Monthly Archives: February 2008

Air Force Tanker Contract Goes To Airbus

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Stunning news out this afternoon, as the Air Force announced that Airbus and Northrop Grumman have been awarded the $40 billion Air Force tanker deal.

According to the Air Force, the contract is for the right to build up to 179 tanker aircraft, to be called the KC-45A, for the Air Force.

“The tanker is our number one procurement priority right now,” said Air Force Gen. Duncan McNabb in a press release about the deal. “Buying the new KC-45A is a major step forward and another demonstration of our commitment to recapitalizing our Eisenhower-era inventory of these critical national assets.”

The KC-45A is expected to be able to provide refueling to both Air Force and Navy planes, while its predecessor, the KC-135, must be configured for one or the other before takeoff.

It was widely believed that Boeing held the edge in these negotiations. As one report said tonight, “Boeing officials must be feeling a little bit like the New England Patriots.”

This award comes after a scandal involving  the revelation that a top Boeing official had conducted illegal job negotiations with an Air Force acquisition official who later joined the company broke in 2001 — scuttling what was widely believed to be, at the time, a slam-dunk contract for Boeing.

One thing is for sure. Stars aren’t the only thing falling on Alabama tonight. So are dollar bills. A big part of the Airbus pitch on this contract was the fact they would manufacture the aircraft outside of Mobile, AL.

American Airlines Investigating Similar 777 Incident as BA Flight

Flight International reported today that American Airlines is investigating an incident Thursday in which the engine on one of its Boeing 777-200ERs apparently failed to respond to throttle commands for several seconds during an approach into Los Angeles.

The incident, at this point, sounds somewhat similar to the problem that caused a British Airways 777-200 to land short of the runway at Heathrow recently. Both aircraft were equipped with Rolls-Royce Trent 800 engines.

According to the column,

“The incident involved American’s flight AA299 from Miami and occurred at a height of around 2,000ft as the aircraft was descending to Los Angeles.

In an information statement to members, the Allied Pilots Association – which represents American Airlines cockpit crew – says the aircraft experienced a “hang-up” of its left-hand engine.

“The auto-throttles were on and the left engine hung at approach idle as the right engine accelerated normally,” says the association.

“It is believed that the left engine would not respond to throttle inputs for 10-15 seconds before finally responding and accelerating to the commanded thrust.”

All of American’s 777-200ERs are fitted with Rolls-Royce Trent 800 powerplants.

Maintenance personnel have downloaded the flight-data recorder information and will examine the fuel tanks and engine fuel filters for possible contamination. Tests will also be carried out on the electronic engine control.”

Rodent for Rent

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Anyone know whose rat this was, that was in front of the US Airways’ headquarters Thursday?

While one usually sees the rat in such places as New York or Chicago, and the IAM is usually the one blowing him up, Thursday a large rodent was placed in front of the US Airways’ headquarters. You know, it was Media Day. As a result, union employees took advantage of the fact by picketing outside the airline’s headquarters.

But I’m not sure this was an IAM rat. He looked too new to me. The last IAM rat I saw in front of Grand Central Station a couple of years ago was really pretty disgusting. He’d seen some heavy use. Someone told me Thursday that ALPA now has a rat. Told me it cost the union $4000. Was this the new $4000 ALPA rat?

Maybe there is a rental market opportunity here. You know, Rent-A-Rodent.

My thanks to CrankyFlier, who had the opportunity to snap this photograph Thursday morning. While he was doing something constructive, yours truly was still trying to find a parking space, as the employee garage was blocked, and the spaces next to the headquarters had been roped off.

No worries. I got there. More to come. But one thing I will say is this.

There was a Reuters story that ran yesterday afternoon that was headlined, “US Airways CEO sees airline industry heading down.” This story was filed almost simultaneously with the conclusion of the executive Q&A session of the Media Day program.

Both CrankyFlier and I were in that same room, and both of us were in disbelief when we read this story. US Airways CEO Doug Parker did not say that the airline industry was “headed down.” He did say the industry was “a mess.” But this was in the context of talking about consolidation, the economy, and a number of other related topics. In fact, US Airways President Scott Kirby said yesterday that while it is expected that passenger demand will begin to fall — given what is going on in the economy — the airline still has not seen evidence of such a weakening as of yet.

In summary, a very misleading story posted by Reuters yesterday afternoon.

Ancillary Agida

Godzilla.jpg It’s me again. Sorry It’s been a while since you’ve heard from me, but that wasn’t by choice. It certainly wasn’t for a lack of things on which to comment, that’s for sure.
One recent trend in the airline business that, although is a logical result of too much capacity and $100/barrel oil, bugs me is ancillary revenue. There was even an “Ancillary Revenue Airline Conference” held recently. Heck, it must be here to stay if it is an acronym.
Call me a purist, but I think it is a sad day in Whoville if airlines can’t make enough money from selling airline tickets to make a profit, so they have to resort to selling display ads on their tray tables and charging most customer for checking more than one bag. To be sure, the current conditions have created some strange bedfellows, including an alliance between Allegiant Air and The Blue Man Group, which still baffles me. However, people a lot smarter than I have determined that “it is good”.
It may be helpful in the short term, but if an airline can’t make enough money selling its services to support itself taking people to and from where they want to go, I don’t think you can sell enough sandwiches, check enough second bags, or sell enough hotel rooms or show tickets to have any long term success. You might make it in the short term, perhaps make a few bucks in an IPO and get out before the house of cards falls in; but eventually the business plan needs to be sound.
Well that’s all from Godzilla this evening. If, due to my absence, you have forgotten who I am you can check out Holly’s introduction of me here. I would certainly be happy to read your comments; posted here or sent directly to Godzillaspeaks@gmail.com.

Off to US Airways’ Media Day

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Hey folks.

Tomorrow I fly to Phoenix for the US Airways’ Media Day, which cranks up on Thursday. 

The airline should be applauded for having a Media Day. At this point in time, only two airlines hold such an animal on a regular basis, and only US Airways has held one every year for the last several years.  Pretty sorry track record, don’t you think?

For that — the airline deserves a high five.

Yes, the original standard bearer of the PR and media crown for the airline industry, Southwest Airlines, also holds Media Days. But they are not held on a regular annual basis.

Given the fact that no other airlines even hold a Media Day — both airlines really do deserve a public shout-out.

In addition, next week I’ll be speaking at the Network 2008 Conference. The conference, which is sponsored by Airline Business magazine, brings together airlines and airport folks — in San Diego. It’s actually a cool concept. Kind of like “speed dating” for airports and airline route planning folks.

Yep. Lots of flying. Lots of opportunity to get out and meet more subscribers of PlaneBusiness Banter. And you — readers of PlaneBuzz.

More later. In the meantime, behave yourselves.

Tuesday Tidbits: Delta, Northwest, Oil Prices

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Delta Air Lines’ Management issued an “update” communication to its employees this afternoon.

“To: Delta Colleagues Worldwide

From: Richard Anderson and Ed Bastian

Subject: Update On Consolidation

The media continues to have daily coverage speculating on the airline industry, including speculation involving Delta.  As you know, for several months our Board and leadership have been reviewing strategic alternatives, including potential consolidation, to ensure that Delta maintains its leadership position in the industry.

Our review has been guided, from the beginning, by certain principles that have to be met if there were to be consolidation with another airline.  Our principles are:

– that the airline be called Delta, headquartered in Atlanta

– that the seniority of our people is protected

– that the pension plans of our employees and retirees are maintained

– that the network is strengthened and our plans for international expansion are accelerated

– and, most importantly, that there is even greater job security along with more career opportunities for our people

To date, we have not arrived at a potential transaction that meets all of our principles.  Rest assured that we will not complete a transaction unless all of these conditions are met.  We have a strong stand-alone plan.  We will maintain our attention on executing that plan while we continue to look at strategic alternatives.

We appreciate the professionalism and dedication you show every day in running the airline.  It is the “Delta Difference” that sets us apart.

Thank you.”

Meanwhile, one has to wonder how long the movers and shakers behind this potential Northwest/Delta deal are going to sit and twiddle their thumbs — while the two ALPA MECs attempt to come to some kind of seniority agreement that is acceptable to both sides.

Then again, as one of our readers, an American Airlines’ pilot, wrote today in a note to us,

“Is the DL/NW BoD really going to wait for DL/NW ALPA to get a combined list? The Middle East will be living in harmony before you can get two pilot groups to agree on a seniority list.  We have TW/OZ guys who still hate each other.”

Another Day, Another Record Price Notched for Oil

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Put gas in your car lately? Yes, well multiply that feeling by about a million gallons a day and you’ll get a small idea of what airline CFOs feel like these days.

If this keeps up, maybe we should all chip in and contribute to an “Airline CFO Antidepressant” fund. Nah. We probably need to keep our own dollars in the bank to pay off our own gasoline bills.

Today the price of a barrel of crude oil closed at a new high — $100.88. This was an increase of $1.65 over yesterday’s close. The price actually went as high as 101.06 during the day.

Wheeeeeeee.

It’s Official: United/ExpressJet Deal Goes Public

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In regard to our posting yesterday here’s the official notice from United Airlines’ SkyNet:

“The United Express team is working closely with our partners to provide replacement flying aircraft during the Spring Break travel period. In anticipation of the high load factors, we’ve signed a contract with ExpressJet Airlines, Inc., one of the world’s largest operators of regional aircraft, to provide three Embraer ERJ145 aircraft from March 12-29.

· ExpressJet is a new flying carrier for us. They have provided similar short-term capacity to other airlines and we are confident in their ability to provide efficient and reliable regional jet service for UAX.

· ExpressJet will be flying 20 flights per day carrying approximately 1,000 customers, and will operate into Dulles with service to Savannah, Pittsburgh, Huntsville, Jacksonville and Charleston, South Carolina. In order to be available during our peak demand period, the aircraft will be flown in ExpressJet livery.”

Ticker: United Airlines (Nadsaq:UAUA) ExpressJet (NYSE: XJT).