Tag Archives: Frontier Airlines

PlaneBusiness Banter Now Posted!

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Good evening everyone! This week’s huge mega-earnings issue of PlaneBusiness Banter is now posted. This week we take an in-depth look at the recent earnings results and the earnings calls from Delta Air Lines, US Airways, Alaska Air Group, JetBlue, and United Continental Holdings.

But there’s more.

Republic Holdings announced last week that Frontier Airlines was getting a new executive team and — that the airline was going to become an ULCC.

You know what that is don’t you?

Ultra low cost carrier. Think Spirit. Or Ryanair.

Not sure what all the animals are going to think about this. Not quite sure what we think about it yet — as details are slim. But it appears that either Frontier will be rebranded and operated as a ULCC. Or it looks like it will be rebranded and then sold as a ULCC.

Heading up the new operation is none other than Dave Siegel. Yes, the same Dave Siegel who headed up the old US Airways during the Dark Period. Joining him is the former head of planning and pricing at Allegiant — Robert Ashcroft as SVP Finance. Daniel Shurz, meanwhile, was promoted to SVP Commercial.

Tomorrow employees and union leaders will finally hear from American Airlines — as the airline is slated to roll out its proposed labor contract modifications per section 1113 of the U.S. bankruptcy code. Meanwhile we’ll be interested to more hear details of the airline’s proposed restructuring plan.

It’s going to be one difficult day for American employees.

Meanwhile the head of the Pension Benefit Guaranty Benefit Corp., the government agency that would be forced to take over the administration of employee pensions if the airline walks away from them continued his very public criticism of the airline Tuesday.

The PBGC also placed liens against assets of American on Tuesday. The agency said that it filed over 70 liens for a total of $91.7 million, on behalf of the four pension plans the airline currently has. This comes after American only paid $6.5 million of the roughly $100 million that was due earlier in the month. The airline said that it had to conserve its cash.

We’ll find out more tomorrow on where the pension issue is headed. But one thing’s for sure — this PBGC is not the same as the one United Airlines rolled over when it went through its bankruptcy. Josh Gotbaum, the director of the PBGC, is not going to go down without a fight.

But the big story this week in PlaneBusiness Banter is earnings — lots and lots and lots of earnings. This week’s issue clocks in at over 150 pages as we take an in-depth look at the five airlines that reported in last week. Which airline do we think reported the strongest earnings for the fourth quarter? Delta Air Lines. And I tell subscribers why.

Also, those reports last Friday about how Delta was now possibly looking at a deal for US Airways? We give you our take on those reports and why they shouldn’t surprise anyone. Who is going to do what to whom and why? We’ll break down a number of the possible scenarios.

All this and a whole lot more. Now. In this week’s PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Hello everyone.

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

This week we have yet more third quarter earnings to discuss, as we take in-depth looks at the results posted by Allegiant, SkyWest and Pinnacle.

Next week, we wrap up our third quarter earnings call coverage as we look at Republic Holdings, Air Canada and WestJet.

Speaking of WestJet, our moles tell us that we should expect to hear another “important” announcement along with the airline’s third quarter numbers this week. That would make sense. It would also explain why the airline is late in reporting their numbers for the quarter.

Speaking of Republic — did you see what happened to shares of Republic Tuesday? That’s right. Shares picked up a whopping 61% on the day on incredibly heavy volume. The airline reported better than expected numbers and also gave clear guidance on how it plans to divest itself of Frontier Airlines. Investors liked what they heard. Obviously.

Late Tuesday there was an update posted on the AMR negotiations website concerning the negotiations between American and its pilots. This follows a week in which all indications continue to point to news of a new tentative agreement between American Airlines and its pilots being announced in the not-too-distant future.

Meanwhile, pilots at Southwest Airlines and AirTran overwhelmingly okayed their proposed seniority agreement. No surprise there.

Internationally, Singapore Airlines, IAG Group and Emirates all reported sharp declines in earnings for the quarter last week — as higher fuel prices took their toll.

Meanwhile, does IAG have a deal to buy bmi from Lufthansa or not? Depends on who you are asking. If you are asking Willie Walsh, the answer is yes. But if you are asking Richard Branson, the answer is apparently no.

Question of the week — How many weeks does it take to train new Boeing 787 pilots? Answer: Five weeks.

No, that’s not a joke. That’s what ANA is doing. Five weeks?

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg We may be a little late, but hey, we made it.

I know. I can’t wait to get my tarmac rule violation bill in the mail this week from the DOT.

Hello all ;-)

This week’s issue of PlaneBusiness Banter is now, finally, posted. If you read my previous post here you’ll get the skinny on why we are posting on Wednesday night. An addendum to that post: while all the other problems were apparently fixed, now I cannot send email on my planebusiness.com account using Verizon.

At this point, I don’t care. I can take up that battle tomorrow.

In the meantime, a head’s up for PBB subscribers. We will be posting another issue of PBB either later this week or the first of next week. Yes, I was supposed to go on vacation yesterday, but because of all this Verizon mess, we were unable to complete all the material we wanted to include in this final issue for the summer.

So — the mojitos have been put on hold. The box of mint is still in the refrigerator.

We’ll be back for one more issue before we formally depart.

In the meantime however, we have a lot to talk about in this issue, including in-depth earnings reports on Republic, Hawaiian, and SkyWest. We talk a lot about the SkyWest/ExpressJet deal, and there were also more details given about SkyWest’s involvement with Air Mekong in the airline’s earnings call. We’ll update you on all that as well.

Cathay Pacific also reported earnings last week — and the airline did very, very well. More on those, in addition to the scoop on the newest low fare Asian airline — a JV between Thai and Tiger.

DAE has apparently told Airbus and Boeing that it is canceling 50 aircraft that had been included as part of the company’s eye-popping $27 billion order spending spree at the Dubai Air Show two years ago. Reality has apparently come to the Middle East. Or at least one part of it. There are still all those mind-numbing Emirates aircraft orders out there.

We give you the rundown on which airlines shone in the second quarter in terms of break even load factor and operating margins. And we’ll talk about those that posted rather worrisome numbers.

One hint: The same two airlines finished last and next to last in both metrics. Who were those two airlines?

And what about the Canadian airline Jazz? Why does it think it’s okay to report its quarterly numbers — absent any mention of RPMs?

We have a pretty good idea why — do you?

As always, this is just a part of this week’s issue. All this and more — in this week’s issue of PlaneBusiness Banter. Subscribers can access this week’s issue here.

Frontier-Republic: Clearing up a Possible Misperception

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I had an interesting note from a former subscriber to PlaneBusiness Banter this afternoon. Since he no longer reads us on a weekly basis, he took my earlier post about the Frontier employee rogue blog as implying that I am not a fan of the Republic Holdings/Frontier/Midwest Airlines experiment.

Au contraire. If any of you out there think the same — continue reading.

I have been a pretty optimistic supporter of Mr. Bedford’s experiment over the last year. Although I have been concerned about his lack of cash. But for those of you who are subscribers and read my review of the Republic Holdings third quarter earnings call in November — you know that I continued, at that point, to give the boys in Indy the benefit of the doubt as they made their way across the mine-filled tundra of their cut and paste business plan. With two BIG conditions.

Those conditions were: that the guts of the Frontier Airlines management team, headed by Sean Menke stay associated with the new venture. In November, this was assumed to be the case.

This is no longer the case.

Second condition: that the brain trust at Republic Holdings did not dismiss the incredible value of the employee/management relationship at Frontier Airlines. That it not start to rip that culture apart — all in the name of making some numbers look better.

Unfortunately, I am afraid now that the continuation of that valuable Frontier culture seems to be in danger — given some moves of late by the Republic management team.

So no — I was, up until recently, a rather optimistic observer of the grand experiment.

Then again, I’m not saying that the whole thing is dead — I’m just not encouraged by the recent news coming out of Indianapolis. Much less my email box — especially from those close to the Frontier operation.

Rogue Frontier Airlines Blog: This is Good Stuff

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One of the things that airline management team members have to understand is this — In this day of blogs and internet chat rooms — you can’t sweep the voice of concerned and/or pissed off and/or disillusioned employees under the rug like you used to years ago.

Nope. Those days are long gone.

Need we talk about the series of “Hitler” videos from the various airline pilot groups that popped up last year?

Today, the latest example of this: A blog by the name of “All Things Frontier Airlines.

No, I don’t know who is writing this effort, but whoever it is is both very knowledgeable about the airline, and he/she has a razor wit to boot.

Kudos to whomever is writing this. It is one of the better “rogue” efforts we’ve seen in a long time.

Here is a snippet from the Thursday post.

“Today, Republic found themselves in the news twice. The first article which appeared in the Denver Post, was aptly named “Republic chief has “work to do”. For the most part the article was pretty mundane, but for me the most telling quote in the piece was, “Bedford said there are no immediate plans to replace Menke but that if a successor is named, the person will be added at Republic headquarters.” Apparently, Bedford has obtained a copy of “Revenue Management for Dummies” and feels that he no longer needs the services of anyone with experience in that field or that moving the functions to Indianapolis will magically solve all of those issues like it has everything else. The article goes on to mention that Frontier will be receiving 3 Airbus 330′s and 7 Embraer 190 aircraft. I truly hope that the A330 mention was a misquote or a typo instead of A320, but at this point I can’t say I would be surprised if it was not and Mr. Bedford doesn’t realize the differences in the aircraft. Most of all, I really like the title of this article, “Republic chief has “work to do”. Naturally, I began to wonder what work Mr. Bedford has in store. After much searching, I was finally able to obtain this mysterious “To Do” list and as I think you will see, it offers much insight on what it takes to be the CEO at Republic Airways.

Brian Bedford To Do list:
- Check E-Mail and forward “Obama no birth certificate email” again to the non believers.
- Look up current fuel prices and figure out what can be moved to Indianapolis or who’s pay can be cut as a result.
- Take a nap.
- Call CEO of Qwest and convince him to move the business and employees to Indianapolis.
- Prepare weekly letter to employees by incorporating at least 2 scriptures, 1 quote from Winston Churchill, and the evils of same sex marriage.”


Southwest Airlines’ Bid Not Accepted for Frontier Airlines

We said all along that we would only move forward on this deal if it proved to be the right decision for our Employees and financially prudent for our Company,” said Gary Kelly, Southwest’s Chairman of the Board, President, and CEO. “We have a mission to preserve and protect our Culture and the best interests of our Employees, Customers, and Shareholders. This was a great opportunity that required us to act fast. A lot of people worked very hard with every intention of making this work. We were fortunate to be in a position to examine the acquisition to see if it was the right decision for Southwest Airlines. We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected. Our congratulations to Republic Airways and Frontier Airlines.”


There you go.

Go talk amongst yourselves about this turn of events. I’m going to go read some of your email pelts.

Latest SWAPA Update on Pilot Negotiations Regarding Southwest Airlines Bid for Frontier Airlines

Here’s the latest missive from the Southwest Airlines’ pilot group, SWAPA, to its members. FAPA is the Frontier Airlines Pilot Association, the union that represents the Frontier Airlines’ pilots.

“It has been a whirlwind week for your M&A Committee. We have been in meetings with our M&A counsel in Washington Monday and Tuesday and quickly returned to Dallas on Wednesday for a pressing meeting with FAPA. We would like to bring you up to date on the Frontier transaction.

Weeks ago, the Company approached SWAPA for ideas on how to complete the Frontier transaction with our pilots’ support. We expressed our concerns about new federal legislation on the books (McCaskill/Bond) and its potential effect on pilot seniority at Southwest. The Company, at SWAPA’s request, included a “labor contingency clause” requiring labor agreements in place prior to the closing of the Frontier acquisition. This action took the possibility of binding arbitration out of play and protected our pilots from a harmful arbitrated seniority integration.

As the Company was developing their formal binding proposal to acquire Frontier out of bankruptcy, Southwest bankruptcy counsel expressed concern that the Southwest bid could be excluded from the auction process because Frontier legal counsel deemed the proposal “not qualified” for the auction process due to the labor contingency clause. However, the labor contingency clause would be deemed acceptable and the bid deemed qualified if SWAPA and FAPA reached an Agreement in Principle for seniority integration. That triggered negotiations Thursday between SWAPA and FAPA.

SWAPA’s concerns throughout this process have been to protect our seniority list and our Collective Bargaining Agreement (CBA). The only way to adequately protect our entire pilot group was to place the FAPA pilots below the SWAPA pilots on our new Master Seniority List.

FAPA’s concerns are:

  • Job Protection
  • Seat Protection
  • Pay Protection
  • Domicile Protection

FAPA’s position was for relative seniority with a “variable” for the ratio for integration. Clearly, meeting all of FAPA’s concerns would be an enormous windfall for Frontier pilots at the expense of Southwest pilots.”

Oh boy. Here we go. All of these concepts sound very familiar don’t they? Relative seniority. “Stapling” the Frontier pilots to the bottom of the list.

And this is supposed to be finalized with both groups signing off on it today??

Right.

Well, there you have it. Either there is an agreement in principle with both pilot groups as to the question of seniority, or it appears that the bid by Southwest will not be considered to be a “qualified” bid.

Do you suppose that Southwest knew this all along, and this is merely an anticipated ‘squeeze play’ made by the company, assuming that the “urgency” of the situation would prod both groups to an agreement before the clock strikes twelve? Or was this a surprise at the last minute to all parties concerned?

Stay tuned.

Southwest Airlines’ Bid for Frontier: Did They Really Think It Was Going to Be Easy?

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Today is the big day. Or it’s supposed to be the big day.

After all the preliminary table setting over the last several days, today was or is supposed to be the day that Frontier Airlines is actually auctioned off.

But, as I wrote about this week in PBB — I think the assumption that this thing was a done deal for Southwest was a bit premature. In addition, yes, I think that if Republic were to be awarded Frontier — that Frontier could continue to operate and it could be profitable. This is not a case where the bankrupt company is on death’s door. Quite the contrary, Frontier has been posting good operational numbers of late, and they have actually used the bankruptcy process to do what a company is supposed to do while in bankruptcy — they’ve restructured themselves quite nicely.

Therefore, I am not surprised at all that reports last night and this morning say that all is not well on the labor front. Specifically in the negotiations between the Frontier pilots and the Southwest Airlines’ pilots.

Remember that Southwest said going into this that their pilots would have to sign off on a deal with the Frontier pilots or the airline would not go through with the deal.

Not sure if Southwest realized that this, coupled with the fact that the Frontier pilots are taking the position that Frontier does not HAVE to go with Southwest for it to remain a viable business — and you’ve got a pretty strong negotiating position for the pilots at Frontier.

We’ll keep you posted.