PlaneBuzz

Okay all you information-hungry hounds. This week's issue of PlaneBusiness Banter is now posted. Subscribers can access the issue here.

Posted by Holly at 11:01 PM | Permalink | Comments (0)

This week at the Phoenix Symposium, I couldn't find one person who was optimistic about the chances of Aloha Airlines keeping the doors open beyond tomorrow.

This afternoon the airline confirmed the worst.

Aloha Airlines, which first began operations in 1946, will shut down operations tomorrow.

The airline's cargo operation, which remains profitable, will continue to operate. In fact, the cargo operation is going to be auctioned next month. Saltchuk Resources out of Seattle, has already said that it intends to bid on the cargo operation.

Posted by Holly at 6:09 PM | Permalink | Comments (0)

Hi guys.

As I advised PlaneBusiness Banter subscribers in last week's issue, this week's issue will be posted later today.

Why The delay? Because yours truly was at the Phoenix International Airline Symposium last week, which didn't wrap up until Friday evening. So you can do the math. That left yesterday and today to get the current issue written, edited, and out the door.

Tomorrow? Hard to believe, but I actually return to the Worldwide Headquarters. Yep. I'll be flying Continental Airlines back home tomorrow.

Posted by Holly at 12:14 PM | Permalink | Comments (0)

A few days ago CNN.com reported a story about a woman who was forced to remove her nipple rings before being allowed to board a flight from Lubbock to Dallas on February 24th.

Wait, did I just write that?

The TSA Blog, called "Evolution of Security", said that the 4 agents involved (2 male, 2 female) followed the proper procedures, but upon further review those procedures will be modified.

Ya think?

If you want to have a chuckle you should check out the comments, which as of this writing totaled 171. I'd say the sentiment runs pretty strongly against the TSA in this case.

In response to the comments the TSA came out with an official Statement on the incident, which in part says -

"TSA has reviewed the procedures themselves and agrees that they need to be changed. In the future TSA will inform passengers that they have the option to resolve the alarm through a visual inspection of the article in lieu of removing the item in question. TSA acknowledges that our procedures caused difficulty for the passenger involved and regrets the situation in which she found herself. We appreciate her raising awareness on this issue and we are changing the procedures to ensure that this does not happen again."

I recall a story a couple of years ago about a woman who was arrested for taking her top off at an airport security checkpoint after she set off the magnetometer. I guess it's OK now as long as it is done during a "private" security screening. Perhaps that's what the TSA means when it says "The Evolution of Security". Let's just cut to the chase and have all passengers completely disrobe and follow their carry on bags through the x-ray machine.

I'm joking of course, because treating physical security like this is a joke, but it's not funny to those of us who must endure it when we travel. It isn't the hard metal objects that are a danger to our safety on airplanes, it is those who would use these objects to harm us or others. Richard Reid tries to light a fuse on his Nike's and we subsequently all take our shoes off for screening. The London crew decides to use liquid explosives in their failed endeavor, and subsequently all liquids must be a certain size and fit into a small baggie. This isn't evolution; this is reactive, not proactive.

In the wrong hands a pencil is a lethal weapon, and it's not even metal. Cell phones can be used to set off explosive devices. Following the premise that physical security must keep all dangerous objects off of commercial airplanes to it's illogical conclusion, it becomes apparent that the safest alternative is to just ban all objects.

It isn't necessary to invade privacy in order for the TSA to know the airline passengers a little better. The information provided to the airline in their reservation is sufficient. But until we get over the aversion to mingling airline reservations together and utilizing the simple information contained in the airline reservation to help focus the physical security more effectively, we will continue to read stories like the nipple ring incident.

Posted by Godzilla at 9:08 AM | Permalink | Comments (1) | TrackBacks (0)

Compliments of David Letterman, and the Late Show Top Ten List Tuesday night.

10. Thought it would be fun to shoot empty liquor bottles.
9. Air traffic controller's "Clear to land" misheard as "Squeeze off a "round."
8. Media never reports when plane takes off and pilot's gun doesn't go off.
7. Pilot thought he saw one of them "Cloverfield" Godzillas -- Buy "Cloverfield" on DVD April 22nd.
6. Oh, like you've never fired a weapon onboard a passenger plane before.
5. Don't worry -- His parole officer was in the cockpit.
4. Chillax, bro.
3. This is what happens when you let Dick Cheney fly a plane -- Did you see it coming folks?
2. If you didn't want gunplay, maybe you should have flown United!
1. Pilot distraught after picking Duke to win it all.

Posted by Holly at 6:29 PM | Permalink | Comments (0)

Hey guys.

Yep, it's me. The one who's been on what seems to be a continual road trip for the last month.

This week -- we have the last stop on the Wings' Traveling Roadshow.

This week I'm in Phoenix for the annual Phoenix International Airline Symposium.

As regular readers of mine know, this has become an annual visit for me. Actually, I think this is the 10th year I've attended and/or moderated or participated in a panel presentation here.

The event is sponsored by the Phoenix Sky Harbor Airport and is noteworthy in that participants at the event are discouraged from being too formal, too formally dressed, and powerpoint presentations are verboten!

You can check out a rundown of this year's activities here.

Posted by Holly at 5:56 PM | Permalink | Comments (0)

Hey guys. Sorry for the delay. Today was kind of a "personal day." Had a bunch of stuff I needed to get done. So -- I got them done.

Meanwhile, on the airline front -- we had a CEO step down today.

Skybus CEO Bill Diffenderffer, aka the "Samurai Leader," resigned today.

He is going to be replaced by the airline's CFO, Mike Hodge -- effective immediately.

But here was the priceless quote from the Columbus Dispatch concerning the resignation.

"Diffenderffer is stepping aside to return to writing books, a career he left in 2005 when he joined Skybus."

Ahhhh, yeah. Okay. Guess this means I could step aside from PlaneBusiness and PlaneBuzz and start an airline. What do you think? Then when it began to run up continued losses, and it was clear the business plan was not going to work, I could just return to writing PlaneBuzz and PlaneBusiness.

For some reason I just don't think this is the way it is supposed to work.

RIP the Samurai Leader.

Posted by Holly at 8:51 PM | Permalink | Comments (0)

Besides an acquisition-from-hell, an unhappy workforce, and a giant rat outside of their Phoenix headquarters, USAirways has found another way to make negative news. This past Saturday one of their pilots accidentally discharged his weapon in the cockpit of a scheduled flight between Denver and Charlotte.

Understandably there was a flurry of opinion pieces chastising the airline, TSA, the pilot, and Charleton Heston, for allowing its pilots to legally carry a weapon onboard. I don't want to get into a Second Amendment discussion here, but I was particularly amused by an airline pundit who wondered why the pilot had a bullet in the chamber to protect against the gun accidentally firing. If the weapon was a revolver then there really isn't any choice but to have a bullet in the chamber, and a semi-automatic weapon without a bullet in the chamber is just a paperweight anyway, but I digress.

I've no idea what the Federal Flight Deck Officer (FFDO) training program teaches, but I'd guess that they teach the weapon is to be loaded with a round in the chamber and the safety on while in the cockpit. If the weapon isn't ready to use quickly then you might as well leave it home anyway. It is highly unlikely that a gun would go off without being handled by someone, so it's safe to assume that on a routine flight, on a routine day, you might want to break up the routine by showing off your new gun. Add some PIO (Pilot Induced Oscillation), and there you have it. I'd love to read the transcript of the cockpit voice recorder:

"Watch out for the.........[boom!!]"

"[Expletive Deleted]!!!"

"Think anybody heard that?"

The TSA doesn't allow just any pilot to carry a weapon in the FFDO program; there is a psychological evaluation that must be passed by the pilot before beginning the training. I only know this because a friend of mine who works for a large air freight company flunked the psych evaluation; evidently he has "difficulty dealing with authority", and was not allowed to participate in the FFDO program. I guess that doesn't say much for my choice of friends, but that's probably another story.

Personally I don't have strong feelings one way or another about pilots carrying weapons on commercial flights. I guess if anyone has a gun onboard an airplane I'd rather it be a good guy than a bad guy; and it's not like airport security is so perfect that they occasionally might miss a weapon in someone's carry on bag. A gun on an airplane isn't inherently dangerous unless the person who controls it has evil intentions, or, as in this case, becomes careless.

As a pilot myself I've always thought that having the airplane yoke in my hands would be far more effective a deterrent than a loaded gun. A couple of negative G pushovers that send the bad guy flying into top of the cabin would probably be pretty effective.

Posted by Godzilla at 10:11 AM | Permalink | Comments (3) | TrackBacks (1)

Subscribers to PlaneBusiness Banter can now read this week's issue here.

Not a subscriber yet? Why not? Subscribe now!

Posted by Holly at 7:51 PM | Permalink | Comments (0)

From the airline's official statement:

"Aloha is also seeking Court approval of a cash collateral financing arrangement with its principal working capital lender, General Motors Acceptance Corporation, to provide financing for operations pending a further hearing in accordance with bankruptcy rules. In doing so, Aloha seeks to protect 3,500 jobs, honor thousands of passenger travel reservations, keep the U.S. Mail and air cargo moving between the islands, and continue to provide essential ground-handling services for domestic and international airlines serving Hawaii.


In its filing, Aloha cited its inability to generate sufficient revenues from its inter-island passenger business due to predatory pricing by Mesa Air Group's go! airline. In the highly competitive inter-island market, Aloha was forced to match go!’s below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel. Late last week, crude oil rose to an all-time record high of $111 a barrel. For Aloha that means an annual increase of $71 million in fuel expenses.


“It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action,” said David A. Banmiller, Aloha’s president and chief executive officer. “Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha, and to continue to earn the support of our loyal customers, business partners, vendors and financial backers."

Technorati Tags: Aloha Airlines, bankruptcy, Hawaiian Airlines, Mesa Air Group

Posted by Holly at 10:25 PM | Permalink | Comments (0)

With about an hour and a half to go before the U.S. Bankruptcy Court closes in Hawaii, sources tell us that Aloha Airlines is set to file for bankruptcy protection before the end of the day.

More information as it becomes available.

UPDATE: Courts will be open in Hawaii on Friday. Filing could be made tomorrow.

Technorati Tags: Aloha Airlines, bankruptcy, Hawaiian Airlines, Mesa Air Group

Posted by Holly at 9:00 PM | Permalink | Comments (0)

The Wall Street Journal is reporting online that United Airlines has temporarily grounded several Boeing 747 jumbo jets to check for compliance with federal maintenance requirements, "in a move that signals the controversy over government oversight of airliner safety checks and repairs is spreading, according to three people familiar with the issue."

The article goes on to say:

"United's move, which one person familiar with the matter said covers as many as six long-haul 747 aircraft that had some of their cockpit instruments validated as part of an overseas maintenance check, comes as U.S. airlines are stepping up self-audits of their maintenance compliance. At the same time, the Federal Aviation Administration is launching first-of-a-kind spot checks of compliance with mandatory safety directives at every U.S. carrier.

The FAA ordered the temporary groundings after discovering that test equipment used at a maintenance station in South Korea was faulty, according to one person familiar with the issue.

Re-checking the accuracy of the affected cockpit instruments may only take several hours. But one person familiar with the details said United already has delayed one trans-Atlantic flight from San Francisco by as much as five hours. FAA and United officials couldn't immediately be reached for comment.

The six affected United aircraft, according to people familiar with the details, all went through major maintenance work at a maintenance facility in South Korea, and FAA inspectors on site noticed that some of the test equipment there wasn't properly calibrated. It's unclear how many of the planes flew away from the South Korean facility without having their cockpit instruments verified. It's also unclear whether other U.S. or foreign airlines may face the same problem."

Ticker: (Nasdaq:UAUA)

Posted by Holly at 4:00 PM | Permalink | Comments (0)

Jon Ostrower's  excellent blog, FlightBlogger, has more details on the 787 wing box design flaw that was first made public by ILFC's Steve Hazy this week at the JP Morgan Transportation Conference.

Technorati Tags: Boeing_787

Posted by Holly at 3:44 PM | Permalink | Comments (0)

Okay, so this is a little off-topic, but not much, since if you're reading this -- you're connected. Somehow.

A good friend of mine in the U.K. just sent me a message in which he included a link to a cool little creation that he received for his birthday.

The gift? A t-shirt that not only detects a Wi-Fi network, but changes color according to the strength of the signal.

Heh. Who wants to be the first one to wear one of these through a TSA line?

Unfortunately Firebox does not have them available on their U.S. site, but they are available on their U.K. site.

Posted by Holly at 1:51 PM | Permalink | Comments (0)

Leave it to ILFC's head honcho Steve Hazy to let the rest of the world know what is going on with Boeing and Airbus airplanes.

This time it's Boeing and the news is not good.

Hazy told investors in New York yesterday at the JP Morgan Chase Transportation Conference that he believes a design change is needed in the 787's center wing box, a key piece that connects the wings to the fuselage.

As a result, he expects the first flight of the 787 will now be delayed until the fall. Boeing has said its goal is to have the first flight by the end of June.

The next "formal" delay announcement from Boeing regarding the 787's maiden flight would be the fourth time the aircraft's first flight has been pushed back.

Ticker: (NYSE:BA)

Technorati Tags: Boeing_787

Posted by Holly at 12:49 PM | Permalink | Comments (2)

The pilots at Delta Air Lines today said thanks, but no thanks today to the idea of submitting to binding arbitration in an attempt to come to an agreement on seniority with their co-horts at Northwest Airlines.

Okay. Guess that settles that.

Ticker: (NYSE:DAL), (NYSE:NWA)

Technorati Tags: airline mergers, airline unions, airlines, Delta Air Lines, Northwest Airlines

Posted by Holly at 4:58 PM | Permalink | Comments (0)

Today was "sell the commodities day" on Wall Street.

All the nervous nellies who climbed into oil futures, gold, and other commodities over the last week as the financial stocks went through their personal meltdown, decided, apparently, that today it was time to unload them.

That was why, when it was reported that crude oil inventories did not increase as much as had been expected in the U.S. last week -- oil prices declined anyway.

Usually, we'd see the price rise.

For the day, the price of a barrel of light crude was down almost $5, ending the day at $104.48.

Posted by Holly at 4:41 PM | Permalink | Comments (0)

Today we got more details about the route cuts that Delta Air Lines has put into place -- all part of the airline's efforts to cut costs. The airline also announced that it had put another  $10 fare increase into place. This comes on top of the $50 roundtrip fare increase that United Airlines initiated last week. Continental Airlines quickly matched that increase last week and as of today, the increase appears to be sticking.

Meanwhile, on the route front, Delta announced today that it has slashed its flights into Orlando. The airline announced that by June, the average number of seats it flies into Orlando will decrease by 45% compared to June 2007.

The airline said that it intends to "streamline its network" by reducing marginal routes, and reducing the number of point-to-point flights.

For John. Q. Passenger looking to fly this summer I think it's pretty clear what they are going to find.

Fewer flights.

Fewer non-stop flights.

Reduced frequencies on particular routes, particularly low-yielding "leisure" routes.

Fewer regional flights (depending upon the routes.)

Oh, and the flights they do find? The fares are going to be higher.

With the end of the first quarter almost upon us -- will we hear of more cuts and route changes from other airlines before we hear details of first quarter earnings?

Yep.

Posted by Holly at 4:34 PM | Permalink | Comments (0)

With a nod to our guest columnist Godzilla's rather dire view of the world on Monday, we present -- Ta-da! -- the JP Morgan Chase Transportation Conference. Live from New York -- it's analysts Jamie Baker and Mark Streeter.

Time to cue up the band.

Well, then again. Maybe not.

Hell of a time for an airline investment conference, eh?

But hey, it is what it is. And this morning Delta Air Lines' CFO Ed Bastain took advantage of his New York appearance at the conference to announce that Delta now plans to shrink its domestic passenger capacity by 10%, not 5% as originally planned in 2008, the airline plans to cut at least 2,000 jobs, and it also plans to offer severance packages to a total of 30,000 employees.

The moves come as the airline attempts to deal with the recent run-up in the price of fuel.

According to a memo that was circulated to airline employees Tuesday morning, one part of the voluntary severance program is for employees who are already eligible for retirement or for those whose age and years of service add up to at least 60, with 10 or more years of service.

The second part of the voluntary severance offer is an "early-out" offer for frontline employees — such as flight attendants and gate and ticket agents — with 10 or more years of service and for administrative and management employees with one or more years of service.

Posted by Holly at 1:23 PM | Permalink | Comments (0)

When I first started blogging I promised to only write about things I knew about. Perhaps that explains the paucity of my posts to date.

Over the past few weeks it's been a bonanza for bad stuff. How much will a barrel of oil eventually cost? How low will the dollar really go? Is it better to work for an airline or an investment bank?

So I've been reading the news and talking to people who know a whole lot more than I do about the financial markets, and it's pretty clear this is uncharted territory and nobody really know what the heck is going to happen. It sure is easier to predict things "will get worse before they get better". It's like saying the Cubs won't win the series in 2008; you've got a lot more chance to be right than wrong and nobody will remember if you were wrong anyway.

Try as I may, I have never been able to figure out the game of craps as played in Las Vegas. Seemingly you can bet on anything, and if you are lucky you can win a lot of money. No value is created, no service is provided, and minimal skill is involved. A bet is made and won, or lost.

Sounds like Wall St. to me; but then again, I am not a financial wunderkind.

OK, that's not fair. In part, the financial markets provide capital with which those so inclined can wager bets. Some safe, some not so safe. Some backed by logic, some backed by emotion.

It's the emotion part that is the most difficult for me to understand. If I believed everything I heard about the state of the world everyday I'd be suicidal. Pass me the ammunition honey, the 6 o'clock news is coming on.

My personal opinion is that the bad news we are hearing about the financial markets now is just payback for the multi-million dollar bonuses that have been earned by Wall St. financial types over the past few years. I believe the system itself is basically sound and it is proving its soundness now.

Posted by Godzilla at 8:11 PM | Permalink | Comments (0) | TrackBacks (0)

I don't know how else to look at the news this afternoon that Global Aero Logistics CEO Subodh Karnik has resigned.

Global Aero is the parent company of ATA, World Airways and North American Airlines.

The new CEO of Global should be a familiar name. He's the ex-CFO of Southwest Airlines and ex-CEO of ATA -- John Denison. And, as we all know, John is very close to current Southwest CEO Gary Kelly.

People tell us this afternoon that we could hear about what Southwest is going to do with ATA's international certificate in as little as 48 hours.

Ticker: (NYSE:LUV)

Technorati Tags: ATA Airlines, Southwest Airlines

Posted by Holly at 6:30 PM | Permalink | Comments (2)

When is an investment bank not a bank?

When is an investment bank just like a bank?

There are legal differences in terms of how one is regulated and how one is not.

Apparently this weekend the Federal Reserve decided that it didn't matter if Bear Stearns was an investment bank or not.

It was bankrupt, and it had to be salvaged, for fear its failure could cause a "run on the banking system." (Or so said may of the Wall Street watchers today.)

Enter JP Morgan Chase, which last week had responded to the first Fed plea for assistance in regard to Bear Stearns.

This time, JP Morgan got a sweet deal at about $2 a share, and Bear Stearns equity holders got left holding the proverbial empty bag. But the bond holders did just fine -- as JP Morgan picked up the firm's bonds. And the Feds are helping to guarantee them.

Sweet deal.

Now that all the excitement is over -- what's the collateral damage?

The fact that Bear Stearns was insolvent enough to warrant such a drastic move.

Tends to negate those who have been saying of late that the credit crunch and the liquidity problems facing financial institutions had "run its course" and was leveling out.

Nah. We haven't seen the worst yet.

There is one bit of direct collateral damage to the airline sector. Frank Boroch, who I thought did a good job analyzing the airline industry for Bear Stearns is no doubt out of a job. JP Morgan Chase already has a fully-staffed airline research group, both on the equity and the debt side.

In terms of the bigger picture and how all this financial angst affects the airline sector -- we saw it in big red numbers today -- across the sector's stock prices. However, many of the airline stocks actually picked up some ground from where they were earlier in the day.

Still not good though.

Just looking over the carnage we see that shares of US Airways lost 10%, closing at 7.45, taking the biggest hit for the day, while shares of ExpressJet, were, interestingly, up 10% on the day, closing at 1.74.

In between we had a long list of losers, including AMR which lost 3% on the day, closing at 8.95, Delta, which dropped another 4%, ending the day at 9.23, Northwest, which lost a healthy 6%, dropping back to 8.92, United Airlines, which lost 8%, closing at 20.91, and Continental Airlines, which dropped back 5%, closing the day at 18.87.

Ticker: (NYSE:AMR), (NYSE:LCC), (NYSE: CAL), (Nasdaq:UAUA), (NYSE:DAL), (NYSE:NWA).

Technorati Tags: airline analysts, airline stocks, airlines, American Airlines, AMR, Continental Airlines, Delta Air Lines, JP Morgan Chase, Northwest Airlines, United Airlines, US Airways

Posted by Holly at 3:54 PM | Permalink | Comments (0)

Subscribers to PlaneBusiness Banter can access this week's issue here.

Posted by Holly at 2:23 PM | Permalink | Comments (0)

Hey guys. I'm sitting here and it's nine o'clock, while all you poor souls on the East Coast are looking at midnight.

I hate daylight savings time. Especially when I am in a West Coast time zone.

Anyway, that is beside the point.

This week's issue of PlaneBusiness Banter is sitting in front of me, and it is finished. Yep, we're not only talking about airlines this week, we're talking about the Federal Reserve bailing out banks. We're talking about ExpressJet's earnings call. We're talking about a horrible week for the airline sector this week on Wall Street. We're talking about auction-rate securities and which airlines are more at risk than others. Never a dull moment.

I'm going to post this week's issue in the morning -- as we had an unexpected missive arrive late today that I want to include in this week's issue, and it's going to require,  well, another set of eyes, before I can post it.

So go back to your Friday night beers and we'll talk to you in the morning. Well, unless you are on the East Coast, and who knows when I'll talk to you next. That's what you people get for living so far East.

Posted by Holly at 11:08 PM | Permalink | Comments (0)

I always like to read Terry Maxon's blog at the Dallas Morning News on Friday to see what his three Friday morning musings are.

In fact, today I've been inspired to come up with my own musing, as I work on this week's issue of PlaneBusiness Banter.

Eliot and I want to know who Clients 1-8 were.

Technorati Tags: airlines, eliot_spitzer

Posted by Holly at 2:00 PM | Permalink | Comments (0)

News out this morning that the US Airways' West pilots (the old America West pilots) have now decided to go their own way.

Thomson Financial reports that US Airways  management said today that  it has been notified by America West pilots that they wish to pursue separate labor contract negotiations from US Airways pilots.

"Since the America West-US Airways merger was consummated, more than 400 US Airways East (former US Air) pilots have been able to upgrade to captain positions, yet less than 40 US Airways West (former America West) pilots have been offered the same opportunity," said Captain John McIlvenna, chairman of the union leadership group, highlighting one of the main grievances of the America West pilots.

US Airways said America West pilots have also begun separate negotiations with the airline on the rules and conditions related to flying future Airbus A330-200 widebodied planes.

Is this something unusual? Not really. Remember that, even today, restrictions on who flies what aircraft are still in effect at Northwest Airlines - a lingering after-effect of that airline's merge with Republic. Pilots on both sides in that merger finally agreed on a workable merge agreement -- but only with certain "fence" provisions going forward.

Meanwhile, voting begins in about a week on representation of the pilot group at US Airways -- as the US Airways' East bloc of pilots push to oust ALPA from the property. The alternative union organization, USAPA, was created after an ALPA arbitrator ruled on the seniority question concerning the two pilots groups last May. The US Airways East pilot group claims that the award is not "fair" and, as a result, now seeks to remove ALPA as the pilot's labor representative.

Just more fun than you can shake a stick at.

Ticker: (NYSE:LCC)

Technorati Tags: airlines, US Airways

Posted by Holly at 1:43 PM | Permalink | Comments (0)

Red Letter day today on Wall Street. For two reasons.

One, the price of gold topped $1000/ounce earlier today.

But more importantly -- at least to those of us who like to fly the those things with wings that consume great quantities of jet fuel -- the price of a barrel of crude oil broke the $110 mark today.

Crude closed at $110.33.

How does that story begin....."It was a dark and stormy night...."

A recession and $110/barrel oil prices. A perfect dark and stormy night for our friends --  the airlines.

In other news, shares of Mesa Air Group hit a new 17 year low today. (Adjusted for splits.) The last time shares were this low in the airline were in 1991. Shares in the airline closed today down 3%, to 2.24.

Shares of US Airways have also been hit hard this week. Today shares of LCC were down another 3%, closing at 8.76. Yes, you read that correctly.

Shares of Northwest are not having a good week either. Shares here were down 4% today, closing at an anemic 9.86 while shares of its hoped-for running buddy, Delta Air Lines, were up 4% today, closing at 10.52.

Meanwhile ExpressJet shares managed to pick up 2% today. But the shares here continue to struggle. Really struggle. Shares closed here today at 1.77.

Ticker: (Nadsaq:MESA), (NYSE:XJT), (NYSE:NWA), (NYSE:DAL), (NYSE:LCC).

Technorati Tags: airline stocks, airlines, Delta Air Lines, ExpressJet, Mesa Air Group, Northwest Airlines, US Airways

Posted by Holly at 8:11 PM | Permalink | Comments (0)

US Airways and its mechanics union have reached a tentative contract agreement. The airline said Wednesday that the deal will see mechanics receive a 10% raise once the contract is ratified.

In addition, these raises will be followed by 3% raises every year until 2011. New overtime rates were apparently also negotiated. A pension plan is also going to be offered to members.
IAM spokesperson Joseph Tiberi was quoted in an Associated Press story as saying, "After two bankruptcies at US Airways and more than two years of negotiations after the merger, employees are finally seeing something positive."

IAM also represents the fleet service workers at the airline. That group and the airline came to terms on a new contract last summer. However, union members rejected the deal. New negotiations are now in progress on that contract.

Posted by Holly at 5:39 PM | Permalink | Comments (2)

Talk about timing.

I walk into the LABTA meeting today to give my speech and someone who is here, who lives in Dallas, tells me that Southwest has grounded 41 aircraft.

Nothing like a little bit of juicy news to go with my rubber chicken. (Actually it was turkey.)

Now that the speech is history and I've read through the news reports and Gary Chase's comments from Lehman Brothers, I don't think I need to worry about whether or not my flight tomorrow on Southwest will be canceled or not.

It appears that Southwest informed the FAA about the decision to ground the jets this morning.  The airline said it had grounded 44 of its Boeing jets to inspect for possible structural damage.

According to the Dallas Morning News, Linda Rutherford, Southwest spokesperson, said the airline identified 44 airplanes from its Boeing 737-300 and 737-500 fleets that needed inspections of the aircraft skin above and below the windows along the fuselage

Of those, 38 were taken out of service Wednesday for the inspections, which take about 90 minutes per airplane, she said. One of the 44 had already been retired, and five were already undergoing other maintenance work, she said. As of 2 p.m. Wednesday, the airline had finished inspections on 19 aircraft and had returned them into service.

The airline says it should be back to its full schedule on Thursday.

How costly is this interruption going to be for the airline?

According to Lehman analyst Gary Chase, not very.

Chase said in a note this afternoon,

"The bottom line?

We believe the impact from this move will be negligible on value for
Southwest and for potential competitors.  We expect this issue to be
resolved shortly with no material impact on operations, costs, or
revenue other than for a very short period of time."

Posted by Holly at 5:08 PM | Permalink | Comments (1)

From JP Morgan's Jamie Baker in his research note this morning in which he downgraded Continental, Delta, Alaska, American, Northwest, US Airways and United Airlines: "Even a best-ever recessionary demand scenario [in 2008] results in a $4 billion industry loss."

"And if demand trends mirror prior recessions, a $9 billion loss can't be ruled out," he added. "In that scenario, cash becomes scarce for many."

He added,

"It’s Just Math. Industry fuel likely to be some $25 billion higher than 2002, overwhelming the $7 billion in labor savings wrought by the Ch.11 cycle. Consolidation may help longer-term assuming labor doesn't intercept most of the benefit, but getting there may prove scary. Aggressive 2H capacity cuts may offset part of the expected pain, though we don't believe the industry can move quickly enough to put much of a dent in forecasted losses."

Technorati Tags: airline analysts, airlines

Posted by Holly at 10:56 AM | Permalink | Comments (0)

This week we've now seen downgrades and dire comments from both Credit Suisse and, as of this morning, Jamie Baker with JP Morgan.

But more potentially troubling to the airline sector than the expected stock price worries, given the higher price of oil, Standard & Poors said yesterday that they were now taking a hard look at the credit ratings of all the major airlines that they track. That would be a total of ten.

Currently, three of those airlines have positive outlooks, six have stable outlooks, and one has a negative outlook.

In particular, the agency says that it is taking a hard look at its "positive" outlook ratings for AMR, Delta Air Lines and US Airways.

S&P noted that except for Southwest Airlines and Alaska Air Group, the airlines “have a relatively low proportion of their 2008 fuel needs hedged, because hedging high and volatile fuel prices is expensive and may require posting cash collateral.”

S&P also noted that while airlines have taken advantage of strong demand and raised fares to offset higher fuel prices, it expects that this trend will stall across the industry in the face of softer demand, likely first on domestic routes and then in international markets.

In addition, it pointed out that though US airlines have built up their cash and in a few cases, bank liquidity over the past years as a cushion against adverse conditions, most of them have at least part of their short-term investments in currently illiquid auction-rate securities.

The rating service says it expects to complete its review by the end of the month.

Tickers: (NYSE: LUV), (NYSE:AMR), (NYSE: DAL), (NYSE: LCC).

Technorati Tags: airlines, American Airlines, Delta Air Lines, Southwest Airlines, US Airways

Posted by Holly at 10:43 AM | Permalink | Comments (0)

The government was out this morning with its latest oil inventory numbers. Not that U.S. inventory numbers have had THAT much to do with the latest run-up in the price of oil - but clearly a surprise on the upside would normally cause traders to back off a bit -- and that is exactly what we are seeing in the markets this morning.

U.S. crude inventories rose more than expected, up 6.2 million barrels to 311.6 million barrels for the week ending March 7, the Energy Information Administration reported on Wednesday. analysts surveyed by Platts had expected an increase of only 1.6 million barrels. While gasoline supplies rose by 1.7 million barrels in the latest week, distillate stocks fell by 1.2 million barrels. Distillates include jet fuel -- so that is not necessarily good news.

As I post this, a barrel of crude is now priced at about 107.55, down about 1.20. Not a lot to get excited about but at this point, we're happy for any decline.

Posted by Holly at 10:27 AM | Permalink | Comments (0)

Yours truly is going to be the keynote speaker at the Los Angeles Business Travel Association Education Day Conference on Wednesday. The event will be held at the UCLA Faculty Center.

If any readers are in the Los Angeles area and would like to come by -- I'm sure the LABTA would love to take your money.

Hope to see some of you there!

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

Holy Moly Batman.

It's bad enough that we have the price of oil hitting new record highs today (107.60 as I post this, up an eye-opening 2.45 on the day). The surge in oil prices has sent shares of almost all airline stocks reeling -- again.

But one airline stock is really getting hammered today.

Shares of ExpressJet are now down about 17% -- sitting at about 1.86 a share -- after the airline reported earnings this morning.

The airline posted a loss of $31.7 million, or $0.60, compared with a profit of $22.8 million, or $0.39 cents per share, a year earlier. Its revenue rose 2.3% to $436 million from $426.4 million.

ExpressJet spent nearly $41 million last year in an effort to transition 69 aircraft that were under a previous agreement with Continental to branded flying. Continental withdrew the jets from its capacity-purchase agreement starting in December.

"Results reflect the enormous challenge this company was presented in redeploying 25 percent of its fleet within a six-month period and managing an increasingly challenging airline industry environment," CEO Jim Ream said in a statement.

For the full year, ExpressJet posted a loss of $70.2 million, or $1.31 per share, compared with a profit of $92.6 million, or $1.56 per share, in 2006.

Yeoow.

Not surprisingly, given the airline's increase in branded flying, the airline's fuel costs when through the roof during the fourth quarter. Fuel cost was up 70% over fourth quarter of 2006.

Ticker: (NYSE: XJT)

Technorati Tags: airline stocks, airlines, Continental Airlines, ExpressJet

Posted by Holly at 1:07 PM | Permalink | Comments (1)

Everyone piles on. Now it's the Future Farmers of America....

Thanks to one of our subscribers who caught this for us tonight.

Posted by Holly at 10:56 PM | Permalink | Comments (0)

This week's issue of PlaneBusiness Banter is now posted. Subscribers can access this week's issue here.

Posted by Holly at 7:25 PM | Permalink | Comments (0)

Goldman analyst Richard Safran writes today in a research note, "We now think deliveries will start in the third quarter of 2009 versus the current 'early' 2009 target."

The deliveries he's talking about are the Boeing 787 deliveries.

Safran writes that Boeing "continues to underestimate the amount of work required on the 787."

Safran says that production problems on the first batch of 787s on Boeing's production line would delay turning the power on in the first plane, push back the first test flight and extend the amount of time Boeing needs to conduct full flight tests on the aircraft.

(NYSE:BA)

Technorati Tags: Boeing, Boeing_787, delays

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

Forget all those people who used to say, "Oh, but adjusted for inflation, the price of a barrel of crude is still lower than what it was when it hit its high peak in the 80s."

Today the price of a barrel of crude oil closed at $105.47. This is the first time the price has ever closed above $105, and this price is used by many as an inflation-adjusted total.

Why the continued increases?

The continued devaluation of the dollar.

The euro rose to yet another record high against the dollar.

This news comes on the heels of a raft of bad news today concerning home builders, mortgages, and those people who fund mortgages. Like banks and investment firms.

As we like to say in this industry, fasten your seat belts. We have only seen the tip of the credit collapse iceberg.

Technorati Tags: oil prices

Posted by Holly at 4:31 PM | Permalink | Comments (0)

Dave Michaels at the Dallas Morning News has the story here.

Technorati Tags: FAA, Southwest Airlines

Posted by Holly at 4:31 PM | Permalink | Comments (0)

Very bad news on the fuel front today folks, as the price of a barrel of crude hit a new all-time high. Crude shot up $5 a barrel today, closing at 104.52. In a somewhat ominous sign for tomorrow, after-hours trading has oil now trading at a price of 104.95.

The uptick comes after the government reported a larger than expected decline in the inventory levels of crude, and OPEC said publicly that it has no plans to change its current production levels. Oh, and yes, the dollar also hit new all-time lows against the euro.

Take it all together and you've get the perfect recipe for higher oil prices.

The Energy Information Agency said today that crude inventories fell for the first week in eight, dropping 3.1 million barrels to stand at 305.4 million barrels for  the week ending Feb. 29. Analysts surveyed by commodities information provider Platts had been expecting an increase of 2.1 million barrels for the week.

And if you are wondering about gasoline, the news was not good here either, as April reformulated gasoline gained 11.3 cents to $2.6421 a gallon and April heating oil rallied 15.13 cents to $2.9431 a gallon on Tuesday, the highest closing level a front-month contract has ever seen.

Yep. $3 a gallon for heating oil.

Delta/Northwest Pilots "Talking"

A number of news organizations are reporting today that pilots leaders from both airlines are meeting today in an effort to come to some kind of seniority agreement for the two pilot groups.

Mary Schlangenstein and Mary Jane Credeur reported today in Bloomberg that the sessions, which started yesterday, are the first between the airlines' work groups since negotiators failed to agree two weeks ago on how to combine the seniority rankings of 12,000 pilots.

This week's meetings involve "leaders of the pilot groups at the two carriers and don't yet involve the full merger committees for each union chapter," according to sources cited in the story.

Posted by Holly at 3:08 PM | Permalink | Comments (0)

There was a story in the LA Times yesterday about an elite level frequent flyer on American Airlines who experienced some truly horrendous treatment on a couple of AA flights. Although the story relates several of his experiences on AA, the most notable was a flight from LA to London that was diverted to JFK due to a flight attendant who'd mistakenly thought she'd seen this gentleman on the employee bus. Thinking the passenger had circumvented security, she advised the cockpit crew and the decision was made to divert to JFK. This incident was widely reported at the time.

It's easy to read this story and decide that the flight crew involved overreacted and that this is racial profiling, plane and simple. It is also easy to forget that about 6 and 1/2 years ago ~2,800 people went to work not expecting or deserving to die, but they did.

It is frustrating when I read stories about this misplaced suspicion that causes flights to divert, or when someone runs through a security screening checkpoint and a concourse is shut down for 4 hours. Relying on physical security alone isn't going to cut it. We regularly read about airport security failures; just Google "Airport Security Failures" and check it out.

Airline flight crews deal with airport security every day and know well its absurdity; perhaps that explains (though doesn't justify) the American Airlines flight attendant's actions on the L.A - London flight. It's virtually impossible to keep all sharp objects and liquids in containers larger than 4 oz. of of commercial airplanes 100% of the time.

I recall a flight I took to Reagan National Airport in November 2001 that illustrated this fact. At the time passengers weren't allowed to leave their seats for the last 30 minutes of the arrival and flights to Washington received a second security screening at the boarding gate. On this particular flight they also had a bomb sniffing dog do a once through the airplane before we boarded. However the dog wasn't trained to detect hand tools.

Upon arrival in D.C. and as the aircraft rolled out on the runway I felt something roll into my foot. I looked down and there laying next to my foot was a 6 " long screwdriver, evidently left onboard by a mechanic during some previous maintenance work. I thought about telling the flight attendant but then realized I'd be spending the next 4-5 hours talking to the D.C. police, so I discreetly put it in my briefcase.

When I departed DCA for the return trip I forgot the screwdriver was still in my briefcase until I laid it on the x-ray machine belt during the security screening process. No big deal, they can just confiscate it and I'll be on my way. Except they didn't detect it. The offending screwdriver now hangs on my garage wall next to my other hand tools.

The moral of the story is that it isn't the sharp object from which we need protection; it is the person that would use the object to cause us harm on the airplane. And I am not talking about CAPPS II or whatever iteration is currently being contemplated. We don't need a mega database with everyone's credit information and other personal data so the government can spy on us.

In a previous life I worked for a company that proposed to the TSA a method to utilize the data that is present in airline reservations to provide real time responses to queries about the data. Things like - show me all of the reservations booked between W and X dates for travel out of Y airport on or after Z date. Designed to be used by security or law enforcement agencies, it would be a tool to confirm intelligence from the field. So if information was that bad guys were planning to do bad things to flights leaving London and bound for the USA next month, this tool could help find those reservations made by the bad guys. No credit checks, no social security numbers, no data enhancement, no billion dollar capitol cost to set it up. Just use whatever is in the reservation and don't bloat it (and make it slower) with useless personal data.

Instead of looking for weapons that have been tried in the past - shoe bombs, liquid explosives, or box cutters, let's just look for the bad guys. One thing every bad guy needs to accomplish their dastardly deed is a reservation.

Unfortunately what happened with CAPPS II was that the big government contractors smelled cash and lined up at the trough for their fair share. Ultimately there was a lot of money spent with no beneficial result, and the companies involved had the added bonus of defending themselves in various class action cases brought by privacy advocates. Although it supposedly was killed by TSA, it has been reported that they will continue to develop an "automated passenger pre-screening system". Oh goodie.

Fast forward 6 years and we are still looking for sharp objects and liquids at security checkpoints, taking off our shoes and belts, and diverting flights because we are not sure whether someone is a threat, or just a really good customer who happens to fly a lot.

Posted by Godzilla at 5:36 PM | Permalink | Comments (0) | TrackBacks (0)

Anyone going to be in San Diego tomorrow for the Airline Business Network USA 2008 Conference?

If so, stop by and say hello. I'm on the first panel that will be speaking between 9 and 10:15 a.m.

Max Vallejo, Air France; Florian Dehne, Lufthansa;  and Brook Sorem, Southwest Airlines will be joining me as we talk about  -- what else? The airline industry.

Hope to see some of you there.

Posted by Holly at 4:09 PM | Permalink | Comments (0)

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

Posted by Holly at 8:22 PM | Permalink | Comments (0)