Monthly Archives: January 2007

US Airways/Delta Deal Apparently Dead

Usairways10012

Oh, boy. I can upload graphics again. Yes, we had some kind of little technical glitch with the program we use to upload stuff yesterday. Hence, we were graphic-less.

Horrible state to be in.

How is everyone today, on this, the 31st day of January?

This date is significant, in that tomorrow had been the deadline US Airways had given Delta’s creditor’s committee to get its act together and either allow US Airways to move forward on its merger proposal or not.

According to reports this morning, and confirmed by a US Airways’ official statement about 10 minutes ago, the deal from US Airways is now off the table.

From that release:

“We received word earlier today that Delta’s Official Unsecured Creditors’ Committee would not be able to meet our demands by the Feb. 1, 2007 deadline. As a result, we have withdrawn our offer to merge with Delta Air Lines. While we are disappointed that the Committee has chosen to ignore its fiduciary obligation to Delta’s creditors, we are excited about our future and proud of our team’s performance during this process.

Ticker: (NYSE:LCC)

Bidder Follies at Alitalia

According to the Financial Times today,

“The Italian government surprised everyone this week by revealing that 11 potential bidders for the ailing Alitalia had submitted expressions of interest. This was far more than expected but also owed something to lax checking of candidates.

Happily, that meant that along with global powerhouses such as Texas Pacific, UniCredit and a group featuring Goldman Sachs, there was Fabio Scaccia, who teaches aviation at a technical institute south of Rome.

Scaccia, whose name was third on the official press release from the Treasury ministry, was surfing the internet, saw details of the sale and submitted his bid to Merrill Lynch, which is advising the government. The requirement that bidders have assets worth at least 100 million euros seems to have been waived in his case.

He said on Tuesday his bid was an orderly protest about years of mismanagement at the airline, which is losing over 1 million euros a day.

“I did it out of indignation not because I really want to buy [Alitalia]. I wish! I don’t have enough money for that, I’m a teacher and my wife’s a housewife.”

It will be up to all those real financial bidders at least to show they know as much about air travel as Scaccia, who says he’s studied aeronautics for 30 years.”

Heck, we could have submitted a bid. Drat.

Wait. What am I thinking?

About Time: FAA Proposes Change to Pilot Age Limit

“The Federal Aviation Administration has proposed raising the retirement age for commercial pilots from 60 to 65, a decision that could help older pilots cope with diminished salaries and retirement benefits, but would slow career advancement for younger pilots.

Marion Blakey, the FAA’s administrator, said Tuesday that his proposal would allow commercial pilots to fly who are older than age 60, as long as the other pilot on the flight deck is 59 or younger. That matches a rule put in place last year by the International Civil Aviation Organization. While that provision does not affect U.S.-based pilots, it would allow foreign pilots older than 60 to fly into the United States.

“A pilot’s experience counts, it’s an added margin of safety,” Blakey said in a statement. “Foreign airlines have demonstrated that experienced pilots in good health can fly beyond age 60 without compromising safety.”

Raising pilot retirement age has been a contentious issue for several years. Many pilot groups, including the Allied Pilots Association, which represents American Airlines pilots, have opposed the idea. Others, however, including the union for Southwest Airlines pilots, have lobbied in favor of a change.

The decision isn’t final. The FAA will publish its proposal in coming months, and then will accept public comments before deciding whether to implement the age change.

The retirement age dates to 1959, and was implemented in part because of a strike at Fort Worth-based American. The airline had established a mandatory retirement at age 60, and three pilots brought a grievance against the airline after they were forced to retire. C.R. Smith, the airline’s founder and chief executive, refused to reinstate them, which sparked a 21-day walkout.

Smith asked the FAA to establish 60 as a mandatory retirement age for pilots, and the rule was later adopted as the federal standard.”

-Ft.Worth Star-Telegram, Trebor Banstetter.

Delta/US Airways Merger Deal: It’s Awfully Quiet Out There

Was talking to someone in the industry this morning and he said to me, “It’s awfully quiet on the Delta/US Airways front. Think it’s dead?”

I’m not sure. Although not too long after I talked to him, Delta announced it has secured $2.5 billion in exit financing for its stand-alone restructuring plan.

The most circulated rumor today concerning the deal is that US Airways was willing to up its offer another $1 billion, but only if Delta then let US Airways begin moving on due diligence, along with other necessary legal steps that would be necessary to get the merger rolling.

Well, we’ve had no official notice that US Airways has upped its bid, now have we?

So here we sit.

Which reminds me. If the proposal for Delta does go down in flames, then what? As I said to someone this morning, the options at that point for more than one airline begin to get much more interesting than if the deal were to begin an official move towards possible fruition.

Ticker: (NYSE:LCC)

Speaking of ExpressJet…

For those of you who are PBB subscribers, an advance correction notice for our column last week on ExpressJet. (It will be mentioned in this week’s PBB as well.) Yours truly experienced a brain short-circuit when writing last week on the new 50-seat jet operation. I had 44 airplanes on the brain apparently.

Anyway, I referred not once (that would be excusable) but twice, to the new “44-seat” operation. Duh. My apologies. Obviously most of you just assumed I had lost my mind and went on your merry way, figuring out what I really meant — there are 44 aircraft in the operation, and they all have 50 seats.

Good Day

Hi all. I know. I was AWOL yesterday. Just trying to get a bit ahead of the earnings onslaught from last week and today.

We now have more details on the new 50-seat operation that ExpressJet is getting ready to unroll this week.

Was just talking to someone in the industry this morning, and he remarked to me that he was somewhat surprised that there had not been more written about the new operation. I agree.

In a nutshell, ExpressJet is going to take 44 of of its 50 seaters it used to fly for Continental (you may recall that Continental modified its contract with ExpressJet, eliminating a total of 69 regional aircraft, effective this year.) and they are starting a small point-to-point regional operation of their own.

Gutsy move.

Last week CEO Jim Ream was not very long on details about the new operation, and the official roll-out for news is set for Thursday.

But, thanks to Scott McCartney at the WSJ, we do know more cities that are involved in the new operation. They include Ontario, Calif., near Los Angeles, which will apparently be the new airline’s busiest city, with nonstop flights to 14 cities.



Other cities that will see new service are: Albuquerque, Austin, Bakersfield, Birmingham, Boise, Colorado Springs, Corpus Christi, El Paso, Fresno, Jacksonville, Kansas City, Louisville, Monterey, New Orleans, Oklahoma City, Omaha, Raleigh-Durham, Sacramento, San Antonio, San Diego, Spokane, Tucson, and Tulsa.

For those with enquiring minds, I’d point out that that bulk of these cities are current Southwest cities.

Interesting.

PBB To Be Posted Later Today

Home-Typewriter Copy-1-16

Ah, the sun is shining and it’s a beautiful day here in the swamp. It’s about time, that’s all I have to say. It’s been grim, grey, and well, glum, around here for more than a week.

Meanwhile, all of us here at the Worldwide Headquarters are merrily typing away. Except for the cats. They’re all out in the sun. Smart animals.

Look for this week’s looong issue (earnings tend to do that) to be posted in a bit. Shouldn’t be too late today.

Talk to you then!

What Do You Think?

Madchild

Yesterday Ben Mutzabaugh, in his “In the Sky” blog at USA Today wrote about an incident involving a small child and her parents. Apparently all three were traveling on an AirTran flight. Only one problem. Said child, age 3, refused to stop screaming.

Here’s the text of the blog entry:

AirTran is defending its decision to remove a family from one of its flights after a 3-year-old girl’s parents could not calm her temper tantrum. “After the family boarded an AirTran plane in Fort Myers on Jan. 14 for a flight to Boston, the child became temperamental and refused to take her seat,” the Orlando Sentinel writes in its account of the incident. The girl “was climbing under the seat and hitting the parents and wouldn’t get in her seat,” AirTran spokeswoman Judy Graham-Weaver adds to The News-Press of Fort Myers. Her parents insisted that they could have calmed the girl if they had just been given a little more time. “We weren’t given an opportunity to hold her, console her or anything,” mother Julie Kulesza tells The Associated Press. By federal law, children older than 2 must sit in a seat secured with a seat belt in order for a plane to be cleared for takeoff, according to the Sentinel.

“The flight was already delayed 15 minutes and in fairness to the other 112 passengers on the plane, the crew made an operational decision to remove the family,” Graham-Weaver says. The family was refunded their ticket price. The family also was offered free round-trip tickets to anywhere the AirTran flies, which the New-Press says was declined. ABC News quotes the family as saying the flight’s passengers were more sympathetic than the crew, though no other passengers were interviewed for the story. The girl’s grandfather acknowledged that “nobody wants to sit on a plane with a crying child,” but adds “your first attempt should be to remedy the situation before you take a drastic action, and that wasn’t done.” He adds: “My granddaughter is 3. Kids are kids.” Says AirTran’s Graham-Weaver: “We have an obligation to the other passengers to move the plane.”

This story has generated a fair number of emails to me this week, and has become a hot topic on more than one aviation-related email list to which I belong.

So — my question to you this morning is this.

Did AirTran make the right move in this case? Or, if not, what should they have done?

My opinion? I think they did the right thing. However, I’m not sure they went about it in the right way. (Then again, none of us were there and we’re relying on a number of press reports for the info as to how things went down.)

The unfortunate side effect for AirTran is I know if I had a small child and was getting ready to fly, I might think twice before I booked a flight on the airline.

New ExpressJet Regional Network: Just Don’t Call It An Indy Air Clone

Expressjet

In today’s ExpressJet earnings call, CEO Jim Ream outlined the three-pronged business plan the airline has mapped out for itself going forward.

Without a doubt, the most controversial is clearly the 44-seat regional network carrier the airline plans to roll out next week. Sound eerily like another Independence Air? Not hardly, according to Ream.

Jim said in the call that unlike Indy, which sought to position itself as a “low-fare” carrier, ExpressJet intends to charge market rates for its regional routes.

Where will they fly? We don’t know. Average fare? Don’t know. Average length of haul? Don’t know. The airline was tightlipped in its call today with any details — other than the fact we’d find out more on Feb. 1.

Mark you calendars now.

(NYSE:XJT)