Tag Archives: Nasdaq:UAUA

Southwest Airlines, United Airlines and Continental Airlines Report Earnings

On the first of a three-day onslaught of earnings that can only be described as “earnings hell,” Southwest, Continental, and United Airlines all reported their second quarter numbers today.

The short and sweet?

While Southwest Airlines reported a profit for the first time in three quarters, the airline’s guidance for the third quarter was not very rosy. So much so that the airline said it could not guarantee a profit for the third quarter. The airline posted a profit of $54 million or $0.07 for the quarter. This represented a 51% decline in profits over last year’s $121 million.

Operating income at the airline declined by 40%, to only $123 million.

Based on weak travel demand and fuel price volatility, we cannot predict a profitable third quarter,” said Gary Kelly, Southwest chairman, president and CEO.

United Airlines also posted a “profit” — but don’t let those headlines fool you. The airline only posted a “profit” as a result of one-time items and fuel hedge gains. Repeat after me: The airline did not post a real honest-to-God profit.

Excluding all the accounting handiwork, the airline lost $323 million or $2.23 for the quarter. This was, however, better than what the analyst consensus had been for the airline. Analysts had forecast the airline would post a loss of $2.61.

As for Continental, the airline posted a loss of $213 million, or $1.72 a share. Excluding special items, the airline posted a loss of $169 million or $1.36.

Continental posted a $154 million operating loss, which was 116% worse than the second quarter of 2008.

Those are the basics folks. Not exactly the kind of news that makes you want to jump up and down. Much less buy airline stocks. Because as we all know — if the airlines can’t make money in the second quarter — we don’t even want to see what’s coming next in the third and fourth quarters.

Someone noted to me in an email this morning,

“Holly, just looking over the Continental numbers. You know I was thinking about what you wrote this week in PlaneBusiness Banter concerning why Larry [Kellner] would choose to leave the airline right now, and the strength of the management team at Continental. I think the reason Larry has decided to leave this industry is obvious when you look at these results and realize that this airline clearly has one of the best management teams around. But even as good as they are — the airline is STILL not profitable. I can see Larry’s point.

Larry, get out of this industry, go make some money and have a good time doing it.”

I’m afraid our PBB subscriber speaks the ugly truth.

By Popular Demand: United Breaks Guitars

Okay, I give in.

Either I talk about this, or you guys are going to continue to pelt me unmercifully until I do!

No question that the number one item generating reader response in the email bag this week is the case of United Airlines and Dave Carroll’s smashed guitar.

It appears that Dave Carroll of the band Sons of Maxwell hopped a plane with his bandmates from Halifax to Omaha by way of Chicago last year. As the plane unloaded atn O’Hare, Dave happens to look out the window in time to witness the baggage handlers throwing around instrument cases, namely THEIR instrument cases, like beach balls.

He said something to the flight attendants on board — but was met, as he put it, with “disinterest and disregard.”

Fast forward to Omaha, and no, Dave is not surprised at all when he finds that the base of his 710 acoustic Taylor guitar is smashed when he retrieves it from baggage claim. However, the show must go on, and Dave makes do with a stand-in.

A week later Dave made a formal complaint to United, which he says was never acknowledged. Over the next several months, Dave says that he called, emailed, and generally tried to get attention paid to his situation, and the best he received was a denial based on the fact that he didn’t “complain in the right place, or at the right time.”

Having spent some $1200 to repair his guitar, Dave was still not a happy man. Nor was his guitar the beauty she used to be.

So Dave did what song writers do.

He sat down and wrote a song about the whole thing, “United Breaks Guitars.” Actually he wrote three songs. “United Breaks Guitars” is actually “Song One.” “Song Two” is supposed to be posted shortly.

The video of “Song One” was posted on YouTube this week and it has already generated about 1.5 million views. “Song Two” is apparently already written and the video is “underway.” “Song Three” is still in the creative process.

For those of you with really enquiring minds, or if you just want to see some cute shots of Dave (hey, he’s a doll — with a Canadian accent no less) you can read the long version of the story on his website.

The PR machine at United has ground itself into action over this. In an update video, Dave says that the airline has, belatedly, offered to hand over some bucks. Dave says in the video that he doesn’t want the money. But he does want United to take the money and give it to a charitable organization. And yes, then United needs to tell all of us just which organization that was.

In the meantime, he told the last person he dealt with at United, Ms. Irlweg, that he was going to write three songs, and that is what he still intends to do.

Can’t wait to see and hear song two — which apparently deals mainly with “Ms. Irlweg.”

A story like this warms my heart. For more than one reason. The main one being that it illustrates so clearly why old style methods of “command and control” management and/or PR just are not going to cut it anymore these days.

You can’t control the web. You can’t keep this guy from writing his songs. And an offer to compensate him at this point — not enough. The airline comes across as slow-footed and dim-witted.

It’s a PR nightmare — one that all companies, not just airlines, need to understand.

Enquiring minds want to know… I wonder if United made it even worse and “requested” that he not post any more songs — when they finally made him their “compensation” offer this week?”

United Boeing 767 Gets Hosed

Now I know the rest of the story.

This week one of our friendly airline geeks on a list I am on sent out some disturbing pictures in which it appeared someone at United AIrlines decided to take a pressure washer to one of the airline’s Boeing 767s — knocking out windows and generally making a huge expensive mess.

But that wasn’t a pressure washing. It was from fire hoses.

Kieran Daly wrote on his blog, Unusual Attitude this week that he was told that United took a Boeing 767-300, and gave it the full customer-facing treatment. New seats, interior fittings, and best of all,”Panasonic’s all-singing, all-dancing in-flight entertainment.” All of this was done at its Chicago maintenance base.

That’s when all hell broke loose.

If you would like to read the official MX write-up of the damage, you can access it at Kieran’s blog. It runs for pages and pages. And pages.

United Airlines Seems Determined to Piss Off Employees; O’Leary Tees Off on News

Take one major airline.

Have that major airline use bankruptcy as an excuse to destroy its employee pension plans.

Have same airline continue to enjoy some of the most adversarial management/employee relations in the industry.

Add just one more objectionable move on the part of said airline’s management to the almost-boiling pot.

Stir.

Back off and watch as the pot boils over.

Today that is exactly what has happened, as United Airlines’ pilots are reacting to the news that the airline plans to link-up with Irish airline Aer Lingus to offer flights between the U.S. and Madrid. Say what?

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Starting next year, both airlines will market the flights and each airline will have their own flight numbers on the route.

But United Airlines’ employees will have nothing to do with the actual operation of the flights.

No, Aer Lingus will fly the planes with their crews. And provide the planes. United will handle the marketing for the flights.

According to a report in Bloomberg, “Aer Lingus and UAL will review the partnership after two years and may turn it into a ‘full-blown joint venture,’ with the Irish carrier owning 51%.”

Not surprising that the United pilots are not happy about this news. Looking at the details of the deal this looks like nothing more than a glorified wet lease.

Meanwhile, United Airlines continues to sit on a stagnant-to-declining fleet, and continues to announce furloughs for its own pilots and flight attendants.

In a message from the Chairman of the airline’s ALPA MEC, Steve Wallach told the troops,

“The day after reporting one of its worst quarterly financial results in history and after furloughing an additional 254 pilots (bringing the total to 606 pilots), United Airlines announced today that it has entered into what it calls an “innovative” partnership with Aer Lingus”….He then added, “Aer Lingus has advised the Irish press that this joint venture will operate an Aer Lingus aircraft with neither United nor Aer Lingus employees, under a separate operating certificate and under newly established wages and working conditions. Obviously, this partnership will be accomplished at the expense of United’s and Aer Lingus’ own pilots and other employees. This development, where United attempts to establish an airline operation without the use of United aircraft or employees, is nothing less than the outsourcing of jobs to an international company, and clearly demonstrates that this management continues to make business decisions without regard to its pilots and other employees…..The United pilots are exploring every option to put an end to the company’s blatant disregard and lack of loyalty to the United Airlines brand.”

By the way, we all should have known that Ryanair’s CEO Michael O’Leary wouldn’t sit around and be quiet on this development. As most of you know, Ryanair is in the middle of yet another hostile takeover run at Aer Lingus.

Today Ryanair issued a statement in which O’Leary said, “

“Aer Lingus and United Airways share many similar traits. They both used to be big in the 1950’s and 1960’s, but sadly today they are just shadows of their former glory. Both have recently announced losses, job cuts and pay cuts. After months of trawling around looking for partners, it is a sad reflection on Aer Lingus that the best they could come up with is one of the weakest and biggest loss makers in the U.S. airline industry. Given the scale of United’s losses there is no guarantee that they will even be around in March 2010 to operate this “partnership”.

“It is hard to think of any transatlantic airline losing any sleep at the thought of being faced with the combined weakness of Aer Lingus and United Airlines on the Madrid-Washington route. Today’s announcement shows just how desperate Aer Lingus is to find a partner, any partner it can, even if the flights don’t start until March 2010. This so called “partnership” with another “loser” like United shows that Aer Lingus has no independent strategy, and no prospect of remaining independent.”

That’s what I like about Mr. O’Leary. He’s never afraid to tell us what he really thinks.