Tag Archives: SWAPA

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.

PlaneBusiness Banter Now Posted!

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Hello everyone. It’s that time again. Time for this week’s issue of PlaneBusiness Banter. This week we take our in-depth view at the recent earnings calls and results from Hawaiian Holdings, Delta Air Lines, JetBlue, and the newest member of the U.S. publicly traded airline community — Spirit Airlines.

Spirit easily blew past analyst expectations for the quarter, and I must admit, it was fun to listen to a call from an airline that has such a very different business plan. Reminds me of when Allegiant first came on the scene. And years before that, Southwest Airlines was the airline that was pushing its lower costs, its “different” business model of simply low fares, and its low cost structure. Now — the new kid on the low cost, high-growth block is Spirit Airlines.

In addition to our earnings coverage, we spend a lot of time talking about pilots and pilot unions this week. From pilots calling in sick at Continental to ALPA severing a mutually beneficial deal with the Allied Pilots Association that had included the services of a well-respected union negotiator Seth Rosen, as a result of APA hot heads sending out anti-ALPA missives to American pilots — it has been a very “labor-intensive” week you might say.

But all of this angst pales in comparison to the paperwork that accompanied US Airways’ request for a preliminary injunction against its pilot union, USAPA, and the union’s President, Michael Cleary.

The suit, which was filed last Friday accuses the pilot union of of “directly instigating the illegal slowdown by encouraging pilots to delay flight departures, not complete certain training requirements, decline to fly on the basis of fatigue, increase maintenance write-ups, and generally slow down in the performance of their duties — and also by threatening to expose and retaliate against those pilots who do not participate in the slowdown. Although USAPA is encouraging pilots to change their behavior under the guise of “safety,” USAPA’s own communications confirm the true purpose of its campaign is illegally to slowdown US Airways’ operation in order to gain leverage in contract negotiations.”

But it’s not all unions and earnings.

Oh no.

Then there is the latest from Washington.

While the people who were elected to Congress finally managed to cobble together some kind of debt ceiling/budget compromise and both the Senate and the House managed to sign off on it, one thing that was not taken care of before both the House and Senate shut down work for the rest of the month was — a funding authorization bill for the FAA.

That’s right.

The bad news is that this means FAA-funded projects across the country will remain stopped in their tracks, more than 4000 FAA employees will remain laid off, and other FAA workers will continue to work more or less on an emergency basis.

But — on the plus side — (at least if you are an airline CEO or CFO) this could mean an additional $1.5 billion in revenues for the U.S. carriers — as a result of the ticket tax not being collected. That is, unless they begin to start rolling out a series of off-the-wall fare wars.  

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

PlaneBusiness Banter Now Posted!

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Hello everyone. I feel like I need to crank up the theme song from “Rocky” tonight. Yes, it’s earnings week here at the Worldwide Headquarters of PlaneBusiness Banter. Or rather, the first of three heavy earnings weeks. Or is it four? Oh, they are so much fun — who’s counting?

This week Alaska, United Continental, AMR and US Airways in-depth earnings reviews are on tap for PBB readers. I know it’s hard to believe, given how long some of our earnings reviews have run in the past, but I do believe we may have posted our longest earnings review ever tonight. Alaska’s call attracted a lot of analyst attention and they all asked a lot of great questions.

That’s what happens when you are an airline and you post a fantastic pretax margin, operating margin, and an even more impressive ROIC. (That’s return on invested capital for those of you who are not financial geeks.)

Funny. I can remember quarters in the past when Alaska executives would give their presentations on the airline’s earnings call and there were hardly any analysts on the calls asking questions. I used to feel sorry for them.

Things change when you begin running one of the most profitable and well-run airlines in the U.S.

American Airlines? Oh. Earnings. Did the airline report earnings last week? Kind of hard to remember what with all the hoopla the airline generated about its split Airbus/Boeing order of an entire fleet of aircraft. Actually I’m sure the airline would prefer that nobody remembered that they also reported 2Q earnings. And we’ll talk about why that is the case.

No question American would much rather we talk about nice new shiny airplanes.

One thing’s for sure. Wall Street was not happy with the news about all the nice new shiny airplanes. We give readers a selection of analyst comments to pour over this week — and the gist of the feedback goes something like this: new airplanes do nothing to change the underlying problems with the current business model or the brand. Or the operational issues. Or the cost issues. Or the continued less-than-industry peer revenue performance.

Much less mounting cash flow issues.

Bu they, don’t worry, be happy. I sometimes think that AMR management is convinced the airline is simply “too big to fail.” That’s a somewhat dangerous assumption to make. Just ask Lehman Brothers.

United Continental is, of course, still in its transition mode, but so far so good. The airline’s revenue performance was good in 2Q, but I suspect we are going to see the airline’s revenue performance get even better over the next 12 months. My biggest concern with United Continental remains its continuing labor negotiations. Particularly the ones involving the airline’s two pilot groups.

Then there is US Airways. Even without fuel hedges, the airline still posted a profit for the quarter. All things considered, that’s not a bad thing. However, US Airways also happens to have a rather dysfunctional pilot union that still can’t negotiate a seniority agreement, much less a contract. Last week that same union decided to go public with its “safety” concerns at the airline. Uh-huh. Everything new is old again, isn’t it?

We also talk about other things this week of course. But I won’t spill the beans. That will just have to be a surprise.

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

PlaneBusiness Banter Is Now Posted!

Hello everyone.

This week in PlaneBusiness Banter I sit down for a PBB Lounge Lizard Interview with one of my favorite people — Dave Hilfman. Dave is the SVP of Global Sales at the “new” United Airlines. Prior to his current gig, Dave held the same position at Continental Airlines.

We talk corporate sales, red Mazda RX-7 convertibles, Eastern Airlines, Gordon Bethune, Larry Kellner, why some corporate clients are not happy about sharing contract performance information, the United/Continental merger, and you’ll meet Dave’s son Marshall too.

Tonight, we’re waiting to hear the news from AMR in regard to 1) American Eagle and 2) new aircraft. The pilots at American Eagle and AMR came to terms on some sticking points regarding how the pilots would be treated if there was a change of ownership at the airline today. That points to an announcement tomorrow about what AMR intends to do with its regional subsidiary.

The AMR board of directors was meeting today in advance of the airline’s second quarter earnings roll out tomorrow. If we were betting, we’d bet that Airbus/Boeing decision was probably made today at that same board meeting.

Meanwhile, over the weekend, it was announced that the Southwest Airlines and AirTran pilots had come to terms on a new seniority agreement. Still have not seen an “official” summary of that agreement. Clearly this is a big deal for the airline. More after we see the fine print.

Airline stocks? Horrible week for them last week.

In the government fun and games division, the DOT rolled out a list of 16 fees it thinks the airlines need to keep track of and report to the government last week. Of course they did this under the guise of it being “passenger friendly.” Hogwash. It’s so the DOT can force the airlines to account for ancillary revenues in a more clear and concise manner. The easier to tax those revenues — down the road.

Then we had the bipolar fare increase/fare sale activity over the last couple of days. First United and Delta began an attempt to raise fares last week. It continued through the weekend — and then Southwest balked.

Then this week Southwest and its new subsidiary AirTran rolled out a new fare sale!

Just another wacky week in the industry we all know and love.

All this and more — in this week’s PlaneBusiness Banter. Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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This week’s issue of PlaneBusiness Banter is now posted. This week’s issue is one of those “kitchen sink” issues. First we peer into the financial reports of the four largest airline pilot unions — ALPA, APA, SWAPA and USAPA — spurred by my wonderings about just how much the US Airways’ pilot union, USAPA, is paying out in legal fees. Boy, did I open a nice big Pandora’s box. Who says we only have to dissect the financial statements of the airlines?

Then there is American Airlines. No, the airline is apparently not in talks to do a deal with Mexicana, even though press reports south of the border indicated otherwise over the weekend.

Meanwhile, tomorrow is not only the day that American Airlines announces its first quarter loss. It is also protest day for American employees. Concurrent with the airline’s executive level bonus allocations, the Association of Professional Flight Attendants are going to be protesting — and I would bet there will be some other airline employees contributing to the effort.

On the corporate travel front, American filed suit against Travelport and Orbitz last week. They even dropped the “Sherman” antitrust bomb in their filing. Yep, American thinks there is some anti-trust issues here. Travelport and Orbitz, not surprisingly, think this is merely a play for leverage.

Speaking of earnings, we have a line-up of heavyweights on Thursday, followed by another heavy day next Tuesday. We get you up to date on analyst expectations and reporting dates.

If it is time for first quarter earnings, then Proxy Statements are also in the mix. Those are those horribly confusing and hard-to-figure out SEC filings that tell us just how much the top executives at the airlines took home in compensation during 2010.

Southwest Airlines filed their proxy statement last week, and, well, let’s just put it this way. Remember when the airline used to have the lowest top-tier compensation levels in the industry — and they made a big deal about the fact this was the case? And they were proud of the fact? It’s not the case anymore.

Oh, we talk about that, we talk about how airline stocks did last week, we talk about the TSA’s patdown of the six-year-old, we alert you to a museum collection of air sickness bags, and we talk about a lot more — in this week’s issue of PlaneBusiness Banter.

Subscribers can access this week’s issue here.

Southwest and SWAPA Have Another Tentative Agreement in Hand

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Hey, I could be talking about the push to get a passenger rights bill passed.

No, I really didn’t plan for today to be the Southwest AIrlines news day.

But this afternoon SWAPA, the pilot’s union at Southwest, announced a new tentative agreement with the company. This will be the second attempt by both sides at getting a new contract ratified.

Highlights of the contract behind door number two are:

The current number of Lance Captains, as of the ratification date, will be grandfathered for the term of the agreement. (This was a big reason the attempt to ratify the last last TA failed.)

ELITT restrictions will drop from previous TA and is now contractual.

The new Open Time system as explained in the previous TA will now have a test period (circuit breaker) in which SWAPA can opt out.

In terms of compensation, the new agreement includes raises and full retro pay.

There is an increase in 401(k) matching by the company.

And on the subject of codesharing, the TA lowers the previously negotiated near-international ASM cap, and it removes Frontier-specific RJ exemption language.

Southwest Pilot Contract, Part Two

Heard back from some more of our longtime Southwest Airlines’ pilot subscribers this morning, who wrote today about the pilots voting down their tentative agreement.

“I think you nailed it. My way to explain it is this. It was like when people vote for Ralph Nader. They don’t think he stands a chance in hell of winning, but they use their vote as a vote of protest against the system. I don’t think any of the pilots I know thought this thing would be defeated. Rather, they did see an opportunity to send a message to management and/or union leadership by voting no. Unfortunately, that message was stronger than many people thought. Rut-ro. Now things are going to get reallllly interesting.”

Another reader commented, “Holly, you have been on this from the beginning when Carl (Kuwitzky, President of SWAPA) announced that there was a tentative agreement with the company last fall. But, as you said at the time, there really wasn’t an agreement. I think Carl has a lot of ‘splainin’ to do. You think there might be some Texas Two-Steps going on here?”

Another pilot wrote me, saying that no, he voted against the deal because it was a bad deal. Period. How could I take the word of one pilot who said it was “too lucrative?” As he put it,

“I’m sure you’ll talk to more of them than me, but there is not one SWA guy I talked to that said he voted against the contract because it was too lucrative.

In no particular order:

1) Not enough pay.

2) Lance Captain program curtailed

3) Scope

4) Complexity of the new scheduling system.”

Another pilot wrote to tell me that yes, he voted against it because of the scope provisions and because he is unhappy with the direction the company is going.

So, reading through the feedbag this morning it would appear that some guys voted against it because it was not lucrative enough, while others voted against it because they thought it was too expensive for the company. Then there is the scope problem.

Go figure. I think the only thing anyone knows for sure at this point is that the next round of negotiations are going to be tougher. I’d bet the farm on that one. (And the cows too.)

We Warned PBB Readers About This: Southwest Airlines’ Pilots Vote Down Tentative Agreement

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Three weeks ago I published a letter from a concerned Southwest Airlines’ pilot in PlaneBusiness Banter. This particular subscriber is one of the Southwest pilots we go to on a regular basis to get a “read” on just what the group is thinking at any given time. The substance of his letter?

He gave readers a head’s up about the fact that if the pilots’ tentative agreement passed — it was not going to be by much. That more and more pilots he was talking to were going to vote “no” as a protest vote against what the pilots now perceive as a “lack of leadership” or a “lack of direction” both at the airline — and within the union’s leadership.

Or maybe a bit of “misdirection” would be a better term.

To put it more bluntly — why should the pilots at the airline vote for a contract that was going to put even more financial pressure on the airline that has seen its operating margins erode, its costs continue to rise, and its revenues continues to slump?

You got that? In other words, the pilots at the airline were going to vote against the contract because it was too good.

Today, the final vote tally on what would have easily been the most lucrative pilot contract in the U.S. was announced.

The TA did *not* pass. But it was close. Very close.

A little less than 51% of the pilots voted against the contract.

Our last call on the contract? I still thought it would pass — but not by much.

This is a major piece of news for those of us who are airline labor/management watchers, because I’m not sure where this one goes now — but one thing is for sure. This vote was clearly a “protest” vote.

The question now is — how do both sides go back to the table and renegotiate a contract that is NOT as lucrative or financially draining on the airline?

Yes, you read that correctly. NOT as lucrative.

And how much more aggressive will the pilots’ union leadership be (or new leadership) in pressing management for better financial performance at the airline?

Whew.

I said at the beginning of 2009 that Southwest Airlines was going to be the biggest newsmaker of the year — on the domestic airline front. Nothing has changed with that prediction.

And …it’s only June.

Looks Like Southwest Airlines’ Pilots and the Airline Have a New Tentative Agreement

We hear from one of our Southwest Airlines‘ friends that the pilots at Southwest, who are represented by their own independent union, SWAPA, and the airline, have come to terms on a new tentative agreement.

Here is an excerpt from Carl Kuwitzky’s blog that was blasted to pilots this afternoon. Carl is the President of SWAPA.


“Last night SWAPA agreed in principle on a new five year contract with the Company through August 31, 2011. This new contract includes the following: stronger scope language as well as codeshare restrictions not previously released including no domestic codeshare, increase in pay rates including retroactive pay, increase in 401K match, improved disability program and streamlined/improved scheduling and work rule language. Additionally we have retained the Lance Captain program and ELITT albeit with changes to current language. Our Negotiating Committee (NC) is continuing to negotiate final language and when that work is completed will present a Tentative Agreement to the BoD for approval. If the BoD approves the new contract it will be sent to the membership for final ratification. I anticipate a BoD meeting in late February or early March to review the TA.”

This news comes as it was announced today that the mechanics at the airline approved their proposed TA with the airline by a 61% majority.