Monthly Archives: January 2008

All in the Family

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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.

JetBlue to Ink Long-Awaited Aer Lingus Deal

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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)

American Pilots Jammin’ With The Clash

Clash

“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”

That’s what more than a few American Airlines pilots are singing themselves today — as the deadline hits home for them to decide whether they themselves are gonna stay or gonna go.
And yes, from what we have been told, more than a few just might wait until the last minute today to let the company know about their decision. Why?

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.

Midwest/Northwest/TPG Deal Approved

Monopolyman

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)

My First Blog

Godzilla.jpgActually 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.

Nice Onboard “Get” for Continental; JetBlue Pockets the Money

Television

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: ,

AirTran, JetBlue, Northwest Report Earnings

Earnings-10

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.

New Godzilla Picture Suggestion

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.

757

Okay, We’ve Found It

Frank

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?

We Welcome a New PBB Contributor

Welcome

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.