Monthly Archives: July 2007

Airline Stocks Fall as Oil Rises — With Two Exceptions

Midwest

With the price of oil taking off today, most airline stocks went in the opposite direction.

With two big exceptions.

On the back of the news that Midwest Airlines will begin “discussions” with AirTran, as well as other “strategic and financial parties” that have expressed interest in a deal with Midwest – shares of Midwest were trading up almost 13% as we posted this update, to 14.18.

Ryanair

Across the pond, Ryanair also saw shares up sharply today, as ADRs of the airline were trading up almost 14%, sitting at around $41.75 last time I checked.

The reason? The airline reported earnings up 20% from last year’s fiscal first quarter.

Tickers: AMEX:MEH, Nasdaq:RYAAY

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Tuesday Tidbits

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Hello everyone. Okay, it just took me more than an two hours to get my email box to a point where I could at least know how far behind I was. Heh. I have a friend who makes fun of me whenever I say I am going to try and not check email for days at a time. (He says that never happens.) But Friday, Saturday, Sunday, and most of Monday it was true, as I was caught up with the family activities here at the Worldwide Headquarters involving PlaneMom’s farewell flight.

And today, I have paid the price.

Maybe I should just shut down the computer and go do something else.

Nah….

So — first of all, there have been seven count them seven airlines, that reported earnings between the time PBB was in the editing process Thursday morning and today.

US Airways, Alaska, Frontier, Midwest, AirTran, Republic and Northwest.

Speaking of Northwest, the airline’s cancellations continued to spike over the weekend. More than 200 flights were canceled Sunday alone, 128 cancelled on Monday, 62 cancelled as of 1:30 p.m. CT.

Between Friday and Sunday more than 514 flights were canceled. 

No surprise that both sides — management at the airline and the airline’s pilots –  continue finger-pointing at the other for the increased cancelation figures.

Oh, and yes, Northwest reported a profit today. Without reorganizational items, and before taxes, the company earned $273 million compared $179 million in the second quarter of last year. Not counting the reorg items, the airline had been expected to post a profit of $0.79 a share. The airline came in just under that at $0.78.

In today’s earnings call, CEO Doug Steenland said “our operational performance in June and July has been unacceptable and we must restore NWA to its historical position as one of the most reliable airlines in the industry. Our immediate focus is to restore operational reliability.”

Meanwhile, as I said, the airline also explained that the cause of cancellations is from a combination of bad weather on the east coast and a spike in pilot absenteeism, but officials for NWA’s pilots union continue to argue that the carrier has too few pilots to fly the planes.

Oil Moves Up, Dow Moves Down

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Wild day down there in the pits on Wall Street today, as more mortgage and credit bad news sent shares of the Dow Jones Blue Chip Index down more than 300 points just a few moments ago. As of this posting, the Dow is now treading down about 296 points. That represents about a 2.2% decline on the day.

Other not so good news as we look at the stocks we track here at PlaneBusiness. Not one, not ONE airline or airline-related stock that we track is posting a gain as we post this note.

Meanwhile on the oil price front, a barrel of crude oil hit $77 a barrel in trading earlier today, but is now is trading around 76.05.

PlaneBusiness Banter subscribers: this week’s issue will be posted later today.

Clive To Step Down as CEO of WestJet

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Oh my.

The last founder of WestJet standing has announced that come September, he’ll be leaving his post as CEO. He’ll become the company’s executive chairman of the airline.

“I will continue to play a key role within WestJet as the company’s executive chairman by establishing and supporting the strategic direction of the company,” Beddoe said in a statement issued today.

Beddoe, who co-founded the airline in 1996, plans to hand over the job of CEO to current WestJet president Sean Durfy on Sept. 4

I wonder if this means Clive will be able to sneak in more time fly-fishing. In an interview we did with Beddoe a number of years ago in PlaneBusiness Banter, he seemed most happy when he was talking not about the airline — but about how he loved to fly fish — but that he didn’t get nearly enough time to pursue his love.

Being an airline CEO can tend to cut down on the fly-fishing time.

Here’s to more fly-fishing time for Clive as he moves more into a strategic position with the airline that he created, along with Don Bell, Mark Hill and Tim Morgan, in 1996.

Tuesday Tidbits

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Hi guys. Yes, the Memorial Service for PlaneMom is Saturday, so yours truly spent most of today and yesterday doing things related to it. You know – signing papers at the attorney’s office, going back to the florist, trying to get the programs finished, making sure there is nothing else I have to order online so that it gets here ontime, making dinner reservations for after the service, scrounging around for additional easels to hold artwork and pictures — you know, the usual.

Frankly, as the one who is supposed to give the main “address” or whatever on Saturday, I can guarantee you it won’t be structured until late Friday night. If not Saturday morning.

Having said that, tomorrow and Thursday are now officially designated as “Memorial Free Days.” Heh. I’ll see how long that lasts. It had better last as I’ve got to write about Continental, JetBlue, and United’s second quarter numbers in detail this week in PBB. Along with all of our normal bantering.

Speaking of United, as per their revised guidance in June, the airline posted good numbers today.

The company said its second-quarter profit amounted to $274 million, or $1.83 per share, compared with $119 million, or $0.93 per share, a year earlier.

Wall Street analysts had expected the company to earn $1.39 per share, according to consensus numbers.

Can’t wait to listen to the latest edition of the Jake and Glenn show.

Yesterday the airline unveiled the details of its new business class seats. They’ve gone flat.

If anyone had any doubt as to whether or not the new Business Class seats on American were lacking — I think United just took a big step in making that decision for them as they announced they are going to lie-flat seats for their business class configurations.

Business-class cabin improvements to United’s Boeing 747s, 767s and 777s will include electrical outlets, connections for Apple iPods to seat-back video screens, and seats that turn into lie-flat beds. United will install new fixtures and tiling in lavatories and offer more movie choices throughout the planes, and put new cushions and fabric on coach seats.

But there is another side to the announced changes. The airline will also be reducing the number of first and business class seats on its 747s, 777s, and 767s. The move is designed to add more more coach tickets that are paid for at some fare, rather than having more room taken up by first and business-class travelers who aren’t paying top fares — but upgrading.

Interesting move.

Or, as Brian Nelson, analyst with Morningstar told Bloomberg, “This is a cheaper way of increasing seat capacity on a lucrative market. It’s definitely cheaper than buying a new 747 outright.”

Jamie Baker, analyst with JP Morgan said that if the airline were to make the changes today, the airline would immediately pick up 2% in capacity — as a result of the changes.

JetBlue also reported in today.

The airline reported net income for the quarter rose to $21 million, or $0.11, from $14 million, or $0.08 cents, earned in the year-ago second quarter.

While this was an improvement year-over-year, it wasn’t that much of an improvement, and was below analyst’s consensus for the airline. Analysts had expected the airline to post a profit of $0.12 a share.

Speaking of my memorial service duties, (which have included screening thousands of slides) here I offer you just a small taste of what my mother would make me endure on a regular basis, i.e., pose for her. Didn’t matter what time of year. What the reason. What the outfit.

As you can clearly see.

Well, I guess another 40 of these might make my argument stronger, but I won’t subject you to that.

Hollyposeweb

PBB Posted

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Okay boys and girls. This week’s issue of PlaneBusiness Banter, complete with in-depth coverage of the earnings calls of American, Southwest, and Delta Air Lines, is now posted. Subscribers can access this week’s issue here.