Monthly Archives: March 2009

Good Morning: Pilot Contracts, PBB Publishing Update

It’s Monday and this is our last day in the desert. Tomorrow, it’s back to Dallas.

A couple of things. One, Terry Maxon posted a great summary of the proposed Southwest Airlines’ pilot contract on his Dallas Morning News blog this morning. If you would like to read a copy of the entire summary of the tentative agreement that has been distributed to Southwest pilots, you can access one of those here.

Two, I am still working on this week’s issue of PlaneBusiness Banter today — as a result of my being involved with the Phoenix International Airline Symposium last week. I will post an update here later today when it is ready for subscribers to access.

In the meantime, a quick look at airline stocks this morning was not particularly pleasant, as the sector is down across the board. It would appear that Wall Street is a bit shaken this morning at the hard line the Obama administration has laid out for the U.S. automakers to follow. Airline stocks seem to be caught up in the downdraft.

Have to go finish this week’s issue. More later.

Babbitt Formally Announced as Administration Pick for FAA Head

This afternoon the White House announced that it will, in fact, nominate Randy Babbitt, former ALPA President and aviation consultant, to be head of the Federal Aviation Administration.

Randy, who is here in Phoenix at the Phoenix International Airline Symposium (actually he’s up on stage right now moderating the executive panel) denied reports that he will bring his Hawaiian shirt dress code to the Washington FAA offices in Washington.

Last Holdout to ASAP Program Participation Rejoins the Fold: APA and American Bury Their Differences

More good news today on the airline union front.

It was announced this afternoon that the pilots at American have come to terms with the company on a new Aviation Safety Action Program (ASAP) participation agreement.

As readers know, this issue has been a burr in my side. The ASAP program, which encourages pilots to self-report safety problems without fear of retaliation, knowledge of which can benefit pilots from all airlines, had become a “leverage” tool used by a number of airline pilot unions over the last couple of years.

As a result, pilots at American, Delta, and US Airways had stopped participating in their respective programs, citing a fear of lack of confidentiality — or potential efforts to “get back” at those employees who participated in the program.

But after pilots at Delta Air Lines rejoined the program earlier this year, following the lead of the pilots at Northwest Airlines, the FAA took a hard line stand — telling airlines and their pilot unions that were still not participating that they needed to rejoin the program, sooner rather than later.

With this news, all the major airline pilot groups are now once again participating in what is, no question, an excellent safety program that is run in conjunction with the FAA.

The pilots at US Airways had already agreed to participate in their company’s program again about two weeks ago.

Southwest Airlines Flight Attendants and Company Announce TA

This morning it was announced that Southwest Airlines and its flight attendants have come to terms on a new four-year tentative agreement.

In its announcement, the TWU said the deal “includes raises, a boost in the 401k contributions and improvements in leave, flexibility, and job security among other areas. The tentative agreement contained no economic concessions.”

If One Has to Be Somewhere, It Might As Well Be The Arizona Biltmore

Today is the first day of the 2009 Phoenix Sky Harbor International Airline Symposium. Yours truly is sitting on the back row of what is a gorgeous meeting room at the Arizona Biltmore Hotel with Dan Reed from USA Today and Brett Snyder, aka Cranky Flyer. Susan Carey from the Wall Street Journal is sitting a few rows in front of us, and there are a few other media types floating around.

Today has been a good start to what is always one of my favorite industry get-togethers. There are no power point presentations, the dress is casual, and the company is great.

DOT secretary Ray LaHood spoke to a packed house at lunch. John Byerly, deputy assistant secretary for Transportation Affairs at the State Department seemed to be more excited than most at comments that LaHood made, as, according to Byerly, it was the first public confirmation that the new administration is firmly (and trust me, LaHood was VERY direct and forceful about the fact) behind two major items. One — the new NextGen navigation system and two, the concept of “Open Skies.”

According to John, who came over and talked to me after the speech, this was the first time there had been public confirmation of the “Open Skies” support. Not that there was that much danger this would not the case. But I can understand why he was happy. As he said, “Whew, that’s going to make my job much easier!”

John, of course, is preparing to start work on stage two of the EU/U.S. air liberalization agreement.

Some people wondered whether or not DOT Secretary LaHood would fomally announce the symposium moderator Randy Babbitt’s nomination as the new FAA administrator at the conference, but there was no official announcement today.

However, that’s not to say that LaHood did not discuss the topic. He made a point to discuss the extensive and grueling “vetting” process that nominees have to endure. My take on his comments at lunch were that this was why Babbitt was not announced formally — the process has simply not been completed.

For those fans of old line airline types, Bill Franke was on the panel before the one that is speaking now. Yes, a real live recipient of the PlaneBusiness Ron Allen Airline (Mis) Management Award. That’s okay. United’s Glenn Tilton is our luncheon speaker tomorrow. As most of you know, he received a special PlaneBusiness Greed Award the year United came out of bankruptcy.

Meanwhile yours truly will participate on the labor management panel tomorrow afternoon.

Ye haw!

Babbitt Selection: PBB Readers Knew It First

Just a friendly bit of self-promotion here today. In last weekend’s issue of PlaneBusiness Banter I talked about how I wondered if the formal announcement of former ALPA President Randy Babbitt being tapped for the FAA Administrator’s position would be made public during this week’s Phoenix International Airline Symposium.

Babbitt has been involved with the event for many years. With many different companies.

Yesterday, readers of the Wall Street Journal found out that Babbitt was now apparently the administration’s choice to lead the agency.

Score another one for us.

US Airways Media Day: Not a Bad Way To Spend A Day

Yesterday was Media Day at US Airways. And a fine time was had by all.

Really.

Considering that the airline did not have any major news to release, the day was nonetheless helpful. Or as one newbie to the event told me late yesterday afternoon, “I’m glad I came. It helped me to understand where the airline sees itself and the niche it occupies much better.”

The format of the day was much the same as it always is. The day opens with remarks by CEO Doug Parker, which are then followed by presentations by Scott Kirby, President, Robert Isom, COO, Derek Kerr, CFO and C.A. Howlett, the airline’s government affairs VP. During lunch, all the top execs of the company then make themselves available for questions and answers from the floor.

After this — the airline had a panel of those staffers who were most directly associated with the airline’s response to the Flight 1549 crash landing into the Hudson River on January 15th. It was the perfect way to end the day as everyone involved, including Parker, gave their accounts of where they were and what they did after the news hit that the aircraft was in the water. Most interesting were the stories that we had not heard before — such as the fact that Captain Sullenberger was initially told by the company’s representative at the ops center when he called in that he would have to call back — the operations center was really busy because there was a plane down. Sully managed to convince them that he was well aware of that fact.

I’ll talk more about Doug Parker’s opening comments in this week’s PBB, but the Cliff’s Notes version would be that airline managements need to stop comparing the financial performance of their respective airline to industry peers and start managing airlines like any other profitable business.

Of course, the fact that Congress tends to look at the airline industry as a type of “public good” and not an industry that is run for the benefit of shareholders is a big problem. He talked a great deal about this, and I agree, if the airlines are going to be deregulated, then they need to be truly deregulated. They still aren’t, in a lot of ways.

As for the airline itself, it estimates that it will make between $400 and $500 million this year in ancillary revenues, and no, it has not been able to detect any type of “booking away” as a result of their additional baggage fees. The airline also said that this year, any new ancillary revenue changes will probably only be made in the area of seat selection — as the airline continues to work on new technology that will allow passengers even more choice, in terms of price and seat selection.

The big story of the day was the airline’s quite remarkable turnaround in operations in 2008. We’re talking time of departure, time of arrival, lost bags, all those things. We told you guys last year that we liked this guy Robert Isom. And this year the numbers proved that the new COO of the company knows his stuff.

For 2009, the plan is to keep improving these operational aspects of the airline — with more focus being put on those aspects of the customer experience that are direct — web site ease of use, ease of rebooking, those types of things.

The most interesting thing I took from Isom’s talk this year? I remember at one point in 2008, there was some grousing from other carriers that the only reason US Airways was doing so much better in the DOT statistics was because the airline had padded their block hours. Even US Airways’ pilots jumped on the bandwagon, accusing the airline of being “inefficient.”

Yesterday, as Robert showed us graphically, while yes, the airline did initially pad the block hours a bit earlier in the year — the airline actually not only went back to the “pre-padded” schedule in the last part of 2008, but it even cut block hours to a level lower than when the airline started 2008. And the airline still managed to post very respectable operational numbers.

Oh, and finally — the really important news.

Monday night the airline held a dinner for those of us in town for the event at Cadillac Ranch in Tempe. Cadillac Ranch has a mechanical bull. As I forecast in this week’s PBB, yes, Elise Eberwein, SVP of Communications and People at the airline rode the bull. Yes, Scott Kirby, President, rode the bull.

But surprisingly, neither won the contest.

Al Hemenway — the airline’s VP of Labor Relations took the prize. In belted khaki chinos no less.

I was impressed.

Even after repeated second and third attempts by Elise and Scott, and other attempts by media folks and US employees, Al hung on to win the prize.

Only appropriate that he persevered, considering he deals with labor relations, right?

I’ll post some pictures later. Need to get out of here. Have to go check in over at the Biltmore for the Symposium. Talk to you later.

When Technology Craps Out

image1474493313.jpgHow many of you have ever found yourself in a position where some form of technology failed you? A piece of software….a computer…. A gadget of some sort?

If you’ve ever been in that situation you’ll understand when I ask the question,”Why is it that they always decide to quit, break, or stop working just when you need to use it the most?”

It’s Sunday and as usual I should be wrapping up this week’s issue of PlaneBusiness Banter. One problem. My laptop’s display unit died last night. No see. No write. No nothing.

The good part? The friendly folks at the Apple Genius Bar were able to determine the problem this morning. Even better, Apple is picking up the tab to fix it.

The bad part? I was told to come home and clone my hard drive and bring the computer back in … TOMORROW. And the new display unit won’t be in stock until TUESDAY.

So here I sit with external drives daisy chained and two laptops chugging away ( had to use target disk mode to boot up the MacBook Pro because… Well…..there is no display!)

Meanwhile I sit and twiddle my thumbs and contemplate what kind of happy pills Apple must give those guys who work the Genius Bars. I don’t see how they do it. And how I’m going to try and get an issue written.

And….how am I going to get all this done and be back to the Swamp to take my Dad for eye surgery at 6 a.m on Tuesday?

As the guy at the Apple Store said…”There are always Margaritas.”


“Scary Mary” Says Slumping Economy Could Lead To More Air Crashes

I was quietly eating my lunch today at The Breakfast Club in Old Scottsdale. The place makes great waffles and their teas and coffees are great as well. So here I was, minding my own business, people watching all the folks who were obviously catching a bite before heading off to watch a spring training game–when I glance over at the flat sceen on the wall. The television was on Fox News and I noticed that they were playing the video of the FedEx crash in Narita over and over. Then I saw the crawl….and I quote, “Will Worsening Economy Lead to More Air Crashes?”

As you can imagine… At this point my blood pressure began to rise.

But then it got worse as who should appear on the screen telling America that yes, cost cutting on maintenance because of the economy could very well mean more airline crashes than Scary Mary herself — Mary Schiavo.

While I couldn’t actually hear the audio, I could certainly read the crawls drawn from her comments.

It was almost enough to make me not want the hot crispy waffle that was then put in front of me.

I’m sure FedEx appreciated the assumptions that I am sure some viewers took from her comments as well.

I don’t think any of the major news organizations will use her anymore. But obviously Fox thinks she’s credible.

So the next time an airplane crashes anywhere in the world– remember that there’s a good chance it crashed because of cost cutting involving the maintenance of that aircraft. That’s Mary’s story and she’s stickin’ to it.

Thank you so much to Fox News for bringing Mary’s enlightening perspective to everyone’s attention.

The Hits Just Keep On Comin’; Continental Airlines Says Revenues Down 18%

Continental Airlines logo 020708.jpg.jpeg

As UBS analyst Kevin Crissey said in a research note this evening, “The headline figure is bad.”

Ah, yeah. I think you could say that.

Tonight Continental Airlines issued an update to its guidance. The company now expects March passenger unit revenue (RASM) to be down more than 18% year over year. This — despite the airline’s capacity cuts. And everybody’s else’s capacity cuts as well.

Continental also said that it is not yet seeing any kind of “stabilization in demand” that some other carriers have indicated of late they are experiencing.

On the plus side, the airline did say that they should beat their own cost guidance for the first quarter.

Woo hoo.