Monthly Archives: May 2010

PlaneBusiness Banter Posted!

Greetings to all on what was a very hot Memorial Day here in the Dallas-Ft.Worth Metromess.

I hope all of you had a good Memorial Day holiday and most importantly, I hope all of you took a minute between bites of your grilled hamburgers to thank those who serve this country in our Armed Forces. Or who have served.

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The latest issue of PlaneBusiness Banter is now posted. Subscribers can access the newly posted issue here.

This week I talk about the new “ugly girl” in the industry. Yep, I’m talking about American Airlines and that airline’s merger options.

But American is in the news for other things — including yet another TA with a TWU-represented employee group. However, to say the union leadership gave the deal a lukewarm endorsement would be an understatement.

British Airways saw itself in the middle of yet another strike by its cabin crew members today. This one started on Sunday and as today is a Bank Holiday in the U.K, the work slowdown will probably hit the airline a bit more than the last one. Which just ended on Friday of last week.

I know. It’s pure insanity.

This last week airline stocks had a great week with shares of US Airways leading the pack. Handily. The main reason for this sudden burst of vitality? Two bullish analyst notes. JP Morgan analyst Jamie Baker upgraded the entire sector, and had very positive things to say about US Airways in particular. His comments were then followed by a bullish American Airlines/US Airways research note issued by Bob McAdoo with Avondale Partners just a few hours later.

The combined one-two punch was clearly felt across the sector, but especially in shares of US Airways.

Is the Porter Airlines IPO in trouble? First quarter numbers sure didn’t help it much.

Virgin Blue had a surprise for its investors this week, and in our Market Review this week we talk about the resurgence of private equity support for the aircraft leasing sector.

All this and more in this week’s edition of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Hello earthlings.

Subscribers to PlaneBusiness Banter can access this week’s issue here.

What are we talking about in this — our last mega-earnings issue for the quarter?

Well, obviously we’re talking about earnings. This week I grouped the three remaining regional carriers together — SkyWest, Pinnacle and ExpressJet.

While institutional investor interest in the regional sector is understandably less than enthusiastic, I still found it interesting to listen to the calls from the three airlines. Clearly SkyWest is obviously the dominant carrier of these three, and the airline ended the first quarter with more than $700 million of cash in the bank. Gotta love it.

But even SkyWest has had to become creative over the last several years — as the major airlines keep trying to cut, cut, and cut some more costs from their regional airline contracts.

Regional airlines, in turn, have been forced to get creative.

Nowhere have those efforts been more obvious in this group than with ExpressJet. The airline has dabbled in the corporate charter business, it started its own branded operation, and now it’s struggling to keep the doors open while saddled with a big chunk of convertible debt that is coming due. The airline also paid some nice fees to United Airlines — in return for United throwing some business in its direction.

As for Pinnacle, it didn’t have a particularly good quarter. CEO Phil Trenary said that it was one of the worst he had ever experienced — in terms of the weather-related costs to the airline.

Mekong Air? Heard of it? Apparently Jesup & Lamont analyst Helane Becker has as she grilled SkyWest CFO Brad Rich about the airline’s potential involvement with it.

While Brad was not forthcoming with much information, other reports suggest that SkyWest is, in fact, behind the new start-up.

In other news we talk about a lot of labor issues this week — and of course that includes the situations at British Airways, American, AirTran, and Spirit.

A reminder: The 30-day cooling off period for the pilots at Spirit ends on June 12. A strike here could be nasty — as Spirit does not have the deepest pockets on the planet.

On Wall Street it was ugly for airline stocks last week. This week hasn’t started off all that well either — although a bullish JP Morgan analyst note this morning seems to have lifted the sector. Shares of US Airways seem to be enjoying the nicest ride today — a result of both a positive comment from JP Morgan and because of a note from Avondale Partners in which analyst Bob McAdoo discusses the reasons why an American/US Airways deal would make sense.

Which reminds me. I’ll be talking a lot about mergers. And potential mergers — in next week’s issue.

All of this — and more in this week’s edition of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted

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Hello everyone. This week’s mega-earnings issue of PlaneBusiness Banter is now posted. No thanks to the wizards over at Verizon, who disconnected us totally from the rest of the world early yesterday morning — five days before they were supposed to — as part of a move of the PlaneBusiness Worldwide Headquarters.

I don’t want to get into it.

However, I will pass along this rather ironic piece of information that not one, not two, but three Verizon employees (who were being recorded at the time probably) told me in the midst of some eight hours of talking to various techs, customer service reps, and supervisors as I frantically tried to get us back online so that we could get published yesterday.

That advice from those on the dark side: Never use the Verizon website to do anything. And especially — never order any service on the website.

Their advice: Call them and talk to a human.

Now how positively telling are these comments? Isn’t the internet/websites/connectivity their business?

Funny. Whenever someone complains to me about the airline industry I always turn and ask them, “And what about your cell phone provider? How’s that service working out for you?”

While I don’t have my cell phone service with Verizon (I have an iPhone and AT&T has its own problems), all of our H/S internet connectivity is part of a Verizon FIOS package.

Love the FIOS service — have never had an issue with it. And unfortunately there is no competing AT&T Uverse service at the new Worldwide Headquarters. Otherwise — at about 2 p.m. yesterday, FIOS would have been history.

Sigh.

What do they say about competition?

Anyway, as I said before I got sidetracked, this week’s issue PBB is now posted. Subscribers can access this week’s issue here.

This week is another big earnings issue. This week we take a close look at the recent earnings results and earnings calls from Air Canada, Republic Holdings and Hawaiian Airlines. Whew. The three airlines provide a lot to talk about.

In addition, we have the March DOT Air Travel Consumer Report. Verdict? Clearly there was a lot less bad weather in March than there was in February.

We also talk a lot this week about British Airways. The airline is poised to report its biggest annual loss in its history this week. On top of that the airline got hit with yet another strike this morning — before the airline was successful in getting an injunction against the union mid-day. Still the damage was already done — at least in terms of flights affected for today and tomorrow.

Then there is the little matter of that damn volcano that nobody can pronounce. And the ash it continues to spew into the atmosphere. It started doing it again this weekend, and once again, airports were closed in the U.K. Is the ash a deadly mess for aircraft engines — or do we need to develop more accurate methods of determining the extent of the ash and its whereabouts?

UK and European airlines are not happy.

The worst part? This volcano is probably not going to stop doing this any time soon.

We talk about the latest merger chatter this week. We get caught up on the progress in the Continental/United match-up and we wonder who Jesup & Lamont’s analyst Helane Becker thinks Republic is going to pair up with before the end of the year. Enquiring minds want to know.

All this and lots more scintillating discussions — all in this week’s issue of PlaneBusiness Banter.

Southwest Announces New Service to Charleston and Greenville-Spartanburg

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Well, one out of two ain’t bad.

Three weeks ago, after returning from my BMW Performance Driving School experience in Greenville, S.C. with the folks from Travelport , I told PlaneBusiness Banter subscribers that it appeared that Southwest Airlines was coming to town.

Ding. I am now free to accept heaps of praise that I called the new city correctly.

However, the airline one-upped me today as it announced it was not only starting service to Greenville-Spartanburg, but to Charleston as well.

Oh well. I didn’t go to Charleston. Maybe if I had I would have been able to out them on that announcement as well. Heh.

Interesting that in the press release noting the new service, the airline bent over backwards to note that service to both cities is *without subsidies.* It is even in the sub-head of the press release headline.

Hmmmm.

According to the release, “The airline’s service will not be dependent on pending legislation to provide air service subsidies.”

Guess that’s a little sideways jab at AirTran — the subsidy kings?

Yes, well, Southwest received its own basket of goodies in return for flying into Northwest Florida.

Boys, boys, boys. Let’s just play nice.

With or without subsidy, I like both choices.

PlaneBusiness Banter Now Posted!

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This week’s mega-earnings issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s issue here.

What is on the agenda this week? First, we have in-depth reviews of the earnings calls from AirTran, Allegiant, and WestJet.

But that is just the start.

Our first column from this year’s Phoenix Sky Harbor International Airline Symposium discusses a presentation that was made at this year’s event by Adrian Slywotzky, economist, author, and partner with Oliver Wyman – the consulting firm that works with the airport to put on the Symposium.

The subject of his presentation? The airline industry is not the only “no-profit” industry out there. And yes, there are competitors in other “no-profit” industries who have figured out ways to improve profitability. Are there lessons here for the airlines? Yes.

Our second column this week is our first take from the recent US Airways Media Day. Coming just a day after the airline’s earnings call and just a couple of days after the airline said it wasn’t talking to the powers-that-be in Chicago anymore — the airline still managed to give us some information we’d never seen before.

All that plus the manic moves on Wall Street last week, the NMB’s news from today, the DOT’s decision on the proposed slot swap, American’s decision to hold its annual meeting away from the madding crowds, and more. In this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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I know. We are a bit late this week. Well, ahem, it’s been kind of a madhouse this week. To say the least.

Nonetheless this week we have another mega-earnings issue of PlaneBusiness Banter for subscribers to peruse. You can access this latest issue here.

Yes, we are still talking about earnings and this week we have four in-depth reports on the recent earnings released by United Airlines, US Airways, Alaska Air Group and JetBlue.

We also have PlaneBusiness Banter earnings summaries posted for the other airlines that have reported their first quarter numbers.

But hey, all everyone wants to talk about is the United/Continental merger. Right?

Yes, we talk about that as well.

We also give you just a glimpse of what we heard this year at the Phoenix Sky Harbor International Airline Symposium — more in next week’s issue.

The Readers Write section is also a hot area this week as we talk more about automobiles, our recent selection of Dave Barger for the PlaneBusiness Wild Turkey Award, and we clarify some comments both I made and analyst Jamie Baker made recently concerning American Airlines.

All this and more in another whopper-sized issue.

Continental Airlines/United Airlines Deal Official

It’s all over the news. Has been since the wee hours of this morning. Do we have thoughts on this? Of course.

But more on these later. And probably more after that.

Meanwhile, the official site of the merger is http://www.unitedcontinentalmerger.com/

As one person who was close to the United/US Airways‘ talks said to me this morning, “Looks very much like the website we had been working on for the last several months.”

Ah, yeah. I’m sure it does.

One thing I do like about the new blended airline, which apparently will be operated as part of United Continental Holdings, Inc., is that it appears they are going to keep the Continental Airlines livery (thank god) but keep the name United.

I like that. About time United Airlines got rid of that ugly Stephen Wolf-induced battleship grey livery. (Yes there are still a few out there.) The other positive thing about this is that visually, and viscerally, the Continental Airlines brand then becomes the surviving brand going forward — not United Airlines.

And that is the way it should be, as Continental Airlines has the better operations team, a better all-around management team, a superior customer service reputation, and the better corporate sales team.

Below you see the new computer-generated livery superimposed on a Boeing 787 mock-up.
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United Airlines BOD Approves Deal With Continental Airlines

As expected, news reports this afternoon say that the board of directors of United Airlines has okayed a merger with Continental Airlines. The Continental BOD is expected to meet later today and do the same.

The expected merger is valued at more than $3 billion and the formal announcement is expected Monday.

For now, my lips are sealed. I’m in the middle of writing another 100 page earnings issue of PlaneBusiness Banter. But I will say this — I hope the folks at Continental did their homework.

Goodbye Houston, hello Chicago.