PlaneBuzz

Moody's Investors Service cut its liquidity rating on United Airlines today amid concerns about higher fuel costs, a slowing economy and rising costs.

The rating firm lowered the speculative grade liquidity rating to SGL-3 to SGL-2, and the outlook to “negative” from “stable.”

Moody's meanwhile affirmed the carrier's corporate family rating and other debt ratings, which remain at B2, which is a speculative or "junk" rating.

Moody's said it lowered the outlook because it expects the airline's operating and financial performance to deteriorate.

"Weaker results are likely because of materially higher fuel costs, but also the weakening economic conditions that are likely to reduce demand and limit recovery of higher fuel costs by raising ticket prices. United also faces continued challenges to control the growth of unit costs," Moody's said.

Sounds about right to me.

Ticker: (Nasdaq:UAUA)

Posted by Holly at 12:13 PM | Permalink | Comments (0)

Efforts to move forward with an FAA reauthorization bill stalled today, after the Senate voted 49-42, on a procedural vote to limit debate on the bill.

After two weeks of intense negotiations on both sides -- Senate Democrats and Republicans still could not come to an agreement on a bill that was not padded by amendments from both sides.

Unless they can revive the FAA bill, and I think chances of this happening now are slim to none, lawmakers will probably opt for a 15-month extension to re-authorize the agency through September 2009.

Posted by Holly at 4:10 PM | Permalink | Comments (0)

We waited and we waited and we waited.

Sources had told us that there was going to be a board meeting at Continental Airlines today. So we waited.

No news.

Finally, I made the decision that we had to go ahead and post PBB.

Figures.

We post, and not 20 minutes later, news hits that the board did, in fact,  meet today, and in a follow-up note to employees, Larry Kellner has told them that the board has decided that a merger is not in the best interest of Continental at this time.

Continental executives told employees that the risks of such a deal outweigh the potential rewards.

The company says it will continue to review potential alliances and membership in SkyTeam.

Looking more and more like the scenario we outlined last week in PlaneBusiness Banter where we discussed why it was United Airlines and US Airways could do a deal together just picked up more weight.

Posted by Holly at 5:44 PM | Permalink | Comments (0)

How long can Silverjet hang on?

Another airline bites the dust, as EOS, the privately-held all business-class carrier that flew between London's Stansted and JFK has filed for bankruptcy and is flying its last flights today.

The airline, which had said earlier this month that it had closed on a deal that would bring it an additional $50 million in capital -- apparently saw that deal evaporate.

Eos’s first flight took place on in October, 2005. The airline purchased three Boeing 757s and reconfigured the 220-seat planes with just 48 business-class seats, which converted into fully flat sleeping quarters.

Posted by Holly at 9:43 AM | Permalink | Comments (0)

Dear John, er, Dear Jim.

Thanks to a reader who sent a note that gave me an excuse to stop writing about earnings.

For those looking for more details on the proposed SkyWest/XJT deal, ExpressJet has filed some information with the SEC concerning the offer from SkyWest, and more importantly, the "other" deal between SkyWest and Continental.

I only thought this was a squeeze play before I read the letter from Continental Airlines' CFO Jeff Misner. Now-- I don't think there is any doubt.

According to Misner's letter that was sent to CEO Jim Ream and Chairman George R. Bravante,

"First, we confirm that we have negotiated a new CPA with SkyWest, which would become effective if SkyWest is successful in acquiring ExpressJet (which, in turn, is subject to due diligence, among other things), and that we would consent to the change of control that would occur upon such an acquisition.

Second, absent our entering into a new CPA with savings of the magnitude we have negotiated with SkyWest, we currently expect to deliver to ExpressJet on June 28, 2008, a notice to withdraw 51 of the existing 205 Covered Aircraft from the current CPA, beginning in December 2009.  Further, although we have the right to terminate the existing CPA at any time, we currently anticipate we will not extend the term of the current CPA (which we must do, if at all, by December 31, 2008), and thus the current CPA would simply expire in accordance with its terms beginning on December 31, 2010, with the expectation that all aircraft would be removed from the current CPA by the end of 2012.

We hope this information is helpful to you."

Hah. Yeah, I guess it was helpful. I'd say.

Here are links to the two pertinent letters.

First letter is from SkyWest CEO Jerry Atkin to ExpressJet CEO Jim Ream and Chairman George Bravante.

Second letter is from Jeff Misner, Continental's CFO to Jim and George.

Also for you union types, note the request for modification to the current contract between ExpressJet and its pilots. (They are represented by ALPA.)

As for my thinking on all this -- it looks pretty clear. Obviously the folks at ExpressJet decided they'd go public with this all in an attempt to get a better deal. From SkyWest or someone. But given the collaboration of Continental, I'm not so sure ExpressJet has that many options.

Technorati Tags: airline mergers, airlines, Continental Airlines, ExpressJet, SkyWest

Posted by Holly at 5:36 PM | Permalink | Comments (0)

Okay, so I lied. I'm back.

I guess I need to talk about the SkyWest/ExpressJet deal. Or no deal as it stands right now.

ExpressJet said less than an hour ago that its board had unanimously rejected an offer by SkyWest to purchase the company for $3.50 a share.

ExpressJet said that the committee believes that the fair value of the company's stock is "substantially higher" than SkyWest's proposal and does not reflect the inherent value of ExpressJet or its prospects.

The offer would represent a 68% premium over the company's closing stock price Thursday of $2.09, and would values the company at about $181.5 million.

Jerry Atkin, SkyWest's CEO, said in a letter to ExpressJet officials that the offer constituted a "full and fair price" for the ExpressJet shares.

Meanwhile, ExpressJet says that it has set up a special committee of its board to look at perhaps a better deal with SkyWest. The committee will also assess the potential for a new capacity agreement with Continental, and it will talk to "other potentially interested parties about a potential acquisition of the company at a higher price."

Not surprisingly, shares of ExpressJet have soared on the news, and are now trading about 40% up for the day.

Ticker: (NYSE:XJT)

Technorati Tags: Continental Airlines, ExpressJet, SkyWest

Posted by Holly at 10:27 AM | Permalink | Comments (0)

In last week's PlaneBusiness Banter I mentioned that the lawsuit Mesa Air Group said had been filed against Delta Air Lines in regard to Delta's canceling Mesa's Freedom Air contract flying had not been able to be found on the PACER system. (A public database of bankruptcy and Federal District courts in the U.S.)

That is no longer the case.

I suspect that because there was an initial motion entitled "Motion to Seal Case"  this was the reason the case was not immediately available in the database. However, the judge agreed only to seal the complaint in the case -- not the entire case.

So the case is there now.

Unfortunately because the complaint itself was sealed, we can't read any of the nitty gritty details. Not surprising, as the complaint no doubt contains a great deal of Delta-Freedom contract information that competitors would love to read. (Yes, we've already had folks from three airlines ask us if we have copies of the complaint.)

According to the PACER documentation, Mesa Air Group and Freedom Air did file this week for a preliminary injunction against Delta Air Lines -- but the hearing on that request has not been scheduled until the end of May. May 27-29 to be exact.

Clarence E. Cooper, United States District Court Judge is presiding over the case in U.S. District Court for the Northern District of Georgia.

Ticker: (Nasdaq:MESA), (NYSE:DAL)

Technorati Tags: Delta Air Lines, Mesa Air Group

Posted by Holly at 12:52 PM | Permalink | Comments (0)

It's not easy in the regional airline industry these days, as Mesa found out a couple of weeks ago when Delta Air Lines notified the airline that it was canceling its contract for more than 35 EMB-145 aircraft.

Today -- it appears that Frontier Airlines has severed its regional flying contract with Republic Airways Holdings.

This contract was not for fifty-seaters, however. This contract included 12 76-seat E170 aircraft -- an airplane that is in much higher demand.

The agreement provides for an orderly wind-down under which Republic will remove four aircraft on May 1, an additional six aircraft on June 2 and the final two aircraft on June 23, 2008. Immediately prior to Frontier's filing, Republic was generating approximately $6 million in gross monthly revenues under the agreement.

There are also another five E170 aircraft that were slated to go to Frontier that will now have to be placed with another airline or sold.

As a result of Frontier canceling the agreement, Republic says that it will seek a payment of $260 million. I guess this means Republic will now get at the back of the line in bankruptcy court.

Republic said in a press release that it will discuss all of this on its earnings call tomorrow.

The most troubling comment in the Republic press release? Republic's CEO Bryan Bedford's comment, "It's unfortunate that despite their [Frontier's] many efforts to reorganize their business outside of Chapter 11, factors beyond their control conspired to force a deeper reorganization."

Even more unfortunate is that this particular part of Frontier's business plan was the one that was supposed to be the "Southwest Buffer" -- an attempt to grow service to markets that Southwest Airlines could not duplicate out of Denver.

Not a good sign for the fine folks at Frontier, who recently filed for Chapter 11 protection after its credit card processor increased the airline's holdback allowance.

Technorati Tags: Delta Air Lines, Frontier Airlines, regional airlines, Republic Airways

Posted by Holly at 2:23 PM | Permalink | Comments (1)

We called it right a couple of months ago. But it sure sounded this week like ALPA had pulled the upset.

Sources tell PlaneBuzz that ALPA has lost the pilot representation election at US Airways by about 500 votes. Repeat: ALPA has lost the election to USAPA.

More details to come as we get them.

Posted by Holly at 1:21 PM | Permalink | Comments (0)

At the recent Phoenix International Airline Symposium, Lehman Brothers analyst Gary Chase said something I thought was worth repeating.

Actually he said more than one thing that was worth repeating.

But given the events in the energy markets the last two days, I'm going to pick his comments about how everyone in the industry was talking about "$100 a barrel oil." Paraphrasing, he said something like, "Who says this is going to stay at $100? It seems like some people in the industry are looking at this as some arbitrary cut-off point. That they are revamping spreadsheets to take that number in account. What about $130/ barrel oil? $150 a barrel? Who says that oil is going to continue to hover around $100/barrel?"

As I talked about in a recent issue of PlaneBusiness Banter, he then went on to explain just what massive changes we could begin to see -- when, not if, oil began to move even higher.

Well folks, today the price of oil is inching closer to that $130 mark.

Yesterday oil closed at a new all-time high price of $111.76.

Today, it's up again.

As I post this, light crude oil futures are trading at $113.60, up 1.84 for the day.

Posted by Holly at 11:06 AM | Permalink | Comments (0)

Hoping to quell potential motivations behind a panic sale in its shares late Friday afternoon, AirTran issued updated financial information concerning the airline's financial status.

The airline said it is in full compliance with the terms of its credit card agreements, and has no holdbacks with any of its major credit card processors.

AirTran also said its liquidity position has strengthened this year, with the total cash and investments balance increasing to $358 million at March 31, up from $326 million at Dec. 31.

The airline said it expects its liquidity to further strengthen during the second quarter.

Ticker: (NYSE:AAI)

Posted by Holly at 8:53 PM | Permalink | Comments (0)

It's getting so that it's scary to crank open the computer and open up the email bag.

Another Friday, another airline bankruptcy.

Frontier Airlines Holdings, Inc. today announced that, following an unexpected attempt by its principal credit card processor to substantially increase a "holdback" of customer receipts, which threatened to severely impact Frontier's liquidity, Frontier and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

We had talked about the shares of Frontier being in freefall here earlier this week. We formally placed the airline on our PlaneBusiness Titanic Watch last week. Yesterday shares of the airline took another dive, closing at $1.57.

Unlike the last several airline bankruptcy filings however, Frontier remains in business.

Frontier said it expects to continue operating its full schedule of flights, adding it will honor tickets and reservations as well as providing refunds and exchanges as usual.

"We felt that Frontier would be able to withstand the challenges confronting the U.S. airline industry, which include unprecedented and significant increases in the cost of jet fuel and the impact of the credit crisis in the financial markets, without seeking bankruptcy protection," said CEO Sean Menke in a statement.

Just a note here on the increase in credit card holdbacks. We've seen this happen in the past -- and it is something we can certainly expect to see again with other airlines that book their own reservations and find their cash reserves under scrutiny. (Clearly this does not apply to the bulk of regional airline flying.)

Ticker: (Nasdaq:FRNT)

Technorati Tags: airlines, bankruptcy, Frontier Airlines

Posted by Holly at 9:47 AM | Permalink | Comments (0)

One of our readers at American just sent me a note that says:

"Last night, the FAA conducted a spot inspection
of the S80 fleet to check compliance with AD 2006-15-15,
as incorporated into an American ECO (engineering
compliance/change order).

Using their method where they sample a statistical
number of aircraft and extrapolate to the entire
fleet, the FAA examined 10 aircraft at DFW. 9
were found not to be in compliance with the ECO.
As a result, the entire S80 fleet is grounded
as of now."

He included this list:

This is only one page of many.

2020 2135 SP80XL DFW /ATL SEG CNLD CODE910-MECH RMKS OPNL
2211 2135 M83GXL DFW /PDX SEG CNLD CODE911-MECH RMKS OPNL
0497 2140 M83GXL DFW /ICT SEG CNLD CODE910-MECH RMKS OPNL
0657 2145 M83GXL DFW /ABQ SEG CNLD CODE911-MECH RMKS OPNL
              -- CHG EQ M83G/4YU TO SP80/
1251 2145 SP8VXL DFW /MCI SEG CNLD CODE911-MECH RMKS OPNL
              -- CHG EQ SP80/586 TO SP8V/
0541 2150 M83GXL DFW /DEN SEG CNLD CODE910-MECH RMKS OPNL
2059 2150 M83GXL DFW /SLC SEG CNLD CODE911-MECH RMKS OPNL
1601 2200 M83GXL DFW /SAN SEG CNLD CODE910-MECH RMKS OPNL
              -- CHG EQ SP80/470 TO M83G/
0343 2205 SP80XL DFW /ELP SEG CNLD CODE911-MECH RMKS OPNL
0785 2205 SP80XL DFW /AUS SEG CNLD CODE910-MECH RMKS OPNL
2380 2205 M83GXL DFW /ORD SEG CNLD CODE911-MECH RMKS OPNL
              -- CHG EQ SP80/422 TO M83G/
0403 2220 SP80XL DFW /TUS SEG CNLD CODE910-MECH RMKS OPNL
              -- CHG EQ SP80/4WB TO M83G/
1079 2225 SP80XL DFW /OKC SEG CNLD CODE910-MECH RMKS OPNL
2285 2235 SP80XL DFW /PHX SEG CNLD CODE910-MECH RMKS OPNL
0550 2240 SP80XL DFW /SAT SEG CNLD CODE910-MECH RMKS OPNL
1410 2255 SP80XL DFW /TUL SEG CNLD CODE910-MECH RMKS OPNL
1274 2300 M83GXL DFW /AUS SEG CNLD CODE910-MECH RMKS OPNL

Technorati Tags: American Airlines, FAA

Posted by Holly at 4:20 PM | Permalink | Comments (2)

The Columbus Dispatch is reporting that Skybus is kaput.

Skybus investors include Nationwide Mutual Capital, Huntington Capital Investment Co., Battelle Services Co. and Wolfe Enterprises Inc., a subsidiary of The Dispatch Printing Company, which owns WBNS-TV, the Ohio News Network, and the Columbus Dispatch.

The airline will cease flying tonight.

No recourse for passengers here, unless they can get a refund from their credit card company.

We have more than one PlaneBusiness Banter subscriber who is employed with the airline -- good luck to you -- and to all the Skybus employees who now find themselves with no job.

Posted by Holly at 8:09 PM | Permalink | Comments (4)

Long day in Washington.

Herb Kelleher, Chairman of Southwest Airlines, just began his testimony.

Posted by Holly at 4:06 PM | Permalink | Comments (0)

"I don't think the FAA can be trusted to police itself."

Testimony today from one of two FAA whistleblower inspector employees, Douglas Peters -- describing the problems involving the culture of the FAA.

Posted by Holly at 1:21 PM | Permalink | Comments (0)

Southwest Airlines codeshare partner ATA has filed for Chapter 11 bankruptcy protection.

The airline said that it made the decision to do so after FedEx informed the airline that it would no longer be a member of a "teaming arrangement." This agreement gave ATA a large number of airlift contracts for transporting military personnel and their families to destinations overseas.

This one agreement had apparently made up the bulk of ATA's charter operations.

Global Aero Logistics and its other subsidiaries, World Airways and North American, will continue to operate as normal.

Interestingly, the ATA website was down for a time last night, and we had seen a number of emails suggesting that perhaps the airline was getting ready to shut down. But after about an hour or so, the site popped back up again, and was again taking reservations.

So much for that great Southwest codeshare idea.

Speaking of, in a research note this morning analyst Gary Chase tackled the impact this shutdown will have on Southwest, as he wrote,

"With ATA's discontinuation of service, LUV loses both near-term code share revenue as well as a future partner for its international code share efforts.  LUV disclosed ~$14mm in code share revenue for 3Q07, or ~$40-50mm on an annualized basis.  Based on DOT data, we believe that only 35% of revenue was coming from Hawaii service (although the mix likely shifted more towards Hawaii in recent months), with the remainder coming from Chicago service to business markets such as New York LaGuardia, Washington National and Dallas-Ft/Worth.  With the end of Chicago service, LUV was likely to see a meaningful reduction in ATA code share revenue prior to its ending service.  Over the longer-term, LUV will now need to find alternative code share partners for its near-international efforts in 2009."

Posted by Holly at 10:19 AM | Permalink | Comments (0)

According to a press release issued by Mesa Air Group tonight, Delta Air Lines notified the airline on Friday that it intends to terminate the contract between Delta and Freedom Airlines, Mesa's wholly-owned subsidiary.

According to the release,

"Delta seeks to terminate the Connection Agreement as a result of Freedom's alleged failure to maintain a specified completion rate with respect to its ERJ-145 Delta Connection flights during three months of the six-month period September 2007 through February 2008. The notice issued by Delta is accompanied by a proposed temporary agreement pursuant to which Freedom would continue to provide Delta Connection services while the parties discuss the terms of a transition agreement. This termination does not affect Freedom's CRJ-900 Delta Connection flying."

Mesa, not surprisingly, said in the release that it intends to "vigorously defend its rights."

So how many aircraft are we talking about? 36 Embraer 145s. Not chump change for Mesa. And no, the ERJ-145 is not an aircraft that is particularly in hot demand either -- if Mesa has to try and unload them and/or find them new homes.

Ticker: (NYSE: DAL), (Nasdaq: MESA).

Posted by Holly at 10:47 PM | Permalink | Comments (0)

This week at the Phoenix Symposium, I couldn't find one person who was optimistic about the chances of Aloha Airlines keeping the doors open beyond tomorrow.

This afternoon the airline confirmed the worst.

Aloha Airlines, which first began operations in 1946, will shut down operations tomorrow.

The airline's cargo operation, which remains profitable, will continue to operate. In fact, the cargo operation is going to be auctioned next month. Saltchuk Resources out of Seattle, has already said that it intends to bid on the cargo operation.

Posted by Holly at 6:09 PM | Permalink | Comments (0)

From the airline's official statement:

"Aloha is also seeking Court approval of a cash collateral financing arrangement with its principal working capital lender, General Motors Acceptance Corporation, to provide financing for operations pending a further hearing in accordance with bankruptcy rules. In doing so, Aloha seeks to protect 3,500 jobs, honor thousands of passenger travel reservations, keep the U.S. Mail and air cargo moving between the islands, and continue to provide essential ground-handling services for domestic and international airlines serving Hawaii.


In its filing, Aloha cited its inability to generate sufficient revenues from its inter-island passenger business due to predatory pricing by Mesa Air Group's go! airline. In the highly competitive inter-island market, Aloha was forced to match go!’s below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel. Late last week, crude oil rose to an all-time record high of $111 a barrel. For Aloha that means an annual increase of $71 million in fuel expenses.


“It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action,” said David A. Banmiller, Aloha’s president and chief executive officer. “Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha, and to continue to earn the support of our loyal customers, business partners, vendors and financial backers."

Technorati Tags: Aloha Airlines, bankruptcy, Hawaiian Airlines, Mesa Air Group

Posted by Holly at 10:25 PM | Permalink | Comments (0)

With about an hour and a half to go before the U.S. Bankruptcy Court closes in Hawaii, sources tell us that Aloha Airlines is set to file for bankruptcy protection before the end of the day.

More information as it becomes available.

UPDATE: Courts will be open in Hawaii on Friday. Filing could be made tomorrow.

Technorati Tags: Aloha Airlines, bankruptcy, Hawaiian Airlines, Mesa Air Group

Posted by Holly at 9:00 PM | Permalink | Comments (0)

The Wall Street Journal is reporting online that United Airlines has temporarily grounded several Boeing 747 jumbo jets to check for compliance with federal maintenance requirements, "in a move that signals the controversy over government oversight of airliner safety checks and repairs is spreading, according to three people familiar with the issue."

The article goes on to say:

"United's move, which one person familiar with the matter said covers as many as six long-haul 747 aircraft that had some of their cockpit instruments validated as part of an overseas maintenance check, comes as U.S. airlines are stepping up self-audits of their maintenance compliance. At the same time, the Federal Aviation Administration is launching first-of-a-kind spot checks of compliance with mandatory safety directives at every U.S. carrier.

The FAA ordered the temporary groundings after discovering that test equipment used at a maintenance station in South Korea was faulty, according to one person familiar with the issue.

Re-checking the accuracy of the affected cockpit instruments may only take several hours. But one person familiar with the details said United already has delayed one trans-Atlantic flight from San Francisco by as much as five hours. FAA and United officials couldn't immediately be reached for comment.

The six affected United aircraft, according to people familiar with the details, all went through major maintenance work at a maintenance facility in South Korea, and FAA inspectors on site noticed that some of the test equipment there wasn't properly calibrated. It's unclear how many of the planes flew away from the South Korean facility without having their cockpit instruments verified. It's also unclear whether other U.S. or foreign airlines may face the same problem."

Ticker: (Nasdaq:UAUA)

Posted by Holly at 4:00 PM | Permalink | Comments (0)

I don't know how else to look at the news this afternoon that Global Aero Logistics CEO Subodh Karnik has resigned.

Global Aero is the parent company of ATA, World Airways and North American Airlines.

The new CEO of Global should be a familiar name. He's the ex-CFO of Southwest Airlines and ex-CEO of ATA -- John Denison. And, as we all know, John is very close to current Southwest CEO Gary Kelly.

People tell us this afternoon that we could hear about what Southwest is going to do with ATA's international certificate in as little as 48 hours.

Ticker: (NYSE:LUV)

Technorati Tags: ATA Airlines, Southwest Airlines

Posted by Holly at 6:30 PM | Permalink | Comments (2)

US Airways and its mechanics union have reached a tentative contract agreement. The airline said Wednesday that the deal will see mechanics receive a 10% raise once the contract is ratified.

In addition, these raises will be followed by 3% raises every year until 2011. New overtime rates were apparently also negotiated. A pension plan is also going to be offered to members.
IAM spokesperson Joseph Tiberi was quoted in an Associated Press story as saying, "After two bankruptcies at US Airways and more than two years of negotiations after the merger, employees are finally seeing something positive."

IAM also represents the fleet service workers at the airline. That group and the airline came to terms on a new contract last summer. However, union members rejected the deal. New negotiations are now in progress on that contract.

Posted by Holly at 5:39 PM | Permalink | Comments (2)

Goldman analyst Richard Safran writes today in a research note, "We now think deliveries will start in the third quarter of 2009 versus the current 'early' 2009 target."

The deliveries he's talking about are the Boeing 787 deliveries.

Safran writes that Boeing "continues to underestimate the amount of work required on the 787."

Safran says that production problems on the first batch of 787s on Boeing's production line would delay turning the power on in the first plane, push back the first test flight and extend the amount of time Boeing needs to conduct full flight tests on the aircraft.

(NYSE:BA)

Technorati Tags: Boeing, Boeing_787, delays

Posted by Holly at 10:55 AM | Permalink | Comments (0)

Stunning news out this afternoon, as the Air Force announced that Airbus and Northrop Grumman have been awarded the $40 billion Air Force tanker deal.

According to the Air Force, the contract is for the right to build up to 179 tanker aircraft, to be called the KC-45A, for the Air Force.

"The tanker is our number one procurement priority right now," said Air Force Gen. Duncan McNabb in a press release about the deal. "Buying the new KC-45A is a major step forward and another demonstration of our commitment to recapitalizing our Eisenhower-era inventory of these critical national assets."

The KC-45A is expected to be able to provide refueling to both Air Force and Navy planes, while its predecessor, the KC-135, must be configured for one or the other before takeoff.

It was widely believed that Boeing held the edge in these negotiations. As one report said tonight, "Boeing officials must be feeling a little bit like the New England Patriots."

This award comes after a scandal involving  the revelation that a top Boeing official had conducted illegal job negotiations with an Air Force acquisition official who later joined the company broke in 2001 -- scuttling what was widely believed to be, at the time, a slam-dunk contract for Boeing.

One thing is for sure. Stars aren't the only thing falling on Alabama tonight. So are dollar bills. A big part of the Airbus pitch on this contract was the fact they would manufacture the aircraft outside of Mobile, AL.

Posted by Holly at 7:26 PM | Permalink | Comments (1)

In regard to our posting yesterday here's the official notice from United Airlines' SkyNet:

"The United Express team is working closely with our partners to provide replacement flying aircraft during the Spring Break travel period. In anticipation of the high load factors, we've signed a contract with ExpressJet Airlines, Inc., one of the world's largest operators of regional aircraft, to provide three Embraer ERJ145 aircraft from March 12-29.

· ExpressJet is a new flying carrier for us. They have provided similar short-term capacity to other airlines and we are confident in their ability to provide efficient and reliable regional jet service for UAX.

· ExpressJet will be flying 20 flights per day carrying approximately 1,000 customers, and will operate into Dulles with service to Savannah, Pittsburgh, Huntsville, Jacksonville and Charleston, South Carolina. In order to be available during our peak demand period, the aircraft will be flown in ExpressJet livery."

Ticker: United Airlines (Nadsaq:UAUA) ExpressJet (NYSE: XJT).

Posted by Holly at 11:56 AM | Permalink | Comments (0)

As the pilots of both airlines apparently continue to try and come to terms on their seniority issues - the rest of us sit and wait. No news yet today on just when the Delta/Northwest merger may be announced.

In other rumblings however, one of our trusted moles sent us a communication this morning in which he outlined how a proposed United/Continental deal may come together. Remember, you heard it here first.

According to him, the bulk of the existing United Airlines brand will continue to be used internationally, but Continental will take over the domestic operation for the most part.

Other details we were told included the fact that there has already been a transition team put together. The deal will be announced after Delta/Northwest goes public.

There will initially be a holding company set up to run both airlines. This operation will continue for three-five years. This will allow for a "smoother transition" from the two airlines into one operation.

And, in another piece of related United Airlines news, we are being told that because of continued problems with Mesa Air Group cancellations, that United has turned to ExpressJet, and that ExpressJet is going to be adding regional service on behalf of United --beginning no later than the middle of March.

Indications are that ExpressJet will start flying at least three aircraft for United at that time, with the possibility that more aircraft could be added fairly quickly, "as needed."

Did United contact any of its other regional feeders about providing service before turning to ExpressJet? Apparently. But from what we hear there were no takers.

Tickers: (Nasdaq:MESA); (NYSE:XJT); (NYSE:CAL); (Nasdaq: UAUA); (NYSE:DAL); (NYSE: NWA)

Posted by Holly at 12:25 PM | Permalink | Comments (1)

Last week in PlaneBusiness Banter I told subscribers that based on our read of the "chatter" coming to us from various sources, it looked as though we could hear in the next week or so news concerning a potential Delta-Northwest deal. Or at the very least it was pretty clear that the airline would be talking about this at its upcoming board meeting.

Today the Wall Street Journal has just gone with a story that says yes, the Delta board will be discussing a potential deal -- but according to their story Delta will be looking at both a potential deal with Northwest and with United.

My take on the news?

I still think that Delta's CEO Richard Anderson would prefer to do a deal with Northwest, if it can be structured accordingly.

However, he's also one of the smartest CEOs we have in the industry right now, and as a result, he knows that he needs to look at all current options -- and these are the two main options right now.

I still think there is more push coming from the United side on a potential deal here, than vice versa.

But again, Anderson and the board are doing what they should be doing -- evaluating the possibilities.

This WSJ news really shouldn't come as a shock to anyone. If not, they've not been paying attention.

Ticker: (NYSE:DAL); (Nasdaq:UAUA); (NYSE: NWA).

Posted by Holly at 2:27 PM | Permalink | Comments (0)

We all saw this coming didn't we? Especially after the airline recently halted trading in its shares on the Alternative London Stock Exchange. The company said at the time that it was "seeking new financing," but with oil reaching new all-time highs -- this shutdown should not have come as a surprise to many.

Still -- it's Christmas Eve. Not a good day to shut the doors and file for Chapter 11. Then again, I guess no day is a good day.

The airline is to be commended however, for trying to take care of its passengers.

According to press reports, and based on what the airline has posted on its own website, "MAXjet has contracted with Eos Airlines for seats on Eos’ scheduled all-Premium service to accommodate passengers awaiting a return flight between New York and London. Passengers needing return travel between London, Los Angeles and Las Vegas will be contacted regarding their flight re-accommodations. Any customers who choose to make flight accommodations directly should seek a refund from their point of purchase (credit card or travel agency) for the unused leg of their journey. We have also secured hotel rooms in London, New York, Las Vegas and Los Angeles through early January 2008 which we will provide to affected passengers whose travel plans have been disrupted."

Technorati Tags: airline industry news, MAXjet

Posted by Holly at 11:01 AM | Permalink | Comments (0)

We were just told from a reliable source that U.S. Bankruptcy Judge Robert Faris has denied Mesa Air Group's request for a new trial in the case involving Hawaiian Airlines.

As they say, more at 11.

Posted by Holly at 9:42 PM | Permalink | Comments (0)

JetBlue has now made it official. Lufthansa is taking up to a 19% stake in the airline. Have more questions? You can can them answered this afternoon by listening to a webcast by JetBlue. The call will be held at 4:30 ET. You can listen to the call live at the JetBlue's investor relations web page.

For those unable to listen to the live webcast, it will also be archived on JetBlue's investor relations website under 'Audio Archives' following the conference call.

Ticker: (Nasdaq:JBLU)

Posted by Holly at 2:56 PM | Permalink | Comments (0)

Analyst Bill Greene with Morgan Stanley just issued a research note on the JetBlue/Lufthansa report.

Here is some of what he said.

"JetBlue needs liquidity: If this story is correct, the deal would help JetBlue's balance sheet. As we noted in our report on 12/12/07, JetBlue has $433M in current debt payable, but will be hard-pressed to fund from cash flow from operations or cash on hand.

However, such a deal would likely substantially dilute current shareholders. We assume that to raise this cash Lufthansa would be buying a stake at some discount to the recently-quoted prices.

It's not clear to us what Lufthansa gains from such a transaction. It may be that Lufthansa wishes to ensure access to JFK and by taking a stake in JetBlue, Lufthansa ensures that it will have slots if the FAA reimposes them at JFK. Lufthansa has a similar small stake in British Midland, which has helped ensure Lufthansa access to London's Heathrow.

This possible investment doesn't change the fundamental story, but clearly helps near-term liquidity. As we noted yesterday, JetBlue faces growing revenue and cost pressures and at $90/bbl will have difficult generating sufficient cash flow to fund its growth plan - even with an investment from Lufthansa. Growth opportunities are diminishing, in our view. We remain Underweight. In fact, such a deal could make JBLU a less plausible participant in US consolidation."

Ticker: (Nasdaq: JBLU)

Technorati Tags: airline analysts, airlines, jetBlue, Lufthansa

Posted by Holly at 2:03 PM | Permalink | Comments (0)

And I quote, from the New York Times:

"Lufthansa is in talks to buy a stake of just under 25 percent in JetBlue Airways, the discount airline, people briefed on the matter told DealBook on Thursday.

An announcement could be made as early as Thursday after the markets close.

The interest from Lufthansa, which is based in Germany, is the latest example of foreign investors leveraging the strength of the euro against the dollar. By limiting its stake to 20%, Lufthansa would remain below federal limits on foreign ownership of a domestic airline. Though the investment will be passive, these people told DealBook, it opens up an opportunity for Lufthansa to make a bigger deal down the road, possibly some kind of partnership."

Excuse me while I shake my head.

Now, unless I've missed something, aren't United Airlines and Lufthansa still the big founding partners of the Star Alliance? Yep, I do believe that is the case.

Can United be happy about this?

Ticker: (Nasdaq:JBLU)

Technorati Tags: airlines, jetBlue, Lufthansa

Posted by Holly at 1:51 PM | Permalink | Comments (0)

Proving once again just how wacky Wall Street can be, almost at the same time we posted this week's issue of PlaneBusiness Banter, the news came over the wires that the FL Group -- the hedge fund that is, er, was AMR's largest shareholder, and the one that has been making all the noise about how AMR needs to "maximize shareholder value" issued a release today -- saying it had slashed its position in the airline from 9.1% to 1.1%.

The fund said in a statement this afternoon that while the divestiture of Eagle is a move in the right direction,  AMR's "lack of clarity over timing, terms and valuation" of shedding Eagle "has done little to enhance value."

First, I agree with what the FL Group said.

But secondly, I'm glad they have taken their monopoly money and gone elsewhere.

Ticker: (NYSE:AMR)

Technorati Tags: airline stocks, American Airlines

Posted by Holly at 3:56 PM | Permalink | Comments (0)

Just out on the wires. AMR, parent of American Airlines says that it "plans to divest itself" of its wholly-owned regional partner, American Eagle.

Did we hear the magic words in the press release that we've heard oh-so-much these days in the airline industry. Yep. Sure did.

"The decision comes after a careful and deliberate evaluation of the strategy that will best enable us to continue to create value for our shareholders," said AMR Chairman and CEO Gerard Arpey.

Ticker: (NYSE:AMR)

Technorati Tags: airline industry news, airlines, American Airlines, American Eagle, regional airlines

Posted by Holly at 1:17 PM | Permalink | Comments (0)

Think Virgin America Chairman Don Carty had anything to do with this?

Virgin America announced today that it has found a replacement for CEO Fred Reid. Dave Cush, formerly SVP of Global Sales at American, will take over as CEO at the airline effective Dec.10.

So -- is this good for Virgin, good for American -- bad for either?

I think Cush's departure is not a particularly good piece of news for American.  As for Virgin, I'm sure Cush's international experience will come in handy -- no matter what the future holds for Virgin America. My guess is that his type of experience will be quite valuable to the Virgin Group in the long term.

As for Cush himself, this is clearly a nice grab, as no one is really moving up at American. The only way up is out.

Ticker: (NYSE:AMR)

Technorati Tags: airline CEOs, airline industry news, airlines, American Airlines, virgin america

Posted by Holly at 2:08 PM | Permalink | Comments (0)

This is one behemoth to try and get one's arms wrapped around.

1. If the Delta Air Lines management team is the surviving team, fine. If not, no. (Just think, this will mean that Jake Brace and Glenn Tilton will get yet another stratospheric payout.)

2. As I told Barney Gimble with Fortune today, "As I've said in the past, the money guys will dictate who goes after whom. Not the players themselves."

That was true last year. Same now.

If this hedge fund can convince other major players on the Street to support the deal -- that is what will make or break it.

Employees and shareholders will have little to say in this type of situation. Delta ALPA MEC Chairman Lee Moak can say whatever he wants to say about how the pilots at Delta have to be involved from the get-go with any "merger discussions," but indications this afternoon are that this one is already pretty far along.

As I write this, reports are flying all over the place, no pun intended, with some reports suggesting that the headquarters of the airline would remain in Chicago, but that Delta AIr Lines' CEO Richard Anderson would be named CEO of the new airline.

Atlanta would be used primarily as an "operations" center.

Again -- just one set of rumors that are flying this afternoon in regard to the potential deal.

Ticker: (UAL:NYSE), (DAL:NYSE)

Technorati Tags: airline CEOs, airline industry news, airlines, Delta Air Lines, United Airlines

Posted by Holly at 3:43 PM | Permalink | Comments (0)

Jeff Bailey at the New York Times has a story today that says:

"Pardus Capital Management, a New York hedge fund, has sent a letter to management of Delta Air Lines asking it to seek a stock-for-stock merger with UAL, the parent of United Airlines, in a deal that would create the world’s largest airline and could prompt sweeping consolidation in the airline industry.

Gordon M. Bethune, former chief executive officer of Continental Airlines, is working with Pardus, the hedge fund said in the letter. And consultants have identified $585 million in savings the two big airlines — currently Nos. 2 and 3 in the country — could realize by combining operations.

Pardus said in its letter, sent Tuesday night, that it owns seven million Delta shares, about a 2.6 percent stake."

Technorati Tags: Delta Air Lines, United Airlines

Posted by Holly at 1:30 PM | Permalink | Comments (1)

I wonder if Gary Chase got any sleep last night?

This morning, the Lehman Brothers analyst was out with another interesting research note. Every Friday Gary updates investors on the industry's capacity moves. Today? He had some interesting news concerning Virgin America's trans-cons in his pre-update capacity note.

Gary reports that Virgin in pulling down capacity in its trans-con routes.

Clearly, this is primarily good news for JetBlue. But it also is good news for other airlines that fly a notable portion of their RASMs in trans-cons as well, including American, United, Delta, and Continental.

According to Gary, Virgin  today pulled about 14% out of its JFK-SFO schedule and 6% out of its JFK-LAX schedule for Nov, Dec, and Jan period (deepest reductions come in Dec).  JFK-SFO went from 4x daily to 3x daily and JFK-LAX went from 4x to 3x (in the off-peak parts of the month) in the schedule tapes.  The adjustments begin in late November. As Gary noted, "It may be only for the off-peak period, but it sure is better than the previous schedule."

So is Virgin merely moving the capacity elsewhere? Nope. Gary reports that there does not appear to be any offsetting additions by the airline.

Gary's overall take on the news? "We don't think Virgin would be drawing down capacity if they were eating everyone's lunch in these markets and shifting large market share."

Tickers: (UAUA:Nasdaq); (CAL:NYSE), (AMR:NYSE), (JBLU:Nasdaq)

Technorati Tags: airline analysts, airline industry news, airlines, jetBlue, virgin america

Posted by Holly at 9:57 AM | Permalink | Comments (0)

Gary Chase, analyst with Lehman Brothers, posted a midnight oil research note tonight on the departure of John Harvey from JetBlue.

Chase says to expect some "near-term weakness" in JetBlue's shares, especially tomorrow. However, he also does not see this news as being indicative of any "imminent breakdown" in JetBlue's fundamentals.

However, Chase also commented,

"This news comes at a bad time.  Oil is reaching new highs almost daily and concern about competitive impact from Virgin America among other things are weighing on JBLU sentiment specifically. JBLU is heavily shorted (highest short interest in the group) amid concerns about Virgin impact especially.  To boot, on the surface, it looks very expensive.  Bottom line, the path of least resistance is to be negative for tomorrow and possibly the next several trading sessions.

Now for the not so obvious...
We believe JBLU is a company in need of restructuring. Its valuation on current consensus is not the issue.  Its true earnings potential is the issue, in our view.  Importantly, we see significant upside opportunity on the cost side of the ledger and in the potential for larger network restructuring."

Technorati Tags: airline analysts, airline earnings, airline industry news, airline stocks, airlines, jetBlue

Posted by Holly at 11:29 PM | Permalink | Comments (0)

Late day announcement today from JetBlue that says CFO John Harvey has resigned as CFO of JetBlue. We hear that is not exactly the case. Sounds to us like Harvey was pushed. By the JetBlue board of directors.

The airline said in its release that SVP of Finance Ed Barnes has been named interim CFO.

Looks like it's shake, rattle and roll time at the carrier. The airline recently also showed its previously  highly touted EVP and Chief Revenue Officer Trey Urbahn the door. Although in his case there was no press release announcing his departure.

Posted by Holly at 6:14 PM | Permalink | Comments (0)

No surprise here.

American Airlines today told the airline's pilot union thanks, but no thanks, to the union's most recent contract proposal.

According to American's response to the Allied Pilots Association, the proposed package would have increased American’s pilot costs by more than $1.4 billion a year and would have brought the pilot cost per hour to a level that was more than that of competitors Delta Air Lines and Continental Airlines combined.

In other news, Bloomberg reports that a seniority agreement that had been negotiated between American, American Eagle, and their respective pilot unions has collapsed. The reason? A disagreement over adding 25 additional regional jets to the Eagle fleet.

The agreement, reached Oct. 24, would have preserved seniority rights for American pilots and helped recruit new pilots at the commuter unit.

The issue now will now be decided by an independent arbitrator, the APA told members in a message today.

Ticker: (AMR:NYSE)

Posted by Holly at 2:30 PM | Permalink | Comments (1)

For those of you who are followers of the ongoing Mesa Air Group/Hawaiian affair, I have a tidbit to share with you today.

And the most remarkable, ironic, or telling part of all this? (Take your pick.) It comes compliments of Mesa's own website.

It can't get much better than this guys.

Just a hint. If you want to see the pictures we're talking about live, you'd better act fast, because I'm sure they will be removed pretty quickly. Then again, for those of you who aren't quite as fast, don't worry. We've made copies of the page, and the pictures. (We are posting all links below.)

But for those eager beavers who read this quickly enough, if you want to see what interesting thing we found today while scrolling the Mesa website, first, open your browser and go to the Mesa Air Group home page.

Scroll down to the section on the recent launch festivities involving Kunpeng Airlines, the regional joint venture created by Shenzhen Airlines and Mesa Air. Headline is "Kunpeng Airlines Launches Services in China." Check out that fake fog while you're at it. (Well it was around Halloween.)

Click on the link that says "MORE" in that section. It will bring up an entire page of full resolution photos. Not minimal JPG sizes. Oh, no, full resolution photographs. (That will become important here in a minute.)

The picture that caught our eye is on the next to the bottom row -- one picture towards the right. It's the one with the huge flower artwork on the wall behind a number of people seated at a long table.

Direct link to the photo.

When the photo is downloaded,  it is identified by the Mesa Air Group site with a moniker that includes  "Kunpeng Launch." As you can see, it is in a group of other pictures that were clearly also of the various launch festivities. When did this particular occur? Well, the launch was officially Friday the 27th of October. So, it could have been the 26th, the 27th or the 28th.

Now, here's the point of my web adventure.

Look who's seated next to Mesa CEO Jonathan Ornstein at the official event.

To his right -- with, appropriately, an open laptop in front of him? (I know, at this point it's becoming more and more like a skit from Saturday Night Live.)

While he seems to be somewhat pre-occupied with a napkin in the photo, and not what is on his laptop, there's no question the person seated next to Jonathan is Peter Murnane. In fact, because the photo was uploaded in its full resolution -- you can clearly make out his name on the little white name placeholder in front of him. George Peter Murnane III no less.

But wasn't Peter on administrative leave from the company at the end of October?

A little historical perspective here for those who took a cruise to Alaska in October.

On Sept. 21, Mesa Air Group sent out a press release. In that release, it stated that the Board of Directors of the airline had put  Peter Murnane on "administrative leave." In the press release, Mesa CEO Jonathan Ornstein said, "Our policy is to comply with only the highest ethical standards of conduct and, if we become aware of a potential or alleged violation of such standards, to conduct an appropriate investigation and to take appropriate remedial action when warranted. We will report the outcome of the Company's investigation as soon as it is completed."

"Until the investigation is complete, William Hoke, Vice President of Finance will continue to be responsible for the financial and accounting functions of the Company and will perform the duties of Mr. Murnane," the release said.

As you recall, it was just a few days later that U.S. Bankruptcy Judge Robert Faris ruled that Murnane had intentionally destroyed files that Mesa had used before launching its airline go! These files had been sought as part of the trial's discovery process. This was the ruling that came after the porn-made-me-do-it defense by Murnane.

I'll let all of you talk amongst yourselves about this. Goodness knows there is enough to chew on.

For those of you who didn't go see what we saw today soon enough, here are the pertinent copies.

PDF of the page of Mesa's Kunpeng launch pictures

Photo in question

Ticker: (MESA:Nasdaq)

Technorati Tags: airline CEOs, airline industry news,