Tag Archives: Southwest Airlines

PlaneBusiness Banter is Now Posted!

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Good evening Earthlings.

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

The last week has been brutal. I’m not kidding. First, we had two airlines report earnings last week, and we have the full review of the earnings call this week from Southwest Airlines and Alaska Air Group.

Our short take? Alaska turned in a respectable quarter — especially considering the airline used to simply assume it would post a loss in the first quarter. Not anymore.

This was also Alaska CEO Bill Ayer’s last earnings call. Ayer, one of the best CEOs in the business — will remain as Chairman. Should investors be worried about this change at the top of one of the most well-run (and profitable) U.S. airlines? No. I’ll tell you why.

As for Southwest, the airline has us totally confused.

It keeps pushing back dates for various merger-related integrations with AirTran. That we get. The airline clearly, as many of us said at the time the deal was announced, did not and still does not have the technology underfoot to make this deal work.

That includes the technology necessary to enable Southwest to fly internationally. Or to merge fully with AirTran. And then there are the fees that AirTran charges as part of their operation. An operation that, in a number of ways, performed better than Southwest in the first quarter.

Now they say they are going to keep all fees that are currently a part of the AirTran model in place. For at least 2-3 years.

Say what?

So now the “we’re going to migrate the AirTran operation into that of Southwest as quickly as possible” mantra has changed.

But why? The airline could switch off the fees at AirTran overnight.

Could it be Southwest is finally beginning to understand the value of “the upsell?”

No. Otherwise they wouldn’t be putting more seats in its 737-700s.

See what I mean about confusing?

About the best news out of Denton Drive last week was the news that the airline has finally made a decision about upgrading at least some of its IT incapability.

The airline announced it was going with Amadeus — and will use that company’s res product to enable it to start international operations. But not until 2014.

(Actually I think we’ll see Amadeus take both the international and the domestic PSS projects on at Southwest before this is all over.)

But clearly the major news last week was the announcement Friday that the three major unions at American Airlines had signed term sheets with US Airways — in effect telling management at AMR they want no part of a standalone airline — and pretty much throwing out a vote of “No Confidence” towards the current AMR management.

Needless to say, the fact the pilots did this pretty much confirms what we had said here last week — that the “Hale Memo” was a farce. Clearly Mr. Hale just signed his name to something that had no truth attached to it whatsoever.

And then the powers that be at AMR wonder why it is that their employees don’t trust them. Funny how that works.

We talk a lot about what happened last week, tell you what you can expect to see happen in the next weeks and months, and why you shouldn’t think that things have stopped happening just because they aren’t happening in public.

No question about it — the actions of the three union leaders and their boards last week was amazing. Something we’ve certainly never seen in this industry before.

No surprise — shares of US Airways climbed sharply last week on the news of the union agreements.

In addition, did you hear about the lawsuit that AIG, parent of ILFC has filed against Steve Hazy, the founder of ILFC, and currently the CEO of Air Lease Corp.?

The really bizarre part of the story — all the major players were in New York at the Plaza Hotel for the Air Finance Conference this week when the news hit.

I would think that might have made things just a tad uncomfortable.

As always, we have all of this 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, 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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Hello everyone. We’re back from our August hiatus. Perfect timing too, as today airline execs took their turns talking to investors at the Deutsche Bank Aviation Conference. And what did most of them say? Demand has not slowed.

In addition, remember that the airlines were the beneficiary of that nice FAA tax collection snafu in August, which fattened their bank accounts with a little unexpected spending money. Tuesday a number of airlines gave more precise guidance as to just how much their bank balances were fattened, as a result of Congress being unable to act like adults.

All of this positive news caused the markets to reward the flailing airline sector with a huge turnaround today.

The depth and strength of airline exec comments today really did seem to be in direct opposition to how we, and everyone else on the planet, perceive the macro economic landscape. I was surprised at some of the PRASM estimates for September that were floated today. Much better than I had anticipated.

This week is also “catch-up” week as we update subscribers on what went down with the Southwest Airlines/AirTran pilot seniority list integration proposal in August. Essentially the AirTran ALPA MEC refused to send the proposal to the AirTran pilot rank and file for a vote.

As of now, both sides are supposedly “talking” but there is already a “drop-dead” date established with the negotiations. If nothing is resolved by that date — the matter will be arbitrated.

We also talk this week about the situation at American Airlines. The airline had 111 pilots opt for retirement on Sept. 1. This is an abnormally high number, (the average monthly total is 11) and it appears the airline may have a similar number, if not more, opt to retire the beginning of October.

We talk about whether this is an “insider sentiment” that indicates the pilot group believes a bankruptcy is around the corner — or if it is simply a reflection of the sharp downturn in the value of AMR shares over the last quarter. (There is a look-back period in terms of what date and stock price is used in calculating benefits.)

Of course, we talk about how the airline sector performed both last week and while we were on vacation. We also go over the July DOT Air Travel Consumer report.

Then there is the usual hodge podge of goodies including an update on Stelios and his latest attack on the EasyJet board of directors, Moody’s cut in Travelport’s debt rating, the update in the case between American and Sabre, the skinny on the person who bit the Alaska Airlines first officer, and much, much more.

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

PlaneBusiness Banter Now Posted!

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Hello everyone. This week’s issue of PlaneBusiness Banter is now posted. This week we wrap up our Q2 earnings coverage with a look at Air Canada and WestJet. Bottomline? WestJet turned in a terrific performance. For Air Canada, the airline has made good progress wading through the swamps of its myriad of labor contracts that came up this year, but the airline was close-mouthed about its efforts at pension restructuring it is trying to incorporate in the new contracts.

Meanwhile, RASM performance at Air Canada lagged, the airline still has that large overhang of debt, and oh yeah, there are those pension obligations.

Meanwhile, the airline still sounds as though it intends to go through with its idea for a new low cost carrier.

I still say that is a mistake.

In other news, we look at the DOT Air Travel Consumer Report for July. Yes, the rather obvious decline in the on-time stats of US Airways continued in July, as did the abysmal showing for American Eagle in three out of four categories.

Lots of labor follow-up this week including; Southwest pilots; AirTran pilots, United baggage handlers, mechanics at American Airlines; and Delta Air Lines‘ pilots.

How about this effort on the part of a group of Delta Air Lines‘ pilots to start their own independent union? They claim they have more than 3300 pilot members and their hot-button issue is …scope.

Meanwhile, we’ll update you on the latest in the AirTran/Southwest pilot contract activity. Last week some Southwest Airlines‘ pilots were upset after SWAPA sent out a letter detailing some of the terms of the proposed deal. Meanwhile, AIrTran pilots have yet to see anything, as their MEC still hasn’t decided if they are even going to a copy of the deal.

[Insert the voice of the old commercial for that silly game “Operation!” Only insert “Arbitration!” instead.]

And — then there was the ALPA representational election at JetBlue. JetBlue pilots voted no.

American put out more details about how it plans to “spin-off” Eagle last week. Apparently there are no third parties involved at this point in time.

Oh, we talk about crack spreads this week, Ryanair buying airport buildings, Tiger Airways taking to the skies again, Gol’s abysmal second quarter earnings, why Spirit Airlines is sizzling hot, and more.

Subscribers can access this week’s issue here.

Is Southwest Airlines/AirTran Pilot Seniority Deal in Trouble?

No surprise that last week Southwest Airlines touted the fact that its pilots and the pilots at AirTran had already negotiated a seniority agreement as part of the airline’s merger process during its quarterly earnings call.

Given the dysfunctional situation that continues with the pilot group at US Airways, after America West acquired US Airways, and the ongoing difficult talks going on with the pilot groups of both United and Continental as they try and hash out a contract and seniority agreement, the airline had a reason to be happy.

And, as best as we could tell, after a bit of initial squawking, it did appear that the pilot group at Southwest was probably onboard with the deal, as we talked about last week in PlaneBusiness Banter.

The problem is — the AIrTran ALPA MEC was supposed to meet and give its “thumbs-up” to the deal and then push it out to members for a vote. Two weeks ago. Then it was last week. Then it was supposed to be this week.

No meeting.

Today, the AirTran MEC notified their counterparts in Dallas that the meeting of the MEC to discuss the deal has been postponed “INDEFINITELY.”

The official SWAPA correspondence is included here.

Update from your Executive Team

Two weeks ago, your board of directors reviewed the contents of Side Letter 9 and voted unanimously to send it to the membership for ratification. Since that time we have been waiting for the AirTran MEC to administer their meeting and decide if their membership will be voting with ours on the agreement. Meetings on their end, which were originally to coincide with ours, have been pushed back multiple times. They were scheduled to meet this week, Wednesday through Friday, to finally make a decision at their board level on the merits of this agreement. This afternoon, however, SWAPA was notified by ATN-ALPA via email that they have postponed their scheduled meeting indefinitely.

We have given you outlines of what this deal entails for you with the final language. A much broader education plan is in the works, if this deal is approved by their MEC. We know many of you are waiting (with continued patience) for further explanation and data, but we must still hold off until a decision on their end is made. In the meantime, SWAPA will continue preparations for arbitration.

We will update you as often and as thoroughly as possible as things progress. These delays don’t help either pilot group or the Company. “

PlaneBusiness Banter Posted!

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Hello everyone. This week in PlaneBusiness Banter we’re talking about the second quarter earnings season that begins next week. We also give you the complete rundown of the current airline stock target prices — compliments of the usual airline industry analyst contingent.

We also look at the most recent DOT Airline Consumer Travel Report for May. This month was a real grab bag of results — with airlines the usually doing well not doing well in certain measures, other doing better than expected — and then there was American Airlines. And American Eagle. The not-so-dynamic duo were clearly the worst performing airlines of the group. We were so impressed, we were moved to unanimously award the two airlines a tandem “Goat” award for their industry-lagging performance.

That reminds me. You know how airline executives always pepper their comments about how their particular airline has such “industry-leading” performance in this and that? When was the last time you heard someone say their airline is an industry laggard?

The EU is convinced that all the airlines of the rest of the world need to participate in its Emissions Trading Scheme. Needless to say the Air Transport Association, the IATA, and U.S. airlines don’t agree. The shrill cry against adding airlines to the list of ETS participating companies rose sharply last week — along with threats of an all-out trade war.

Last week airline analysts lined up to initiate coverage on shares of Spirit Airlines. Without exception they were all bullish on the shares. Their enthusiasm helped push shares of Spirit up 11% for the week.

Speaking of Wall Street, jet fuel posted a sharp uptick of more than 6% last week, even though the price of crude oil was only up a little more than 1%.

United Airlines pulled out the stops last week as it feted its most traveled frequent flyer. They even named a 747 after him.

On the merger front the proposed LAN/TAM deal is on hold as government regulators take more time to look at possible antitrust implications. I find this rather amusing, since LAN basically owns the Chilean market.

Pinnacle’s new CFO used to work for Pinnacle’s CEO when he was CEO at Frontier Airlines, Lufthansa is going to start flying passengers on biofuel on Friday, and more.

All in this week’s issue of PlaneBusiness Banter .

PlaneBusiness Banter Now Posted!

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Good evening earthlings! This week’s last mega-earnings issue of PlaneBusiness Banter is now posted. This week we dig our way through the recent earnings results and calls from Pinnacle, SkyWest and Republic Holdings. Let me put it this way. This is not an easy time for regional airline operators. Three different stories, three losses.

In other news, we talk a lot this week about why it is I am concerned about the negotiations between the United Airlines and Continental Airlines pilots. This situation has gone on far too long. These negotiations should have been wrapped up in no more than 60 days.

But now negotiations have become centered around the big “S” word. Union squabbling, turf wars, and intra-union power struggles that all go back to ….seniority.

These two groups had a choice going into these negotiations: follow the blueprint set at Delta/Northwest or the blueprint set with America West/US Airways. Every day that passes — it appears both groups are following the wrong set of plans.

I tell subscribers this week why I believe these negotiations are now at the tipping point.

In other news, we talk this week about two analysts and their respective research reports. First, we talk about Avondale Partners analyst Bob McAdoo’s research note on AMR. It was, without a doubt, the most scathing review of the inability of management at the airline to do what it needs to do that I have read from any Wall Street analyst. As he points out — the airline continues to lose at least $1 billion in revenues as a result of bad decisions.

So — what are they going to do about it?

Gary Chase, analyst with Barclays, issued a nice preliminary review of what he thinks the Southwest/AirTran deal is going to mean to Southwest. Both short-term and longer-term. We’ve admired Chase’s take on Southwest for years — and his piece last week was no exception. Opportunity? Yes. But with risks.

We’ve got the March DOT Air Travel Consumer Report, we’ll go over how the airline sector did last week (I’ll give you a clue — jet fuel rose again) and we talk a bit about the upcoming IPO from Spirit Airlines, as well as the results issued Monday from Steve Hazy’s new Air Lease Corp.

And more!

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

PlaneBusiness Banter Now Posted!

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Good evening earthlings! This week’s issue of PlaneBusiness Banter is now posted.

This week I talk a lot about US Airways. For good reason. I attended the airline’s “Unplugged” Media Day last week. The airline used the occasion to announce it is upgrading its regional airline fleet with first class cabins. But that was not the only news to come out of Tempe. We’ll give you the low down.

That doesn’t mean we’re done talking about Southwest Airlines and its recent fuselage problem. Nor have the late night talk show hosts.

Last week Southwest Airlines CEO Gary Kelly and American Airlines CEO Gerard Arpey both sat down with Terry Maxon from the Dallas Morning News at the SABEW Conference in Dallas. Gary talked about the Southwest incident and Gerard talked about the recent bogus offer to buy the airline from that outfit in Florida. Yes, as we assumed, the SEC is looking into it.

Speaking of Dallas, the DOT reported its February Air Travel Consumer Report last week. As expected, it was not a good month for airlines based in Dallas. (February ….ice…snow…Superbowl on ice.)

Expedia and American Airlines kissed and made up this week. But this news leaves a lot of very ragged and messy things to clean up on the corporate travel terrain. We like TheBeat’s Jay Campbell’s take on the news. We’ll share his take with you.

While pilots for United and Continental Airlines keep working on a new contract, all is not apparently warm and fuzzy on the United Airlines pilot side of the house. Reports say that there was a recall vote originally scheduled for Monday’s UAL ALPA MEC meeting. The intended victim? The pilot’s current MEC Chairwoman, Captain Wendy Morse.

Meanwhile the flight attendants at American Airlines offered up a deal for the airline. An immediate 6% raise for its members — and the rest of the contract details would be tabled for 18 months. The airline said no.

Speaking of American — April 20 is just around the corner. That’s the day you can expect to see protests from airline employees over the airline’s latest PUP bonus distributions.

We talk also take a look this week at just how much additional revenue and/or capacity cuts the airlines would need to make — in order to cover the current price of fuel for the remainder of the year. That’s a sobering chart. Thanks to Dahlman Rose analyst Helane Becker for the analysis.

As always, all this, and more in this week’s issue.

Subscribers can access the issue here.

PlaneBusiness Banter Now Posted!

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Hello everyone.

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access it here.

This week we have a pretty good issue. Always takes us a week to get back in the groove after the holidays, and this week I think we have a little bit of something for everybody.

No question that the thrill of new metal hung over the industry last week as Delta Air Lines told its employees it is looking at new aircraft options. While Continental/United did not tell its employees that it too has been checking its bank balances and kicking some tires, industry sources confirm that yes, this is also the case.

Then there was that obscene order placed by IndiGo Airlines — based in India. It was, according to Airbus, the largest commercial aircraft order ever place. A whole slew of A320s, including a nice stable of the new “neo” flavor A320. You know, the ones with the more efficient engine.

But Airbus didn’t stop there. Oh no, they are clearly in their “Let’s Hammer The Boys at Boeing” mode as they also announced a new A320 order from Virgin America. One that also, conveniently, was signed at the stroke of midnight on Dec. 29. (I’m making up the part about the stroke of midnight, but I’m probably not that far off.)

The result of all this? Airbus looks to now have a nice solid start to its “neo” program, and oh yes, the Virgin order pushed Airbus past Boeing in the all-important testosterone-fueled exercise called, “Who sold more airplanes in “________.” Fill in the year.

For 2010, it looks like Airbus nosed out Boeing, 644 to 625.

Not surprisingly, given all this hoopla about new metal, Steve Hazy’s Air Lease Corp. filed its S-1 with the SEC last week. Translation: They are going to do an IPO.

Of course the American Airlines/GDS cat fight continued last week, with one very interesting new tidbit. In last week’s PlaneBusiness Banter I talked with subscribers about how I wondered if there was not more going on between American and ITA than met the eye.

Well, looks like I was right, as American announced a new deal with ITA (American is already a client) for a nice chunk of work with American’s new IT overhaul — which is being spearheaded by HP.

We update subscribers on all the latest GDS related news, and we also share a guest column this week from Montie Brewer, ex-Air Canada CEO. He gives us his take on the GDS/airline situation. (Yeah, I know. Bet you can’t guess which side of the fence he’s on.)

We also have a longish Market Review this week. We bring subscribers up to speed with the latest research reports from three analysts — Jamie Baker and Mark Streeter with JP Morgan; Glenn Engel with Bank of America and Dan McKenzie with Hudson Securities.

All three have different takes — and different things to say — and in the case of Glenn, he gives us part three of his ongoing research series in which he compares airlines on the basis of revenue and cost per plane. None of the usual RASM, CASM stuff. His first two reports last year covered revenues of the major and regional carriers. This latest report covers the costs of the major carriers.

Interesting way to look at the same numbers.

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

PlaneBusiness Banter Now Posted!

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Hello to all on what is a drop-dead gorgeous Tuesday morning here in the DFW Metromess.

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access it here.

So what are we talking about this week? Well, considering we are headquartered in that hotbed of aviation, Dallas Ft. Worth, we talk a lot this week about the recent British invasion. Oh, that’s right. Virgin America is, er, an American company.

It was easy to forget that last week as Sir Richard Branson and the Virgin marketing machine touched down in DFW.

Yes, Virgin America launched its new service to DFW. We give you our take on the festivities.

In addition, in my column this week I take a long look at two similar and intertwined airlines — JetBlue and Virgin America.

In other news, we have a copy of the Australian Transportation Safety Bureau’s preliminary report on the Rolls-Royce uncontained engine failure on Qantas Flight 32. Let me put it this way — if there were any doubts before, it’s pretty clear Rolls-Royce has a big problem with the Trent 900 engine. Particularly the version Qantas is using on its aircraft. And yes, that particular flavor of 900 is a different configuration than the one Singapore and Lufthansa uses.

We include two of the photos from the report in this week’s issue. Not a pretty sight.

In other news, the International Air Transport Association announced that Cathay’s CEO will be taking over the helm there next year. This means we’ll have two new mouthpieces at the helm of the two biggest airline trade groups in 2011.

Fallout from the national election continues to trickle down through the industry. This week we saw shares of FedEx lead the group as analysts upgraded shares. Granted, one of the reasons shares were upgraded is an increase in industrial productivity — but the fact that proposed legislation that would have made it easier for FedEx drivers to unionize is now probably toast — a result of the changes in Washington — certainly is at play here as well.

Speaking of Wall Street, oil prices hit their highest point in more than two years on Friday. Monday, they were up again.

Not good news for those things with wings that drink millions of gallons of jet fuel for breakfast, lunch, and dinner.

And what about those Spanish Air Traffic controllers? Did you folks see how much these guys make on average? Trust me. It’s more than 99% of what airline pilots make.

It’s hell when the gravy train stops.

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

Enjoy!