Tag Archives: american airlines bankruptcy

PlaneBusiness Banter Now Posted!

home-typewriter copy 1Good evening earthlings. Our last summer “kitchen sink” issue of PlaneBusiness Banter is now posted. Alas. We were supposed to already be on vacation. But then the Department of Justice decided to sue American Airlines and US Airways last week.

So we bumped our three remaining 2Q13 earnings call reviews to this week. We also had a feeling that we’d hear more important information in regard to the DOJ’s machinations — which we did on Thursday.

So this week we wrap up 2Q13 earnings, including a look at break-even load factors and operating margins, we update you on the latest between the DOJ and American and US Airways, we take a sneak peek at how the bigger players are doing in terms of on-time performance in August, we muse about whether or not an airline should be named “Vanilla” and we go through a lot of mail.

Subcribers can access this week’s issue of PlaneBusiness Banter here. 

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg Hello everyone. No surprise that we are publishing on Wednesday night this week. Has something to do with some activity that was centered around the DFW Metromess today. Yes, there were three American Airlines‘ union votes announced today — two passed and one didn’t. And the one that didn’t was the big one.

The pilots at American Airlines decided that they would rather put their fate in the hands of U.S. Bankruptcy Judge Sean Lane than accept what many pilots apparently thought was an “unsatisfactory” contract.

As you can read in the blog post below, I thought the pilots should vote yes.

Meanwhile, the flight attendant voting period during which they need to decide if they are going to vote yes or no on their “last best and final offer” from the company continues.

As it is scheduled now, Judge Lane is supposed to rule on the airline’s request to abrogate the union contracts that have not been renegotiated next Wednesday as part of the standard Section 1113 procedure.

However, the outcome of the flight attendant vote will not be known by that time.

It will be up to the airline — whether it asks the judge to delay a ruling — or it simply allows him to abrogate the contracts that have not been agreed upon (which would then include the flight attendant contract) on Wednesday.

Meanwhile, this week is yet another big earnings week issue, as we take an in-depth look at the recent results of Spirit, Allegiant, Alaska Air Group, WestJet, and Republic Holdings.

We also give you overviews of the recent earnings news from IAG Group (owner of British Airways and Iberia), Virgin Atlantic, Lufthansa and Cathay Pacific.

Speaking of Allegiant, the airline said on its earnings call last week that it was very happy with the first month of its new service to Hawaii. The airline is using 757s to fly to Hawaii, and today, the airline announced even more service to Hawaii. Know what new routes were announced? Better yet, know which airline Allegiant seems to be targeting with their latest choices?

WestJet had an interesting announcement last week — for those of you who agree that passengers will pay for meaningful upgrades. The airline announced it was putting in four rows of “premium economy” seats on all of its 737s. It is also adding seats to its 737-800s.

Meanwhile, Spirit just keeps making money. Although I think the airline showed evidence of some growing pains in the second quarter — as costs were above where the airline wants them to be.

In terms of Republic Holdings, the hybrid holding company did quite well, as the Frontier Airlines’ restructuring process is really beginning to shine. So now what?

Meanwhile Republic continues to work through its issues with its Chautauqua, aka Chicken Taco, operation. Republic remains convinced it can make the 50 seat aircraft work –but it is going to have to be flown at exceptionally low rates to mainline airlines if that is the case.

While we don’t do a full earnings review of SkyWest this week, as they reported earnings today, I will tell you that the airline blew away estimates — sending shares of the stock up 23% on the day.

As always, all this, and more — in this week’s issue of PlaneBusiness Banter.

Also — a friendly reminder for our subscribers. This is our last issue for August. We are now officially on vacation. Our next issue will be published after Labor Day!

Why American Airlines’ Pilots Need to Vote Yes

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To say that I have been bombarded over the last week with emails pertaining to the American Airlines’ pilot TA vote would be an understatement. This is not to say that the voting that is also going on with the airline’s flight attendants and its TWU groups which did not vote for the “last best” TAs are also not important.

But we all know how this works.

The pilot union vote is the one that carries the most clout.

While I already voiced my opinion on this matter two weeks ago in PlaneBusiness Banter, I am going to say it again today — very clearly and very publicly.

If you are a pilot for American Airlines — you have to put aside the emotional firestorm that has erupted over the last several days, a result of an email that was circulated within the pilot group concerning “conversations” and “comments” involving both the airline’s Chief Pilot John Hale and SVP of Operations Jim Ream.

You have to stop thinking that there is a “deal” that is going to happen between JetBlue and American. It isn’t going to happen. Period.

You have to stop thinking that a “yes” vote is a vote in favor of the current management.

You have to stop thinking that leaving your fate to a bankruptcy judge is preferable to the contract that is now up for grabs.

You have to remember that you cannot expect a contract that is part of a bankruptcy process to begin to come close to the contract that the Delta pilots recently ratified, or the contract that the United pilots now have on the table before them. Trying to compare these two contracts to the situation that you are now looking at with American is a case of “magical thinking.”

As Ivan Rivera, Aliied Pilots Association Domicile Chairman put it so well in an email he sent out today,

Setting aside for a moment the “cannon shots” and the I Pads, it is clear that AA management has been in a horrible “state of confusion” to add to their incompetence. Confused and incompetent are not the qualities we need from our management, and this is why our primary goal should be to fight to replace them. Without new management, with vision and competence there will be no long-term future for this airline, regardless of what our CBA’s look like. I know we all want this; we just may disagree on the best way to get it done. We have two options going forward to try to achieve that goal, and each carries it’s own set of advantages and risks. The YES vote endorses APA’s strategy of “strategic and financial” leverage thru the 13.5% claim. The NO vote endorses a more traditional “labor” leverage that, depending on many factors, may result in a “financial” leverage as well. As you know, following all our advisor’s recommendations, I have endorsed the YES vote but I have also presented our options with a NO vote at our MIA Domicile meeting. I’ve also shared with you that I believe APA’s strategy following a YES vote will be the same as for a NO vote: We will continue to oppose the “stand alone” business plan-we will continue to oppose this management- we will continue seek the best path for all pilots and other AMR stakeholders, except our current management of course. However, there are two very significant risks with a NO vote: First is the loss of the economic value and power of the 13.5% claim; and second is the risk of doing irreparable damage to our SCOPE thru the outsourcing of the ERJ190-195 (DC-9 size A/C capable of decimating the bottom of our seniority list).

I agree.

I think the recent actions of management at the airline should only convince pilots even more that the current management team at the airline needs to go.

After all, there is a reason that the pilots at both Delta Air Lines and United Airlines are now looking at contracts that are much richer than the one you are now looking at. It’s called — management teams at those airlines realized years ago what had to be done in order to grow their businesses effectively. They realized that “heft” was necessary in order to be competitive on a global scale.

But voting “no” is not the way to get this management team out of the picture. Nor is it a way to tell the current management team to go F*$% themselves.

In fact, I would argue that a “no” vote makes the situation much more advantageous for the current management team.

I know it sounds contrary. I know it sounds confusing.

But the pilot group will not “win” if the current contract is abrogated.

Finally, if you are foolish enough to think management will come back and “sweeten” the deal if the contract is abrogated– while creditors are breathing down their neck to get as much money as possible out of the airline’s coffers — think again.

But this time think rationally. Not emotionally.

PlaneBusiness Banter Now Posted!

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Good day everyone!

My thanks to all for your patience. PlaneDad duty once again took me away from our normal perch here at the Worldwide Headquarters this week.

The good news? PlaneDad is finally making the move to Texas. And he has a place to live when he gets here!

Thank you again for your patience with our nebulous publishing times of late. Just something that can’t be avoided, given what else is going on. We’ll get through it.

So — having said all that, what are we talking about in this week’s issue of PlaneBusiness Banter ? A lot.

Easily the biggest news is the fact that Delta Air Lines and Southwest Airlines finally confirmed that yes, Delta Air Lines will be leasing the entire 717 AirTran fleet from Southwest.

This move is a big one — in more ways than one. There are winners, and there are losers. We talk about some of them in this week’s issue.

Last week the usual suspects were all in Boston, presenting at the Bank of America/Merrill Lynch Global Transportation Conference. We let you in on some of the more interesting comments including those by Ed Bastian, President of Delta Air Lines, Scott Kirby, President of US Airways, Gary Kelly, CEO of Southwest Airlines and Mark Powers, CFO of JetBlue.

We also have a guest column this week by a PlaneBusiness Banter subscriber. His opinion is that airlines need stop the “silo” thinking that pervades so much of the industry and mover more towards what he terms an “Intersilotic” approach. Being the “big picture” person I am, I’m all for it. While some aspects of the industry certainly can benefit from a vertical approach — much more of it should take into consideration the entire team effort — not just the actions of one part of the team.

Of course no PlaneBusiness Banter would be complete these days without the AMR Bankruptcy Follies column. This week we have a short one-act play for you to read, and we update you on the 1113 process.

We also have Scott Kirby’s comments from the Bank of America/Merrill Lynch Global Transportation Conference, in which, or the first time I’ve heard publicly, he clearly and concisely explains why it is that a merger between AMR and US Airways would be beneficial to both pilot groups — USAPA and APA. While his comments dovetail with what we have assumed would be the case — this is the first time I’ve heard someone from the airline put it out there for public consumption.

Oh and yes, we also offer our condolences to American management employees, who are being subjected to a flood of obnoxious communications from the airline. If it isn’t the latest “design and layer” update, it’s superficially happy missives concerning how to handle this new “opportunity in your life!” Yes, they are talking to those employees who are going to be laid off.

We also have the 1Q Break-Even and Operating Margin run down, a look at how the market treated the airline sector last week, and much, much more. As usual.

PlaneBusiness Banter Now Posted!

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Hello everyone.

For those of you who are subscribers and print out PBB, I warn you — this one is probably going to be more than 150 pages. Yes, it is a return of the “Killer Earnings Issue.” (Insert screams here.)

This week we’re looking at the recent earnings calls of Delta Air Lines, United Airlines, US Airways, and JetBlue Airways. Only one of the four made a profit. Do you know which one?

The laggard in the bunch was definitely United Airlines. The airline’s 1Q revenues clearly showed the effect of the airline’s SHARES cutover. The problem? The airline still has a number of cutover issues that have yet to be resolved — and these issues directly affect the ability of the airline to capture additional revenue and/or they concern upgrades.

Between all this and the usual problems that any merger comes with — this year is looking more and more like a transitional year for United.

Delta AIr Lines, on the other hand, produced excellent revenue during the quarter, as did US Airways and JetBlue.

As we also note in our comments about US Airways’ results, the airline continues to be a great poster child for our “Just Say No to Fuel Hedging” campaign.

The airline posted a relatively small loss for the quarter — with no fuel hedges in place.

This week, Delta Air Lines announced that yes, it is going to purchase an oil refinery. When you stop snickering, I’ll tell you why I like the move.

Hawaiian Airlines‘ shares had a nice gain last week — the result of better than expected earnings results and strong guidance. Meanwhile. shares of US Airways picked up even more ground last week. For the year, our favorite trading stock (per our comments in January) has picked up more than 103%.

Of course no issue of PBB would be complete now without the latest addition of the AMR Bankruptcy Follies. This week we talk a little about Harvey Miller — the ex-Lorenzo attorney who is AMR’s lead restructuring counsel. We also tell you how much he is charging AMR by the hour. After you recover from that nugget, you can read our take on the airline’s attempt to negate the significance of the airline’s three unions and their signed term sheets with US Airways, and we talk about some of the comments that came out of last week’s court testimony.

Yes, apparently AMR did have another strategy besides the ‘Cornerstone Strategy.” It was the “Limp-Along” or “Kick the Can” strategy.

All of this and more all all of this in this week’s huge issue of PlaneBusiness Banter .

PlaneBusiness Banter Now Posted!

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Hello everyone. It’s that time once again. This week’s issue of PlaneBusiness Banter is now posted.

This week we take an in-depth look at the recent earnings reported by both WestJet and Air Canada. On the surface, WestJet easily bested its Canadian competitor in terms of its fourth quarter performance, but WestJet is now in the process of starting a new regional airline. We talk a lot this week about my concerns about this new “WestJet Express” operation.

Meanwhile, how is Air Canada going to increase its revenues? The airline’s problems in that department overshadowed the airline’s cost reduction performance in the fourth quarter. Meanwhile, cost forecasts for the first quarter are daunting.

We also update subscribers on the latest from the American Airlines bankruptcy, and we take a look at what happened to airline stocks last week. Hint: The frenzy of the last few weeks finally came to a screeching halt.

Pinnacle Airlines got some good news last week however — and that news sent its shares soaring. We’ll update you on all that news as well.

All this and much, much more, including a very active mailbag — this week in PlaneBusiness Banter.


PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg Hello everyone! I hope all of you are not crazed today. It’s that time of year. It’s a good time. But it can also be very stressful. So try to concentrate, leave those cookies alone and get your work done so you can push all the papers aside later in the week and just breathe. And enjoy.

And eat chocolate.

This week’s two-for-one issue of PlaneBusiness Banter is now posted. I told subscribers last week that I was going to delay the publishing of our last issue for the year by a week — so that I could talk about my trip to New York last week.

But that was not the only reason to wait until this week to write.

Delta Air Lines took Manhattan last week. And Brooklyn. And Queens. And the Bronx. And Staten Island.

In addition to the airline’s new route announcements out of LaGuardia, the airline also held its investor conference in New York last week.

We let you know what the airline had to say.

Meanwhile, yours truly presented at the Business Travel News Group’s Corporate Travel Management 2012 Conference in New York last week along with Kevin Crissey, airline analyst for UBS.

It was a packed house and I’ll give you one piece of intel from our session. When surveyed, the group of top corporate buyers overwhelmingly said they see increased spending on air travel in 2012.

I also attended the BTN Travel Hall of Fame dinner later that evening. What a rollicking event that turned out to be, as some of the other inductees decided to turn it into a roast of former AMR Chairman and CEO Robert Crandall.

Meanwhile, while all of this was going on, airline stocks enjoyed a second week of strong gains. Big winners included JetBlue and US Airways.

But Pinnacle Airlines was not as lucky. The airline warned the week before last that it was attempting to restructure contracts with vendors, customers, and employee contracts.

The stock is now trading at about a buck.

It’s a jam-packed issue this week including our yearly column in which we divulge what airline CEOs are asking for from Santa, we look at the October DOT operational numbers, and much, much more.

Subscribers can access this week’s issue — the last issue for 2011– here!

PlaneBusiness Banter Now Posted!

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Hello everyone. This week’s issue of PlaneBusiness Banter is now posted.

No surprise, we’re talking a lot about American Airlines again this week.

First, the airline’s labor unions have been given a strong position on the airline’s creditors committee. This is no small deal, as the members of the airline’s creditors committee pretty much dictate how the airline is operated and what the airline will look like when it finally escapes from the grasp of bankruptcy.

In addition, Tuesday the airline announced the first round of upper level executive departures. We expected this — and we hope the departures announced Tuesday are just the beginning.

American’s filing has begun to have ripple effects across the industry. One such effect: JetBlue announced Tuesday night that it was starting (FINALLY) BOS-DFW service in May 2012.

A different effect? Southwest Airlines‘ CEO Gary Kelly’s letter he posted to employees about the American bankruptcy. Essentially Kelly took a hardline with employees — making the point that Southwest Airlines is now, for all practical purposes, the airline in the crosshairs — having never filed for bankruptcy, and now forced to compete with an aggressively managed group of “new” airlines including United, US Airways, and Delta Air Lines.

In other news, we’re sad to see FAA Administrator Randy Babbitt have to resign from the agency. But someone in his position cannot be arrested for DUI. Even worse, you can’t be arrested for DUI and then not tell your boss about it. Reportedly DOT Secretary LeHood found out about Babbitt’s arrest only after the Fairfax City police issued a press release on Monday.

Worse, if Babbitt is convicted, he will lose his commercial pilot’s license.

An extremely unfortunate situation — both for Babbitt, and for the FAA. The last thing the agency needs right now is a distracting search for his replacement.

On Wall Street, airline stocks posted a great week last week. Well, there was one exception. But AMR was just that — an exception. Shares of JetBlue soared, leading a number of airline stocks to hefty double-digit gains on the week.

All this and more in this week’s issue of PlaneBusiness Banter!

PlaneBusiness Banter Now Posted!

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Good evening to all.

It’s a late night tonight here at the Worldwide Headquarters. Three guesses why. That’s what happens when a U.S. airline files for Chapter 11 bankruptcy protection at 6 AM in the morning.

Not surprisingly, I spend a lot of time this week talking about AMR and American Airlines. The airline’s bankruptcy filing, why it finally pulled the trigger, why the move was inevitable years ago, why it was not a “moral failure,” and more.

And yes, don’t even start with the AMR merger rumors. Long way between here and there.

In addition, I also take a time this week to talk about the recent DOT slot auction for slots at both LGA and DCA. While the DOT won’t make the “formal” announcement concerning who won what until Thursday, the winners have either confessed or been outed by process of elimination. ;-)

The results of the auction were somewhat intriguing — both because of what airlines were successful in nabbing slots and because of the one big airline that came away empty-handed.

Then there is the continuing mess that is the Indian aviation industry. We talked a great deal about this last week, but this week it’s back on the radar as both Jet Airways and Kingfisher continue to struggle. Jet announced a new lease-back plan that should generate at least $300 million for the airline in the coming months, but Kingfisher is still looking for an investor. Meanwhile, employees haven’t been paid in weeks, and the airline’s pilots are beginning to leave for better opportunities. Oh, and AerCap is taking two of its planes back.

The Air Transport Association is ready to roll out its new “branding” Wednesday. Not sure I like the new name, but I am a fan of the idea behind the extreme makeover. For too long the ATA has been a wet noodle in a sea of sharks — a totally ineffective trade organization.

So here’s to a new gorilla on the block.

Meanwhile, last week was a horrible week for airline stocks. We’ll go over the details of the carnage.

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

PlaneBusiness Banter Now Posted!

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Hello everyone.

This week’s issue of PlaneBusiness Banter is now posted. No surprise that this week’s issue is headlined by the events from Monday. We talk a lot about the AMR Monday Meltdown. We give you the facts. Then we give you our opinion.

Before shares of AMR went on their freefall Monday, there was good news for another airline last week. A US District Court Judge awarded US Airways a preliminary injunction against its pilot union, USAPA. You may recall the airline asked for the injunction the end of July, as it claimed the pilots were engaged in an organized attempt to “slow down” or disrupt the airline. Apparently Judge Conrad agreed.

We also talk a bit more about Stelios and his plans to start up a new airline. Last week we quoted one European airline analyst who said he thought the rumblings were merely Stelios’ latest attempt to extract more funds from the easyJet management.

That’s not what we heard this week. We let you in on all the details as to why the founder of easyJet may just be serious about a new start-up.

Travelport narrowly avoided a trip to bankruptcy court last week, as parent company Blackstone managed to convince debt holders to accept an extension. However that extension came at a price. Blackstone was forced to pay the highest interest rate paid so far this year for a debt restructuring, according to Bloomberg.

It’s hell when a scheduled IPO never happens and a company has a horrific LBO overhang. And that is exactly where Travelport is, as parent company Blackstone was forced last spring to pull Travelport’s expected IPO. Meanwhile, Travelport’s market share of the GDS market continues to shrink.

Emirates is coming to town. The airline announced two new U.S. destinations last week, and outlined a list of other U.S. destinations that are on the airline’s hit list.

Allegiant Airlines announced a couple of strange moves last week as the airline announced it was going to start flying between Phoenix (Mesa) and Las Vegas, and it announced it was pulling out of Long Beach completely. Wait, wasn’t the reason they were in Long Beach in the first place because the airline wanted to launch its Hawaii flights from there?

We talk about third quarter airline stock performance this week as well. A hint — we don’t have a lot to talk about as only one airline stock posted a gain for the quarter. One.

As for last week, the results on Wall Street weren’t quite that bad, but it wasn’t anything to get excited about.

As usual, all this and more — in this week’s issue of PlaneBusiness Banter .