Nothing like coming back from vacation with a bang. That’s what I say. Yes, I am back from vacation and this week’s PlaneBusiness Banter will be posted tomorrow. (Sunday.) In the meantime, look what a little bird just dropped into my hand. A photo of what I believe is the new Southwest Airlines livery that will be unveiled Monday morning at the airline’s headquarters as part of its Media Day event. (Yes, I will be there.) As for where this came from, I’ll never tell. But don’t say I never do anything for you guys.
Hi there everyone!
Since I essentially finished up last week’s issue of PlaneBusiness Banter in the wee hours, fell into bed, and was never heard from again, I figured everyone out there in non-subscriber land was due at least some kind of blog post. (Oh and thanks for all the “get better” emails. I, as you can tell, have been working hard on doing just that! Sleep and drugs. Hey, they work! I’m better!)
So instead of talking about all the great things we talked about in last week’s issue of PBB, let’s talk about the airline hot news flash from Tuesday.
As we had predicted, it was announced today that pilots at JetBlue voted heavily in favor of representation with the Air Line Pilots Association. (ALPA) The vote was announced earlier this afternoon. The final “yes” vote was, according to tweeted comments we saw from ALPA, a “little over 71%” in favor. A press conference is scheduled for this afternoon. May be happening as I type.
There are somewhere between 2500-2700 pilots that are affected.
This is not the worst thing in the world to happen to JetBlue, although the stock took the expected hit when the news hit the wires, and management had been acting, and making comments to the effect that it would be a highly negative turn of events if their “direct” relationship with their employees was tampered with.
It’s not a highly negative turn of events. Things going forward will simply be….different.
Hello everyone. Wow. What a day. Just as we posted this week’s issue of PlaneBusiness Banter, new important information has been published concerning the mysterious disappearance of Malaysia Airlines Flight 370. No surprise that the latest news comes yet again from Jon Ostrower and Andy Pasztor at The Wall Street Journal.
Jon and Andy, who have been the ones to break the story on this situation almost all week, just did it again as we published PBB. They have gone with a story in which they report,
“Officials suspect two different systems were shut off after the plane took off last weekend, one shortly after the other, people familiar with the investigation said. About an hour into the flight, the plane’s transponders stopped functioning, making it much more difficult for air-traffic control personnel to track or identify it via radar.
In the ensuing minutes, a second system sent a routine aircraft-monitoring message to a satellite indicating that someone made a manual change in the plane’s heading, veering sharply to the west. Such a turn wouldn’t have been part of the original authorized route programmed in the flight-management computer that controls the autopilot. Those system-monitoring messages are suspected to have been disabled shortly afterward, according to some of these people.”
This news comes after it was Jon and Andy who broke the story that there was evidence the aircraft had deviated from its original course and veered sharply west, after communications ended with civilian authorities.
I’m proud to call Jon a friend.
That’s a long way of saying — if you really want to know what is going on with this situation listen to Jon and Andy when they are on television being interviewed or read their stories. They are working the story like stories should be worked.
Okay, I’ll shut up now.
Speaking of stories, this week a lot of airline CEOs were in New York telling their stories to investors as JP Morgan held their annual airline, transportation, and industrials conference. Unlike years ago, however, they were anything but sob stories.
The biggest news for us out of the conference? No other major airline is guiding to a substantial reduction in revenues as a result of the winter weather cancellations. Except for the one we already knew about — United Airlines.
Delta Air Lines, in fact, upped some of their guidance. American Airlines says RASM should come in between 2% and 4% as they had already guided. Southwest said their quarter is still on track.
So the question remains — what’s the problem with United?
Speaking of, this week we welcome back contributing editor Brett Snyder, who returns with yet another Cranky Analysis. This week he looks at the Denver market. We know that Southwest now has the largest market share in the market, but have they been able to snatch any of United’s higher yielding revenue? The answer, and our look at a number of routes out of Denver surprised us.
All this, and much, much, more in this week’s issue of PlaneBusiness Banter.
If you will excuse me now, I am off to San Diego for this year’s ISTAT Conference. Can’t wait to see some of our subscribers there. Have a great weekend everyone!
In March, we reported in PlaneBusiness Banter that Southwest Airlines was going to offload its Boeing 717s to Delta Air Lines.
The company subsequently hemmed and hawed around the topic, but they never denied it.
Last week, I then reported that the 717 flying had been addressed in the tentative agreement between Delta Air Lines and its pilot union.
Finally, today, Southwest Airlines announced that yes, it has agreed to a deal that will see all 88 of the former AIrTran 717s go to Delta Air Lines.
This negatively impacts those AirTran 717 pilots who had been the beneficiary of a “carve-out” as part of the seniority agreement with the Southwest pilot group. Their “preferential” treatment will end — when those 717s depart. The carve-out was only applicable as long as Southwest Airlines flew the aircraft.
On the flip-side, this is good news for Southwest Airlines’ pilots — as it will move them up in terms of seniority.
Here we go.
Just minutes ago, a joint statement was issued by the three unions that represent more than 55,000 American Airlines’ employees. Concurrent with that, US Airways issued an 8-K with the SEC.
The situation we have is this: All three unions have signed term sheet agreements with US Airways, and have now publicly thrown their support behind a merger between US Airways and American Airlines.
See below for the union statement:
ALLIED PILOTS ASSOCIATION, ASSOCIATION OF PROFESSIONAL
FLIGHT ATTENDANTS AND TRANSPORT WORKERS UNION JOIN IN
SUPPORT OF AMERICAN AIRLINES-US AIRWAYS MERGER
Union Leaders Pursue Best Path to Restore American Airlines to Preeminence
Fort Worth, Texas (April 20, 2012) — The Transport Workers Union (TWU), the
Association of Professional Flight Attendants (APFA) and the Allied Pilots Association
(APA) issued the following joint statement today:
“On behalf of nearly 55,000 American Airlines front-line employees—including
the 17,000 members of the Association of Professional Flight Attendants, the 10,000
members of the Allied Pilots Association and the 26,000 members of the Transport
Workers Union—we are pleased to confirm our support of a possible merger between our
airline and US Airways. We have reached agreements on terms sheets for collective
bargaining agreements that would govern the American Airlines employees of the
merged airline with US Airways.
“This significant step represents our shared recognition that a merger between
American Airlines and US Airways is the best strategy and fastest option to complete the
restructuring of American Airlines, enabling it to exit the Chapter 11 bankruptcy process
and restore American Airlines to a preeminent position in the airline industry.
“As envisioned, a merger of US Airways and American Airlines provides the best
path for all constituencies, including employees of both American Airlines and US
Airways. The contemplated merger would be based on growth, preserve at least 6,200
American Airlines jobs that would be furloughed under the company’s standalone
strategy, and provide employees of both American and US Airways with competitive,
industry-standard compensation and benefits. Over the long term, the combined new
airline would support greater job security and advancement opportunities for both
American Airlines’ and US Airways’ employees that are far superior to those available to
employees at either airline on a stand-alone basis. Importantly, by avoiding a lengthy and
contentious 1113 process, the new carrier would be able to emerge from bankruptcy more
“A merger would create a foundation to establish American Airlines as a vigorous
competitor of the two larger network carriers and the industry at large. Customers of both
airlines and air travelers in general will benefit greatly from a viable third network carrier
and significantly enhanced travel choices.”
That is the full text of the unions’ joint statement.
Just a short note to let subscribers know that PlaneBusiness Banter is once again accessible. Apparently the company that houses our server decided to move it last night. And not tell us.
This caused all kinds of things to happen. But I think we’ve worked out all the kinks and all the electrons are once again working as they should after a couple of reboots and a handful of tweaks.
Just glad they did this during an “off” time, and not in the middle of a publishing timeframe.
Our apologies for any inconvenience, stress, or other unnecessary angst this may have caused.
FYI — PlaneBusiness Banter returns on January 10th.
Hello everyone. “Almost Happy New Year” to all of you!
Don’t know if this is an omen for 2012, but this morning we woke up and found that the SQL database that controls access for PlaneBusiness Banter subscribers had short-circuited. The PlaneBusiness site itself is still up, but for now, subscribers cannot access PlaneBusiness Banter when they attempt to log in.
Bad timing — as most of our geeky friends are not at their computers this week.
I’ll let everyone know here when the site is back up.
This much I know is true about the American Airlines bankruptcy.
1) With another record number of pilots about to opt for retirement on Dec. 1, the company could ill afford another run on cash reserves
2) The company can talk about “costs” all it wants, but the airline has systemic network and revenue problems it has yet to effectively address. Even if labor costs and productivity were “righted” — airline would only break even at current revenue levels
3) Gerard Arpey had to leave. No option.
4) Expect to see a number of other high-level departures from the AMR C suite.
5) While the pilots have taken the brunt of recent headlines, I suspect it will be the flight attendant group that will be faced with the harsher changes to their contracts as part of bankruptcy process.
PlaneBusiness Banter subscribers — this week’s re-written <!> issue will be posted later today.
Meanwhile, for our latest take on the American situation, please join our Twitter feed at @planebusiness.
A couple of observations on today’s black day for airline stocks.
One, the markets are in panic mode in general today — as fears of a continued economic slowdown shake the Street. This is not just an airline sector sell-off, it’s a general market fear-driven sell-off fueled by continuing concerns over the situation in Europe.
Two, the general market assumption is that if the economy goes south, so will airline revenues.
Three, in the case of AMR, the situation is particularly acute, because investors know the airline has lagged in revenue performance, and the airline is the most cash restrained of all the major airlines.
Four, fears of an impending AMR bankruptcy have been rumbling around and picking up traction for the last 30-45 days. Increasing numbers of retiring pilots do not help the situation, nor do continued analyst concerns over the airline’s long-term liquidity health.
Looking at the latest sector numbers for today, it looks as if shares of other airline stocks that were hammered earlier in the day into double-digit declines have bounced back a bit, while the volume of AMR shares traded continues to boggle the mind. Shares of AMR have climbed back a little bit since trading was resumed. Now shares are only down 30%, trading at around 2.07. Earlier in the day shares were down to 1.75.
The current trend is up, not down.
It’s not been a good day for AMR on Wall Street.