those of you who are wondering where that magical "record-breaking" number is -- taking inflation into consideration? Most experts use the $102 mark as the level at which the price of oil would then bypass its previous historical all-time high -- ever.

Posted by Holly at 1:41 PM | Permalink | Comments (0)

Sorry for the mass broadcast here folks, but if you're out there Aaron, can you give me a shout? I've sent you a number of emails, but have not heard from you.

Thanks!

Posted by Holly at 2:10 PM | Permalink | Comments (1)

And a fond hello on a day when the markets have already made history.

Today the price of a barrel of crude oil briefly touched $100 a barrel. Yeah, I know. You'd think that maybe because it was a New Year, the oil pricing gods would do something different to celebrate the occasion, but no, it ain't going to happen. Current price levels have oil trading around $99.42.

Reasons for the uptick today? Same old, same old. Plus some African-based tension to add to the angst. Inventory levels were less than expected last week (we'll have new ones tomorrow), and there is the continued drop in the value of the dollar. However, traders are also a bit nervous about news out of Africa today, as there was an attack on Nigeria's Port Harcourt, a major oil industry hub.

As you can imagine, this rosy news has sent shares of airline stocks skittering for cover.

Yep, now I really am sounding like a broken record, aren't I?

If you haven't been paying much attention to airline stocks as you basked in the warm glow of the holidays, you're in for a rather nasty awakening. We'd been talking in December about the continued drop in airline stocks -- and unfortunately the news just continues to get worse.

If you haven't checked your favorite airline stock of late -- it's going to be an eye-opener.

As we post this, here's just a smattering of the latest prices we're looking at for the sector.

American Airlines, down 3% to 13.54.
Continental Airlines, down about 4%, at 21.42.
Delta Air Lines, down almost 8% at 13.74.
US Airways, down 7% at 13.63.
Southwest Airlines, down 1% to 12.12.
Northwest Airlines, down 10% to 13.10
United Airlines, down 9% to 32.48. 

Tickers: (NYSE:AMR); (NYSE:LUV); (NYSE:NWA); (Nasdaq: UAUA); (NYSE: LCC); (NYSE:CAL), (NYSE:DAL).

Posted by Holly at 1:54 PM | Permalink |