PlaneBuzz

Scary news just posted on The Aviation Herald website. Simon reports that an Airbus A330-220 was flying from Rio de Janeiro to Charles de Gaulle in Paris when the crew issued a Mayday alert on the international emergency frequency, indicating the aircraft had encountered severe turbulence over the Atlantic.

According to Simon, "The Mayday call was relayed by the crew of a TAM Airbus A330-200."

This aircraft appears to be AF Flight 445 GIG-CDG and the route the aircraft was following is very close to that which AF Flight 447 was on when it disappeared.

Thanks much to PBB subscriber Brian Rynott for this head's up.

Posted by Holly at 4:30 PM | Permalink | Comments (0)

Posted by Holly at 12:19 PM | Permalink | Comments (0)

Hark! Today there is news of two proposed FAA penalties -- and the news does not involve an airline based in the Dallas area.

Today the FAA announced that it has assessed a proposed civil penalty of $5.4 million against US Airways, and a proposed civil penalty of $3.8 million against United Airlines.

in the case of US Airways, the FAA said in a statement that the airline allegedly operated eight aircraft while out of compliance with safety directives or its own maintenance program.

In a letter to employees issued just a few minutes ago, US Airways COO Robert Isom wrote,

"It is important to remember that today’s announcement references situations that are in the past, and in several cases, date back to two years ago. This isn’t to make light of the findings or our corrections to those findings, rather it’s to say these occurrences are behind us, and today, we have improved upon an already solid maintenance program.

The FAA proposed civil penalty dates back to challenges we faced related to our America West/US Airways maintenance integration in 2007. The integration presented some challenges in the areas of inspection and records during 2007, 2008 and early 2009. Our team has worked cooperatively with the FAA to investigate and correct any discrepancies to the FAA’s satisfaction.

More specifically, over the past nine months, we and the FAA have completed a formal review of our aircraft maintenance tracking systems as well as a comprehensive review of our maintenance program. This collaborative process included efforts to identify the issues, drill down to find the root cause and develop comprehensive fixes."

However, In the case of United Airlines, the FAA alleges that the airline flew one Boeing 737 aircraft on more than 200 flights after "violating its own maintenance procedures." That's the "official" language. In plain language, the airline apparently continued to fly a plane that had shop towels stuffed in the aircraft's engine.

On April 28. 2008, a United 737 returned to Denver after shutting down an engine due to low oil pressure indications. During teardown of the engine a week later, United mechanics found that two shop towels, instead of protective caps, had been used to cover openings in the oil sump area when maintenance was done in December 2007. As a result of United's failure to follow its maintenance procedures, between February 10 and April 28, 2008, the airline continued to fly the airplane on more than 200 revenue flights when it was not in an airworthy condition.

Wonderful. Shop towels?

As is the case with all proposed FAA fines, each airline will have 30 days in which to appeal the proposed fines. In the past, this would then be followed by a little horsetrading between the airlines and the FAA -- in an attempt to lower the fine amounts.

Will be interesting to see how much these fines are reduced. Especially the United one. While the US Airways' transgressions seems to be based on issues involving proper record keeping of the newly merged airline -- the shop towel incident with United strikes me as a much more serious "safety" issue.

Posted by Holly at 10:50 AM | Permalink | Comments (0)

Man oh man.

Some days you just couldn't do a better job of making up a blockbuster story if, well, you made it up.

Today is definitely one of those days.

According to a complaint filed in U.S. District Court for the Southern District of Texas, Kate Hanni -- the woman who has been at the forefront of the move to get a passengers' bill of rights passed on Capitol Hill, claims that Delta Air Lines hacked her email accounts, in addition to personal files on her computer.

What the hell you say? I know. When I read the headlines I was skeptical too. But that was before I read the formal complaint filed by Hanni's attorneys and the accompanying exhibits.

You too can do the same. You can access the complaint here, and the exhibits document here.

Here's the Cliff Notes version.

Hanni, who is the executive director of the Coalition for an Airline Passengers' Bill of Rights had her AOL email account hacked into. In addition, the attack was apparently done using some type of malicious little code that also copied files from her personal computer. According to Hanni's complaint, "Specifically, private e-mails and sensitive files were obtained by Delta Air Lines, Inc. (“Delta”) and subsequently used to sabotage Flyersrights’ efforts to pass the “Airline Passenger’s Bill of Rights of 2009” through Congress."

Here is the meaty stuff from the complaint:

"11. Beginning in February 2009, Hanni exchanged information with Frederick J. Foreman, PhD (“Foreman”), an MIT graduate working for Metron Aviation, Inc. (“Metron”). Foreman was hired by the FAA to analyze airline surface delays. During their correspondence, Foreman, with explicit permission from Metron, updated Hanni with public information and statistics from his research and analysis. Hanni, in return, provided Foreman with data and information she acquired about surface delays. In his final report, Foreman pinpoints Delta as an airline experiencing excessive surface delays.

12. During the time Hanni was sharing information with Foreman, Hanni’s personal computer files and Flyersrights e-mail accounts were hacked. America Online (“AOL”), Hanni’s e-mail service provider, confirmed the e-mail accounts were hacked. As a result of the hacking, spreadsheets, lists of donors, e-mails, Department of Transportation statistics and Hanni’s personal files were redirected to an unknown location. Additionally, all of the information on Hanni’s personal laptop was corrupted and rendered useless.

13. On September 25, 2009, Metron executives confronted Foreman with the stolen e- mails and claimed Delta, a client of Metron, was angry about Hanni getting information that would help pass the Airline Passenger Bill of Rights.3 Metron had the stolen e-mails and files from AOL and Hanni’s personal computer in its possession.

14. When Foreman asked Metron how Metron obtained the information, Metron claimed that Delta had provided them with the stolen e-mails.4 Confirming Metron’s claims, the screenshots of the stolen e-mails presented to Foreman were from Delta. Foreman was fired by Metron the same day."   

Holy crap.

All I can say is read the exhibits, particularly the statement from Mr. Foreman. Pretty damning stuff if you ask me.  

Can't wait for this one to unfold.

Hanni is asking for $1 million in actual damages and $10 million in punitive damages. More importantly, she wants to know how her personal files and emails were obtained by the Delta Air Lines and Metron.

I want to know too.

Posted by Holly at 12:55 PM | Permalink | Comments (0)

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.

Posted by Holly at 5:46 PM | Permalink | Comments (0)

Thanks to one of our readers who suggested we all download a copy of this and listen to it as we await more news from the bankruptcy auction.

http://world.std.com/~eshu/dbug/Jeopardy_Think_Music.mp3

Posted by Holly at 4:19 PM | Permalink | Comments (0)

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

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

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

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

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

FAPA's concerns are:

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

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

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

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

Right.

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

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

Stay tuned.

Posted by Holly at 12:44 PM | Permalink | Comments (0)

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

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

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

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

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

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

We'll keep you posted.

Posted by Holly at 11:22 AM | Permalink | Comments (0)

The press conference with Southwest Airlines just ended.

Handling the call for the airline was Ron Ricks, Executive VP of Corporate Services and Corporate Secretary and Bob Jordan, Executive VP, Strategy and Planning.

The airline says their idea at this point at time is to initially operate Frontier Airlines as a separate entity until a certain point in time. But the eventual goal, they say, is to merge Frontier into Southwest in a "reasonable" amount of time.

The binding bid is due into the bankruptcy court no later than Aug. 10.

Quote of the conference: "When United flies certain banks out of there [Denver] it's like a solar eclipse there are so many flights."

That was Ron Ricks talking about why he did not think there was going to be a problem with any "competition" issues involving the deal, were it to go through.

The next ten days the airline will be working on their due diligence, in regard to a final bid. This preliminary bid allows them access to Frontier Airline's information.

Comments about the possible length of a transition period? As long as two years, but nothing is set at this point.

Mary Schlangenstein from Bloomberg asked on the call if the airline was ready for a "fight" with Republic over Frontier. Ron Ricks was pretty straight up that "Southwest's bid is going to be superior in every respect."

He left no question that the airline intends to fight as hard as it can, that it feels it can provide a better offer than Republic, and that it intends to win.

Overlap of markets between the two airlines now -- about 27.

For those with enquiring minds, there are about 12 markets or so that Frontier flies into that Southwest does not, including a number of markets in Mexico.

Dan Reed with USA Today asked if the airline was going to sell the Frontier Lynx operation. Ron said the airline is going to use the due diligence period to determine more about Lynx and other aspects of the Frontier operation. No decision has been made as of yet. This is something that will be determined in the next ten days.

Eric Torbensen from the Dallas Morning News asked if one of the reasons behind the deal was not to more or less remove a competitor that could come out of bankruptcy leaner and more competitive.

Ron said no. This was about growth, a "jumpstart" as he put it.

"This was an opportunity to get back in a growth mode," Ron said. "This was an opportunity that presented itself. We are just trying to react to the timelines set up by the bankruptcy court."

"If you look at Denver prior to our entry, I think there is a lot of evidence that we are the ones that brought low fares to Denver," said Bob Jordan.

The question was asked, "How much capacity can you add with this deal?" Bob responded that it would be roughly about 10% -- over time.

A question was asked as to whether their bid is being encouraged by those at Frontier and creditors of the airline. Bob Jordan said that the bankruptcy attorneys "verified through the process that our offer would be welcome."

Ron made the point that there are "dozens and dozens of non-stop monopoly markets out of Denver today that we feel would benefit from competition."

David Jonas from Promedia brought up the point that CEO Gary Kelly said in the earnings call just last week when asked about Denver, and whether the airline would be interested in assets there, that he said, "The right fit had not been found yet" or words to that effect.

So, as David said, had something happened between then and now?

[David, we know that nothing happened between then and now...]

As expected, Bob said he didn't remember the remark, and Ron didn't want to go any further with it. But the comment was made that well, Gary probably did not want to say anything because of confidentiality issues.

I think it would be safe to say that Gary just didn't want to talk about it.

The question was asked if the airline had bank financing for the deal. The answer was yes.

"A pocket of opportunity in a sea of pain," is how Ron Ricks typified the deal, when asked if the move to get bigger, given the current economic situation, and given Gary Kelly's comments just last week in the airline's earnings call, was not contradictory.

Lisa Stark from ABC asked if there was anything that might keep them from making a final binding bid. Ron said that because they already know a lot about Frontier -- they doubted it. But in the next ten days, the work is going to be intense as the airline reviews contracts, etc., as part of the due diligence process.

Bob said, "We're in this to win."

Posted by Holly at 2:00 PM | Permalink | Comments (0)

One of our PlaneBusiness Banter subscribers just passed along this information to us. It was communicated to employees via a Southwest Airlines' Today@SWA email.

The airline has a press conference scheduled for 2 p.m. CT to talk about the airline's bid.

Southwest Submits Nonbinding Proposal to Acquire Frontier Airlines

On Thursday, July 30, Southwest Airlines submitted a nonbinding proposal to acquire Frontier Airlines in accordance with the bidding procedures in the bankruptcy court.  We view this as an exciting opportunity for the Employees and Customers of both Southwest and Frontier. It represents an opportunity for Southwest to grow our Denver Customers; grow our revenues; and grow our profits. We must caution, however, that this is merely a preliminary step in the bidding process.

We must submit a binding proposal by August 10.  If there is more than one qualified investor, and at this time Republic Airways has also submitted a bid, an auction will be held beginning August 11.  Frontier will determine, in consultation with the unsecured creditors committee, which bid to accept and present to the bankruptcy court for approval.   

Although our plans may vary as we work our way through this process, we wanted to share with you our present plan as we envision it.  Frontier would continue to operate independently and separately for a period of time with its Airbus aircraft and personnel.  We do not intend to integrate the Airbus into our Boeing 737 fleet. As we are able to retire Airbus aircraft, we will add Boeing 737 aircraft. Over time, Frontier employees would be hired into Southwest as needed to support our fleet growth and expanded operations.  There are many details to be worked through, but we are confident that the effort will be worthwhile. We are also confident that our bid, if successful, will boost low-fare competition and benefit consumers in Denver and other cities our expanded network will serve.

Even if our bid is accepted and approved by the bankruptcy court, our closing on this transaction will be subject to several contingencies. These will include the negotiation of acceptable labor agreements dealing with the interim period of separate operation and seniority; and the appropriate regulatory review.  Absent the negotiation of these labor agreements, we will not go forward with this transaction.  However, we are confident that the benefits of such a transaction for Employees of both Southwest and Frontier will become self-evident and that we will be able to obtain such agreements.

Posted by Holly at 12:45 PM | Permalink | Comments (0)

Just never know what the day's news is going to bring. Especially in this environment.

Today, news of a fight for Frontier Airlines.

Southwest Airlines announced today that it has filed a bid of $113.6 million for Frontier Airlines. Republic Holdings, as most of you are aware, has already submitted a bid of $108.8 million. That proposal has already been approved by the U.S. Bankruptcy Court for the Southern District of New York.

However -- just because the bankruptcy court approved that offer -- Frontier still had the right to seek a higher bid. And apparently that is what it did. Actually I don't think Frontier solicited anything. I'm pretty sure Southwest is the one who made the call.

Under terms of the Frontier bankruptcy auction, bidders can submit offers until Aug. 3 and a final proposal has to be submited by Aug. 10.

The auction is scheduled for Aug. 11.

Is it just me, or are memories of the fight over ATA creeping into your consciousness as well?

Well, we certainly now have something more to talk about than earnings.

Posted by Holly at 11:49 AM | Permalink | Comments (0)

Another day, another round of airline earnings reports -- and yet another notice from Standard & Poor's that another airline is now on credit watch, with further rating downgrades a distinct possibility.

Allegiant Travel Company posted results late Tuesday while AirTran came flying in today. The one thing both airlines have in common? They both posted nice profits for the quarter.

Take these guys out and buy them a beer. They certainly deserve it.

Allegiant posted a profit of $23.8 million, up 801% from a year ago. The airline flies only MD-80s. I would have expected nothing less, considering the drop in the price of fuel.

But there is much more to the Allegiant story as those of you who hang out around here know. And in regard to their overall business model -- which relies heavily on ancillary revenue -- this quarter really didn't disappoint as the airline saw its ancillary revenues per ASM increase 17%.

AirTran, which is currently running kind of a hybrid operation in terms of ancillary revenues and more demand based scheduling that has been so advantageous to Allegiant versus the more traditional legacy carrier business model turned in another good quarter today as well.

The airline posted a profit of $78.4 million or $0.56. This was a huge turnaround from last year, when the airline posted a loss of $14.8 million or $0.14.

Excluding unrealized derivative gains associated with the airline's hedging activities, the airline posted a profit of $46.6 million or $0.34.

Interestingly, even here though, unlike at Allegiant, revenues were down. At Allegiant the airline saw operating revenues up 12.5%. on a 30.3% growth in ASMs no less.

AirTran posted a 12.9% drop in revenues. However, the airline also posted a whopping 27.3% drop in operating expenses. There is where the profit came from. ASMs here were down 7.6% for the quarter.

All said and done -- a good quarter for both airlines. Especially considering the rest of the carnage we've seen reported from almost everybody else.

One late note that hit the wires after the close today. Standard and Poor's said this afternoon that it had put UAL Corp., the parent of United Airlines on credit watch for a possible further downgrade.

The company's S&P rating is already buried in the "junk" status, sitting at a "B -."

S&P also warned that AMR, parent of American AIrlines is also now on the bad list as well, as it was also placed on the list for a potential downgrade. American currently is also rated "B -."

We'll look at the Delta Air Lines loss in another post.

Posted by Holly at 5:19 PM | Permalink | Comments (0)

Frankly, there is usually very little that shocks me about this industry. Surprises me, yes. Piques my curiosity, yes. But shocks me -- no.

But I got caught out in left field on this one.

This afternoon Continental CEO Larry Kellner announced in a letter to employees, and in a press release, that he was leaving the company, effective the end of the year.

But wait, he's just not leaving as CEO. He's leaving his position as Chairman of the Board of the airline as well.

Gone.

Kellner is leaving the airline to head up a new private investment firm, Emerald Creek Group, LLC.

The airline announced that Jeff Smisek, President and COO of Continental, will succeed Larry as CEO and Chairman of the Board.

How about that?

Another good one bites the dust.

Posted by Holly at 7:01 PM | Permalink | Comments (0)

See the picture. See the sunshine. Uh-oh.

This morning, details are slowly coming out concerning Southwest Airlines' flight 2294 that was forced to make an emergency landing in Charleston, West Virginia last night.

According to reports, a one by one foot hole developed in the roof of the Boeing 737-300 developed while the flight was in progress between Nashville and Baltimore/Washington International. After looking at video of the aircraft it appears that the hole in the fuselage developed directly in front of where the tail section is attached to the top of the aircraft.

The photo above was taken by a passenger on the aircraft, using his Blackberry.

According to a post by Southwest's Paula Berg posted on the airline's website Monday night,

"The aircraft cabin depressurized approximately 30 minutes into the flight, activating the passengers’ onboard oxygen masks throughout the cabin. Medical personnel in Charleston assessed passengers and no injuries are reported. Southwest Airlines is sending its maintenance personnel to Charleston to assess the aircraft, and the airline will work with the NTSB to determine the cause of the depressurization. According to initial crew reports, the depressurization appears to be related to a small-sized hole located approximately mid-cabin, near the top of the aircraft."

The airline apparently began an emergency inspection of all of its 737-300s last night. Not much more information this morning on just which aircraft were inspected or if that inspection process is continuing this morning.

No more information is known about what happened at this time, but I think it would be safe to assume that the incident is going to restart the conversation concerning the airline's previous issues with the FAA -- most of which concerned inspection for cracks on the airline's older aircraft.

The NTSB has already been on the scene, as they used a cherry picker to inspect the hole from the top of the aircraft.

Posted by Holly at 8:11 AM | Permalink | Comments (0)

Continental Airlines was granted limited antitrust immunity today by the U.S. Department of Transportation -- a move that will allow it to join United Airlines and other airlines in the Star Alliance in creating schedules and determining fares.

The order did, however, set limits on the antitrust immunity in regards to some international routes.

The order excludes rights between the U.S. and Beijing. In addition, the order also does not grant immunity for those flights between U.S. and Canada, and to those flights between New York and Copenhagen, Geneva, Lisbon, and Stockholm.

These "strings" were more or less foreshadowed in the recent Department of Justice filing, in which the DOJ discussed the possibility of "harm to consumers" on routes between the U.S. and China, Canada, Denmark, Portugal, Sweden and Switzerland.

The decision did, however, give the green light to a proposal that will see Continental, United, Lufthansa and Air Canada create a joint venture for some international flights.

This was the right call for the DOT to make, although the DOJ ruling last week was a bit troubling. As I have said for years, if U.S. ownership laws continue to hamstring U.S. carriers from linking up directly with international counterparts, then antitrust immunity -- which allows them to participate more fully with international carriers -- is the answer.

Posted by Holly at 11:30 AM | Permalink | Comments (0)

While this is technically "breaking news," we've all suspected something like this for months. Especially after the last TPG/Republic cash infusion given to Midwest.

This afternoon, Republic made it official. It is buying the remains of Midwest Airlines. I say, "remains" because what constitutes Midwest Airlines these days is a far cry from what most people think of when they think of "Midwest."

Republic announced that it will acquire 100% of the equity in Midwest, in addition to TPG's $31 million secured note from Midwest.

According to the airline's statement,

Consideration will be $6 million in cash and a $25 million, five-year note, which may be converted to RJET stock at $10 per share. In addition, TPG will have the right to nominate a member to the Republic Board of Directors.

Under the agreement, Midwest will become a wholly owned subsidiary of Republic Airways, with the Midwest brand continuing. Midwest’s Boeing 717s will be replaced with Embraer 190 aircraft, enhancing Midwest’s ability to offer nonstop service to key destinations important to its frequent flyers."

Well, how 'bout that?

It looks like the gang that started out with Chicken Taco has decided to add chocolate chip cookies to the mix.

So how does this help Republic? The airline has now announced that it is going to buy both Frontier Airlines and Midwest AIrlines in the span of two days. What I continue to have a problem with, and even more so now that the Midwest part has been added to the mix -- how can Republic continue to operate as a regional carrier when it will now be a major entity in operations that go up against major players?

Then there is the AirTran marketing agreement with Frontier -- what is going to happen to this?

My bet is that we are going to hear more about all of this before the week is over. You have to think that there was a reason the announcements were stair-stepped, and that they both came immediately on top of one another. A defensive play against another potential deal that was about to go down? That would be my guess.

Posted by Holly at 2:37 PM | Permalink | Comments (0)

Former Southwest Airlines CEO Jim Parker is cursing me somewhere right now.

And Gerard Arpey.

And Gary Kelly.

I don't care.

Go Tigers.

(Yes, they are all Texas alums)

Posted by Holly at 9:50 PM | Permalink | Comments (0)

Just never know what news is going to come across the wires these days.

Hi guys.

It's good to be back.

Yes, moi has been a bit offline over the last month or so. No, I still love you. It was not because of anything you said. Or did. Or didn't do. Stop it.

Without going into detail, maybe this analogy will help explain. If someone is a pilot, then it's pretty hard to also work the back of the plane, sell the tickets at the counter and make sure the engine is functioning properly.

Moving, new website drama and delays, exhaustion. I just had to step back and concentrate on our flagship operation -- PlaneBusiness Banter for a bit.

But hey -- as I told PBB subscribers today -- it's time to get back into the swing of things.

And what fortuitous timing for our coming out party!

This afternoon the newswires were literally abuzz with the news that Republic Holdings is buying Frontier Airlines.

As we all know, Frontier has been trying to put together a financing deal that would allow it to exit bankruptcy protection.

We also all know that Republic had already stepped up its financial involvement with Frontier as part of its current bankruptcy process.

Yes, well -- this afternoon Frontier announced that it has entered into an agreement under which Republic will serve as the equity sponsor for Frontier's reorganization plan.

But the big newsmaking kicker is this: Republic will then purchase 100% of Frontier's equity for $108.75 million

Under the agreement, Frontier Airlines Holdings Inc. would become a wholly owned subsidiary of Republic.

Frontier Airlines and its short-haul unit, Lynx Aviation, will keep their current names and operate as they do now.

A hearing on the proposed deal is now scheduled in bankruptcy court for July 13.

Frontier’s reorganization plan calls for general unsecured creditors to get $28.75 million.

It said an additional $40 million of the sale proceeds would repay outstanding “debtor-in-possession” financing from Republic Airways Holdings.

If approved by the bankruptcy court, Frontier’s current equity “would be extinguished and holders of that equity would not receive any recovery,” the airline’s statement said.

Okay, so while this is great news for Frontier Airlines -- I think a very real question is this one -- what happens when Republic, which does a chunk of regional flying for United Airlines, essentially becomes the new owner of Frontier -- a major thorn in the side of United?

Stay tuned. This one should be fun to watch.

Posted by Holly at 8:11 PM | Permalink | Comments (0)

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.

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

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

In the midst of all the giddy sentiment that is starting to take hold in the industry concerning the "stabilization" in demand decline -- a fact that April RASM estimates issued by some airlines have fueled this week -- a new ugly problem is starting to make itself known. That ugly problem? Higher fuel prices.

As they say, if it's not one thing, it's another in this industry.

The big question concerning the recent relatively calm period of lower oil prices was this one -- how fast would they start to ratchet up when the economy began to shows signs of recovery?

We, unfortunately, are starting to see that apparently the answer to that question is -- pretty fast.

If you have not looked at the oil futures market lately, here is the bad news. As I post this (at about 1:30 PM CDT), the price of a barrel of crude is now sitting at 58.55, up almost $2 bucks for the day. Just two weeks ago, the price of crude closed at 50.80. Last Friday, it closed at 53.20.

Today's price is the highest price that crude has posted since November.

What is fueling the push?

A combination of some encouraging signs on the economic front, U.S. equity markets that seem to believe the worst is over (whether it is or not) and a weaker U.S. dollar.

As most of you know, a declining US dollar makes dollar-priced oil cheaper for foreign buyers and tends to encourage demand, leading to higher prices.

Yes, it is indeed a vicious circle.

And one damn frustrating one if you are an airline. Do you hedge or not? At what price levels? With what hedging instruments?

Remember that many airlines were still paying the price (and dearly) in the first quarter for making the wrong move on oil futures last year.

What makes this rapid rise in the price of oil potentially more troubling for the industry than the record-breaking rise last summer is that it is rearing its ugly head at a time when the level of demand, i.e., revenue, has fallen through the floor.

Posted by Holly at 12:33 PM | Permalink | Comments (0)

Photo: A U.S. Air Force VC-25 and F-16 escort in the skies near New York on Monday morning.

The FAA has said the flights were planned and that all agencies were notified. However, someone seems to have forgotten to tell the people living and working nearby, including New York Mayor Michael Bloomberg.

The NYPD issued this statement, according to The New York Times: "The flight of a VC-25 aircraft and F-16 fighters this morning was authorized by the F.A.A. for the vicinity of the Statue of Liberty with directives to local authorities not to disclose information about it but to direct any inquiries to the F.A.A. Air Traffic Security Coordinator."

Another video uploaded to YouTube illustrates one New York resident's fears about the low-flying planes. "That's not normal," says the woman in a concerned tone. No, it's not.

Why the secrecy? What were they thinking? My bet is that they weren't thinking at all. Still, I'm sure the resulting photos of the jet passing by the Statue of Liberty will be very provocative for future Air Force enlistment materials. Never mind the frayed nerves and panic induced by the photo shoot, right?

Update: Late this afternoon, Louis Caldera, Director of the White House Military Office, issued the following statement:

"Last week, I approved a mission over New York. I take responsibility for that decision. While federal authorities took the proper steps to notify state and local authorities in New York and New Jersey, it's clear that the mission created confusion and disruption. I apologize and take responsibility for any distress that flight caused."

Posted by Jonathan at 4:08 PM | Permalink | Comments (0)

Gary Chase, airline analyst with Barclays, issued a note this morning in which he listed the exposure of different airlines to the potential short-term risk of passengers curtailing travel to Mexico.

Gary also took a look at the effect that the SARS scare had on the Asian carriers in 2003, and then extrapolated a kind of "worst case" scenario for our carriers -- in terms of their Mexican exposure.

Of course, all of this is just conjecture at this point. This analysis is only looking at one part of the puzzle -- the US carriers current exposure to Mexican flying. This assumes, which Gary pointed out, that the flu is able to be contained in Mexico.

And right now, that looks like a big assumption.

But let's say that is the case. If that is the case, Alaska Airlines, Continental Airlines, US Airways and American Airlines are the four airlines that have the biggest percentage of their passenger revenue tied up on Mexican routes. Note that even though Alaska's total O&D revenue tied to Mexico puts it fifth on the list, those flights make up 8% of the airline's passenger revenues. A huge amount.

Posted by Holly at 10:56 AM | Permalink | Comments (0)

Just in case you were so wrapped up with the NBA playoffs or the NFL draft that you didn't watch much news over the weekend, or you didn't read Jonathan's note here that was posted last night -- the reason your favorite airline stock is posting a loss this morning is directly attributable to one thing. Swine flu.

Or rather, fears that the flu, which has, up to now, been concentrated in areas of Mexico, but has already crossed the border to the U.S., has gone beyond the stage where cases that have been confirmed can be 'contained.'

As a result, memories of the SARS epidemic of a few years ago, and what it did to the industry, (the Asian carriers were particularly hard hit) has investors selling off shares of airline stocks faster than you can buy a box of Kleenex.

The major airlines are taking the brunt of the selloff this morning, with shares of Continental, Delta, US Airways, United, Southwest, and American all down by double digits. Or very close to double digits.

Posted by Holly at 10:12 AM | Permalink | Comments (0)

Photo: Health officials use heat-sensing cameras to scan arriving passengers at Tokyo's Narita airport.

The initial repercussion will be on those international airline passengers traveling to Mexico, but how far will the virus -- or simply the fear of the virus -- spread? Despite the milder cases of flu in the United States and Canada, compared to the nearly 70 deaths in Mexico, the declaration of a public health emergency by the Dept. of Homeland Security and World Health Organization will do little to encourage travelers to make short term plans to visit any affected areas of North America.

The full economic hit won't be known until after the medical crisis has passed and travel companies have reported traffic numbers. Just like SARS and other health outbreaks, airlines are in the trenches and have to respond fast to these threats. How much more can airlines and public health officials do to curtail the spread of swine flu and future disease outbreaks?

Posted by Jonathan at 7:02 PM | Permalink | Comments (0)

As UBS analyst Kevin Crissey said in a research note this evening, "The headline figure is bad."

Ah, yeah. I think you could say that.

Tonight Continental Airlines issued an update to its guidance. The company now expects March passenger unit revenue (RASM) to be down more than 18% year over year. This -- despite the airline's capacity cuts. And everybody's else's capacity cuts as well.

Continental also said that it is not yet seeing any kind of "stabilization in demand" that some other carriers have indicated of late they are experiencing.

On the plus side, the airline did say that they should beat their own cost guidance for the first quarter.

Woo hoo.

Posted by Holly at 8:58 PM | Permalink | Comments (0)

"In 1999, there was evidence of scale economies for connecting flights. Conditioning on other variables, the marginal cost of serving a connecting passenger on a long route was $18 less than that of a direct passenger, or roughly 12 percent of the average marginal cost.

The cost advantage of connecting flights disappeared in 2006. Conditioning on other cost shifters, the marginal cost of a connecting flight was $12 more expensive than that of a direct flight. The change is probably driven by the increasing fuel cost in the sample period. Since the fraction of fuel consumed at the takeoffs and landings could be as high as 40 percent, rising fuel costs offset the benefit of denser traffic created by connecting flights."

So says researchers Steven Berry at Yale and Panle Jia at M.I.T.

In a new working paper the two have published entitled, "Tracing the Woes: An Empirical Analysis of the Airline Industry, " they confirm that it used to be cheaper for an airline to place a passenger on a connecting flight -- rather than a direct one. But by 2006, that advantage had gone away. Why? One simple answer: the increasing cost of fuel.

According to the two researchers, "Channeling passengers through a hub airport allows carriers to increase the load factor. But it also requires extra fuel, both for the two extra landings and the longer distances passengers have to travel. The authors estimate that in 1999, the marginal cost of servicing a connecting passenger on a long route was $18, or about 12 percent, lower than that of servicing a direct passenger. That cost advantage disappeared in 2006, probably because fuel was more expensive. In 2006, servicing a connecting passenger cost $12 more and reported inflation-adjusted operating costs increased from 11.4 cents per available seat mile to 12.5 cents."

The authors estimate that by 2006 the legacy airlines were transporting 4 percent more passengers with 9 percent less revenue and 19 percent less in profit than in 1996. And, despite the bankruptcies and mergers in the early 2000s and the sharp downturn that followed 9/11, the average revenue-passenger-miles divided by the available-seat-miles of a flight, known as the load factor, rose from 71.2 percent to 79.7 percent from 1999 to 2006. It reached a record high of 80.5 percent in 2007.

There is a summary of the paper available for free here. The entire work is available for $5. Spend the money and buy it. It is well worth the read.

Posted by Holly at 4:51 PM | Permalink | Comments (0)

Thanks for your feedback on the news concerning Southwest's move into Boston. I'll strip off names and summarize comments I've received via email later today.

But first -- let's talk about what has been going on of late concerning the NTSB and their investigation concerning the actions of the pilot in the crash of Pinnacle/Colgan/Continental Express Flight 3407 last week.

If you are like me, you probably did a double take when you read the the Wall Street Journal article yesterday in which the paper reported that "evidence suggests pilot error" as the likely cause of the crash. The New York Times then ran with a story that said that the "crew may have overreacted" after the auto pilot system pointed the plane's nose down to generate speed. No sources were named in either paper's reports.

While officially the NTSB has not publicly made such comments, the assumption would have to be made that someone on the inside of the investigation was feeding both news sources.

Enter a number of our pilot readers.

Here is a "Read Before Fly" announcement that was sent to Southwest Airlines' pilots yesterday. Sound familiar?

Last night more than one pilot sent me a copy. And they weren't all Southwest pilots. Apparently the notice was posted on the PPRUNE site, or at least that is what one American Airlines' pilot wrote me.

___________

Safety Alert 2009-01 - February 18, 2009

There is a potentially significant hazard concerning the ILS to runway 23 in BUF.

Information has been received indicating it is possible to obtain a significant nose pitch up, in some cases as much as 30 degrees, if the glide slope is allowed to capture before established on centerline. Pilots who are preparing to configure and land have the potential to experience abrupt pitch up, slow airspeed, and approach to stall if conditions present themselves in a certain manner.

This effect is the result of an earthen obstruction close enough to the ILS to affect the integrity of the glide slope signal. This has resulted in the issuance of an advisory given on ATIS which states that "the ILS Glide Slope for runway 23 is unusable beyond 5 degrees right of course." When attempting to intercept the runway 23 ILS from right traffic, the ILS glide slope indication may read full deflection down. Just prior to intercept it may then move up in such as manner as to enable approach mode to capture in such a way as to result in a nose up pitch and loss of airspeed. Southwest Airlines has issued a notice reading: "Until further notice, when executing the KBUF ILS/LOC Runway 23, DO NOT select Approach Mode until established on the localizer inbound."

This issue is being addressed on several levels in an attempt to address procedures, facilities, and communication regarding this matter. If you experience any issues related to this, please file an ASAP form and or call SWAPA Safety at SWAPA toll free 800-969-7972.

____________

Posted by Holly at 11:49 AM | Permalink | Comments (0)

Posted by Holly at 4:17 PM | Permalink | Comments (0)

It's official. For those Allegiant fans out there, you know the airline talked on its recent earnings call about setting up a new base city. Last week Cranky Flier went public with his guess -- and his guess wasn't really much of a guess after the airport manager in Sioux Falls went public about it being Los Angeles. Duh.

So why was the airport manager in Sioux Falls talking about it anyway?

Because on Allegiant's website the airline had asked folks to guess what their new base city was going to be. The only information they were giving out last week is that the airline was going to start service out of the new base city to 12 destinations. And yes, one of those destinations just happened to be ....Sioux Falls.

Here are the 12 cities that Allegiant will begin operating to out of LAX:

1, Bellingham

2. Billings

3. Des Moines

4. Fargo

5. Grand Junction

6. McAllen

7. Medford

8. Missoula

9. Monterey

10. Sioux Falls

11. Springfield

12. Wichita

Hmmmm. This should be interesting.

Posted by Holly at 12:06 AM | Permalink | Comments (2)

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.

Posted by Holly at 3:04 PM | Permalink | Comments (0)

This is great news.

As I had written in PlaneBusiness Banter in December, it did appear that Delta Air Lines and its pilot union were close to coming to an agreement which would see the airline reinstate its Aviation Safety Action Program.

This morning the airline announced just that.

From the airline's release:

"Delta Air Lines (NYSE: DAL) has signed a memorandum of understanding with the Air Line Pilots Association (ALPA) and the Federal Aviation Administration (FAA) to reinstate its Aviation Safety Action Program (ASAP) covering pre-merger Delta pilots. The revised program mirrors an existing Northwest Airlines pilot ASAP program."

In addition to the reinstated pilot ASAP, Delta has formal ASAP programs in place for its dispatchers and Technical Operations employees, and other safety reporting programs for flight attendants and ground employees. Delta also will continue ASAP programs currently covering pre-merger Northwest pilots, dispatchers and load planners, and other safety reporting programs for its other workgroups.

This means that almost 17,000 employees of the airline are now covered by some form of voluntary safety reporting system at Delta.

Excellent news. Just makes me want to do a little happy dance outside. Only problem is that if I did, I'd probably fall on the ice and break a limb. So -- happy dance will be postponed until it's a little warmer. (Yes, I'm at the Dallas-Ft.Worth branch office this week.)

We have two more major airlines and their pilots groups to beat into submission in regard to ASAP participation. And we all know which two airlines I am talking about. American Airlines and US Airways.

And no, as I told my PBB subscribers not too long ago, I'm not going to shut up until the last two stragglers are back in the fold. ASAP program participation is too valuable to all concerned.

Posted by Holly at 12:33 PM | Permalink | Comments (0)

A number of news sources are reporting tonight that Chesley B. "Sully" Sullenberger, III, was Captain of the US Airways' flight that was successfully ditched today in the Hudson River.

It seems that Captain Sullenberger has a website. Actually the website is for his consulting business -- Safety Reliability Methods, Inc.

It would appear the guy knows his stuff.

Posted by Holly at 6:53 PM | Permalink | Comments (0)

Okay, if you are a pilot, you already know this.

But I didn't know that the Airbus aircraft apparently have a "ditch" button in the cockpit that automatically closes any vent, air outlet, opening, whatever, to the outside, in preparation for a potential water landing.

Just listening to Greg Fieth, former NTSB investigator, on NBC talking about how this works.

Pretty interesting. I was not aware of this. Clearly today that might have been helpful, as the aircraft stayed above water long enough for everyone to get off.

All you Boeing fans out there -- do they have something similar on Boeing aircraft?

Posted by Holly at 5:51 PM | Permalink | Comments (0)

Yours truly was minding her own business this afternoon, driving back home from Ft. Worth at 75 miles an hour, when all of a sudden I start getting messages about a US Airways plane that had ditched in the Hudson on my phone.

Now, being the card-carrying airline geek that I am -- you can only imagine that it was a miracle I got home and did not run into anyone while I drove and tried to 1) get my emails 2) get online and/or 3) find out what had happened.

According to reports, US Airways' Flight 1549 took off from LaGuardia to Charlotte at 3:03 PM Eastern time. Reports say that the pilot reported a "double bird strike" and apparently the crew felt it necessary to put the aircraft down in the Hudson.

Listening to NPR just now, the reporter there interviewed one of the passengers who said the plane essentially "glided in" on the water. As you can see in this photo, the aircraft remained floating, and passengers were rescued from the wings and the top of the aircraft.

What is unbelievable is that all reports say that all passengers and crew were rescued.

We can only hope that this is the case.

If so -- well done and kudos to the flight crew.

I'm sure we'll all know more as the evening goes on.

PHOTO/NBC NEWS

Posted by Holly at 5:23 PM | Permalink | Comments (0)

Posted by Holly at 4:22 PM | Permalink | Comments (0)

And we thought Continental's numbers were bad.

Yikes.

Southwest Airlines reported its November traffic numbers this morning. Sitting down?

The airline reported that RPMs declined 8.3% on flat ASM figures. That my friends, translates to a load factor of only 63.2%, down from 69.3% for the same period last year. That is a 6.1 point drop in load factor.

Anyone out there still think that demand is holding steady? Raise that hand higher, I can't see it.

Not good. Especially with Southwest making the bet earlier this year that people would "book away" from other carriers, preferring to fly with "no fees."

As usual, Southwest gave no RASM estimates for the month.

Posted by Holly at 12:41 PM | Permalink | Comments (0)

It seems that we have news of a merger a minute these days -- but nothing U.S. based. Yet.

This morning, hot on the heels of the news that Ryanair was once again mounting a hostile attempt to take over the 70% of Aer Lingus it does not currently control (a move which, not surprisingly the Aer Lingus management team quickly denounced) today we have news of an attempt at a true blockbuster link-up.

British Airways and Qantas are apparently in discussions to do the dastardly deed.

According to Bloomberg,

"The airlines are discussing a combination after the Australian government said today in a policy paper that it might ax a rule barring individual foreign holdings of more than 25 percent and total foreign airline holdings of more than 35 percent. Still, there are no plans to abandon the so-called "Qantas Sale Act” that says the carrier must remain 51 percent locally owned.

'Any transaction would also comply fully with Qantas’s Sale Act and Australia’s international Air Services Agreements,' Qantas said separately.

Negotiations on a merger are "advanced," the Australian Financial Review said earlier. British Airways, Europe’s third-biggest carrier after Air France-KLM group and Deutsche Lufthansa, said it issued today’s statement in response to "media speculation."

A merger of the two airlines would create an entity with annual sales of about $23 billion.

What a coincidence.AMR, parent of American Airlines also generates about $23 million in annual revenue.

And yes, you'd have to a blind person not to see why it is that the American Airlines-British Airways anti-trust piece of the pie is so important to this oneworld concept of world domination.

According to various reports out this morning, both airlines would retain their own brands. Sounds like another Air France/KLM type of set-up that is being proposed.

Posted by Holly at 11:49 AM | Permalink | Comments (0)

I love the airline stock sector. Just when you think it's safe to stay in the water....

<Insert the theme from "Jaws" here>

Last week the sector enjoyed one of the best week's it has had in, well, weeks, with the majority of the stocks we track here at PlaneBusiness posting nice double-digit gains.

Today? Not so much.

And tomorrow? Probably worse. Much worse.

After the close of trading late this afternoon Continental Airlines announced its traffic numbers for November, along with its RASM estimates.

The numbers were not good. Ugly might be a better way to describe them.

You can read the release here, but here's the Cliff's Notes version.

Consolidated load factor was down 2.8 points to 77.3%, while mainline posted a load factor down 2.6 points to 77.8%.

On a consolidated basis, traffic was down 10.5% while capacity declined only 7.3%.

But here's the nasty news. Consolidated passenger revenue per available seat mile is estimated to have increased only between 1% and 2% compared to November 2007. while mainline passenger RASM was up between 2% and 3%.

To put these numbers in perspective, last month the airline posted a consolidated RASM figure that was up 9.5% over October 2007, while mainline passenger RASM was up 10.4% year-over-year.

In addition, these estimates are also below recent analysts' estimates, and the airline's own recently revised guidance, which had the airline posting RASM increases of between 4% and 6%.

For those of you who don't follow the sector that closely, the RASM numbers that Continental reports are looked upon as an indicator for the rest of the industry. Sometimes the airline can be a bit above or below the rest of the pack for various reasons, but most of us airline financial types still use their "first out of the box" look at RASM as a kind of indicator as to what's on the horizon.

If this is what Continental did for the month, I'm not sure I want to see any more numbers.

Posted by Holly at 7:28 PM | Permalink | Comments (0)

Let no one say that Ryanair's CEO Michael O'Leary is not a determined person.

This morning Ryanair announced that it will pay $1.78 (€1.40) a share -- or $950 million in cash -- for the remaining 70% of Irish flag carrier Aer Lingus. This price represents a hefty 28% premium over the current stock price.

Two years ago Ryanair tried to buy the airline, but only got as far as putting together a 30% stake in the airline.

Significance of the move? When was the last time we saw a low cost carrier purchase what is considered to be a Legacy carrier?

I suspect Mr. O'Leary may be successful in his attempt this time. There are too many things working in his favor as compared to two years ago.

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

United said in an SEC filing late Friday that Jake Brace, United Airlines' CFO, will be paid $2.42 million after he retires at the end of the month.

Brace will receive two times his $653,125 salary and $555,156 target bonus.

In exchange, Brace agrees not to take a position with a competing airline for the next two years "without consent of the company." (No, I'm not saying a word, although the temptation is great.)

It's so nice that Jake will be paid this lovely parting gift. Dontcha think? I'd hate to think he was going to leave the airline empty-handed.

Posted by Holly at 4:53 PM | Permalink | Comments (0)

It's official.

The Dow Jones Industrial Average posted its worst week in history this week.

The average had its worst week on record in both point and percentage terms, as did the Standard & Poor's 500 index.

The Dow Jones Industrial Average, after starting the day down more than 700 points, finished down only 128 points, but it was one wild road in between.

Over the last eight days, the Dow has lost just under 2400 points.

As for airline stocks, it was also a volatile mix today as several airlines stocks posted record-breaking one-day gains. But we had some losers in the bunch as well.

On the huge plus side for the day, shares of Republic Holdings picked up a whopping 29% today. Yes, you read that correctly. Shares here closed at 8.94.

But wait -- we had one airline stock do even better. Shares of Alaska Air Group shot up 31% on the day, closing at 18.80.

Shares of US Airways also had a great day, as shares here were up 27%, closing at 4.60.

AMR, parent of American Airlines saw their shares pick up 20%, closing at 8 bucks even.

AirTran also had a good day, as shares here picked up a nice 18%, closing at 1.96.

Shares of SkyWest didn't have a bad day either, as shares here shot up 17%, closing at 13.75.

On the loser side, we really just had a small handful of notable drops for the day.

Shares of Pinnacle were down 10%, closing at 2.37, while shares of Mesa dropped back 15%, closing at 25 cents.

Embraer and Bombardier didn't have good days either -- not surprising considering the action in the market as a whole. Embraer shares closed down 8%, ending the week at 17.20, while shares of Bombardier closed down 16%, ending the week at 3.50.

And, last, but by no means least -- where did crude and jet fuel end up today?

Crude futures closed at 77.70, down 8.89 on the day, while the average spot price for jet fuel closed at 2.33, down 21 cents on the day.

Taken by itself, this would be great news for the things with wings.

Unfortunately, there is that elephant that is blocking the view to the nice new HD flatscreen -- the rest of the financial/economic mess on a worldwide basis and the recognition, finally, that no, this is not just a little "subprime" mortgage problem centered in California, Arizona and Florida.

Posted by Holly at 4:13 PM | Permalink | Comments (0)

"Hi Holly, Its 2:05pm on Friday MDT, 4:05 pm EDT. I am sitting in the President's Club waiting for a delayed LH. The delay allowed me to witness a spectacle. At about 1:59 people started getting up and gravitating towards the TV screen by the bar. It wasn't a scandal, it wasn't an assasination, it was the closing bell in New York. The bell rang at 2pm local and half the room walked over to see the news (flat). You'd think the Superbowl was on though people's faces weren't quite that excited.

Posted by Holly at 3:45 PM | Permalink | Comments (0)

Sun Country Airlines, and its parent company Petters Aviation both filed for Chapter 11 bankruptcy protection today.

"We were forced to take this action as a result of recent events at Petters Group Worldwide," Sun Country CEO Stan Gadek said in a prepared statement.

The move comes after former Petters Chairman Tom Petters was arrested last week on charges of mail fraud, wire fraud, money-laundering and obstruction of justice.

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

In case you've been occupied with feeding the cat, doing Sudoku, or eating a late lunch, the world financial markets are one big mess today.

So much for the power of politicians in Washington to snap their fingers and hope that the rest of the world simply agrees to sit back and let Treasury Secretary Hank Paulson do his "magic." A couple of problems with that $700 billion gift from the U.S. taxpayers that Congress okayed last week. One, it's going to take weeks before any of that buy-back of crappy debt even begins. Two, credit markets are frozen NOW. Third, now world markets are starting to unravel.

Which brings us to the big news if you are an airline investor, or someone who simply owns shares of your own airline that you work for.

Not only are world financial markets one big mess today -- but airlines stocks are getting hit very hard.

You'd think that with the price of oil now down below $90 today that investors would be snapping up airline shares right and left.

After all -- think of the potentially lethal profit cocktail we have going on -- sharply lower fuel costs on their way, coupled with sharply reduced capacity. It would seem like the perfect recipe for higher airline stock prices.

Unfortunately that is not how the market is thinking today. Then again, the market is not thinking very clearly about much of anything. This is definitely one of those days when fear rules.

As for the airline sector, the biggest decliners as of this posting include: United, which is down 18% at 6.68, Continental Airlines, down 20% to 12.15, Republic Holdings down 16% to 7.86, AMR, parent of American Airlines, down 18% to 7.65, and US Airways, down 14% to 5.58.

Posted by Holly at 1:03 PM | Permalink | Comments (0)

Gary Kelly, Chairman and CEO of Southwest Airlines announced minutes ago that the airline will begin service out of Minneapolis- St. Paul in March 2009. The airline says it will initially begin service to Minneapolis from only one airport -- Chicago Midway.

Posted by Holly at 3:00 PM | Permalink | Comments (0)

Don't faint.

Southwest Airlines plans to unroll a new customer email system in early 2009.

As many of you know, the airline has steadfastly remained without an email customer service method of communication.

If you wanted to complain to the airline, give them a compliment, or simply ask a question -- you could not send the airline an email. You had to sit down and write them an old-fashioned letter. Yep. With a stamp.

No more.

Starting early next year the airline will finally have a customer email alternative.

Posted by Holly at 1:48 PM | Permalink | Comments (0)

Good morning from the Louis Armstrong International Airport. Yes, for you without GPS capability, that means I'm in New Orleans. I'm leaving this morning for Dallas, where I will attend the Southwest Airlines' Media event Tuesday and Wednesday.

I'm sitting here looking out the window at the US Airways Piedmont retro livery. What a cool airplane. Then again I'm a sucker for most any retro paint job.

Actually, I'm looking at the Piedmont livery in-between reading about the meltdown in the financial markets, both here and overseas.

All jokes aside (re: the Origami Bank folded overnight) it's not good out there folks. As the ex-CEO of Salomon Brothers, John Gutfreund, said this morning on CNBC, the problem is -- nobody knows what the hell is going on or how bad things really are. Either here or in Europe. Much less Asia.

My personal take is that John is exactly right.

The FDIC announced a deal this morning between Citi and Wachovia. I was not able to hear just what Citi is taking over and what it is not. But it sounds very similar to the WaMu deal last week.

While they are both being cloaked as having been "absorbed" or "taken over" by other banks -- the truth is that both banks failed. Period.

And I doubt they are going to be the last.

Meanwhile on the other side of the pond, Belgian-Dutch banking and insurance group Fortis was propped up as the governments of Belgium, the Netherlands and Luxembourg took a 49% interest in the financial, banking and insurance group, in return for an injection of $16.4 billion.

But that's not all.

The U.K. Treasury said Monday it took control of Bradford and Bingley and will transfer the midsized mortgage lender's retail deposits business and branch network to Abbey National. B&B is a major provider of mortgages in the U.K.

Meanwhile back on this side of the pond, the Federal Reserve announced a massive injection of liquidity -- a deal that involves the central banks of a number of European countries

I'm not sure I want to see what's going on when I get off the plane at Love Field.

Hang in there folks. It's going to be a very rough day on Wall Street.

Posted by Holly at 10:49 AM | Permalink | Comments (0)

A reader just sent me this news update. It seems that the credit crunch is now hitting Japan fairly hard.

"The Origami Bank has folded and the Sumo Bank has gone belly up.

The Ninja Bank has taken a hit, but is still in the black.

The Kamikaze Bank shares have nose-dived, and 500 staff at the Karate Bank have got the chop. The Karaoke Bank has been put up for sale and is going for a song!

The Bonsai Bank has to trim some branches, while there is something fishy going on at the Sushi Bank. Staff there are expected to get a raw deal."

Hey, if we don't keep our sense of humor, what are we going to have left? Right?

Posted by Holly at 9:54 PM | Permalink | Comments (0)

Shares of United Airlines dropped as low as one cent today after rumors the airline had filed for bankruptcy took Wall Street by surprise.

As far as we can tell, there is absolutely no truth to these rumors. None.

Unfortunately, it does appear that a a 2002 Chicago Tribune story headlined "United Files For Bankruptcy," appeared on some Web sites beginning this weekend with a date of Sept. 6, 2008.

Shares as of this posting have bounced back up to 8.97.

Posted by Holly at 11:00 AM | Permalink | Comments (0)

While we wait for Gustav to make landfall, and hope that Holly's family remains safe and sound, we also need to consider the impact of the hurricane on the oil and energy industry. This graphic from NOAA reminds us of the sheer number of energy-drilling platforms, most now evacuated, situated in the northern Gulf of Mexico -- almost 4,000 active platforms. What we don't see here is the shore-based infrastructure. Pipelines, terminals, and refineries along the coast are going to be hit as well.

We don't know how bad it's going to be yet, but there's likely to be a hit at the gas pump for drivers and airlines alike nationwide in the coming days.

Another note as the hurricane approaches, Louis Armstrong International Airport in New Orleans discontinued flight operations at 6:00 PM Central time. Following some of the discussion over at Airliners.net, many airlines ran extra flights and used larger planes to assist in evacuations. AirTran, American, Continental, Delta, Northwest, Sun Country, US Airways, and other airlines all contributed to the flight exodus efforts.

Posted by Jonathan at 8:56 PM | Permalink | Comments (0)

Unfortunately one of the ironic things about hurricanes is that as devastating as they are -- they are undeniably impressive to watch as they build in intensity. Here is a great shot that someone just sent me. You can clearly see the eye of Gustav as it moves over Cuba, and you can see also see his running mate Hanna -- right behind him.

To get the full effect, click here for the complete loop of the image.

Posted by Holly at 8:04 PM | Permalink | Comments (0)

As Yogi Berra supposedly said, "It's deja vu all over again."

Exactly three years ago yours truly was on "vacation" from our normal weekly publishing schedule for PlaneBusiness Banter when Hurricane Katrina decided to make a little visit to Southeast Louisiana.

It took us more than four months before things returned to something even close to "normal."

Today, I'm sitting here looking at what is now a Category 4 hurricane by the name of Gustav, which frankly, as of this posting, is on a track that is potentially much more dangerous to where our Worldwide Headquarters is located -- than was the case with the more Easterly track of Katrina. Remember - New Orleans came through Katrina just fine -- it was the levees that failed that caused the massive flooding of the city after the fact. Not the storm itself.

But the Mississippi Gulf Coast was wiped cleaned.

One always wants to be on the west side of a hurricane -- not the east or northeast side.

But today, that is exactly where it appears the Worldwide Headquarters is going to find itself.

On the good news side of the coin -- I am not at the Worldwide Headquarters. I am in Dallas.

As regular readers of PBB know, I have been looking at potential new Worldwide Headquarters locations in the DFW metropolitan area over the last couple of months, and while on "vacation" was also doing some work with folks here who are working on our new subscriber site.

I was scheduled to fly back to New Orleans this week. Not going to happen now.

The bad news is that David, who edits PBB, compiles our earnings summaries, and prepares our weekly graphs and charts, in addition to doing all of our subscriber relations is at the Worldwide Headquarters, along with Max the Cat, Mom Cat, Pitty Pat and Ernesto. Then there are the two hounds -- Bita and Esther. Then there are the back-up hard drives for PBB. My big desktop Mac. My HD television. My car. My pin-up photos of Herb. My clothes. My ....My.... stuff.

Can you tell I am just a little "over the edge" today?

Wait until tomorrow.

And Monday.

And Tuesday.

And Wednesday.

So -- just a head's up for PBB subscribers. Our 11th anniversary issue that was due to be published this week is looking like a rather "iffy" situation.

I'd be lying if I said anything different.

More later. I need to go try and convince my father, who is 89, that he needs to get in the car NOW, and get out of Southeast Louisiana.

As for David, he says he is going to stay and hold down the PlaneBusiness corporate fort and ad hoc animal shelter.

Shaking my head.

As for me -- send hard liquor.

Posted by Holly at 1:11 PM | Permalink | Comments (0)

Interesting news crossing the wires this morning as United Airlines has announced that Jake Brace, long-time CFO, is "retiring" from the company on Nov. 1.

A couple of things. One this is great news. Should have happened a long time before now however.

Secondly, Kathy Michaels, the former head of IR at United, is going to succeed him. That is also good news.

Of course, no news like this is what it appears to be on the surface, and the obvious question hitting my email box this morning more or less runs around this theme -- did CEO Glenn Tilton finally push Jake out, in an attempt to put a lid on mounting calls for Glenn's dismissal?

Could be.

Or it could be that Jake has come to the conclusion that his days at United are numbered anyway -- and he might as well get out now, with a fat retirement/consulting package, before things get much worse.

Speaking of that no-doubt bloated "retirement/consulting" compensation package -- we, along with everyone else will be awaiting the details --when the company outlines the deal in an SEC filling.

Posted by Holly at 9:49 AM | Permalink | Comments (0)

Frankly, this proposal makes much more sense to me than the DIP deal that was announced recently with Perseus. I was not a big fan of the deal -- or at least what I had read about it. As I said then, I had anticipated there would be another airline involved in any deal for Frontier. For two reasons. One, it makes more sense than some kind of stand-alone venture, and two, if it was a good airline, with a reasonably strong management team, the sharing of management bench strength would be a plus.

This one hits on both counts, as best as I can tell at this early stage of the game.

Today, Frontier Airlines announced that it was going to go with an alternative DIP financing proposal that is anchored by members of the airline's Unsecured Creditors Committee. The three key players in this deal are Republic Airlines Holdings, Credit Suisse, and AQR Capital.

The three are offering the airline up to $75 million in DIP financing, with an immediate firm commitment and funding of $30 million.

This new DIP facility provides Frontier with lower financing costs, less restrictive covenants and greater flexibility to pursue strategic opportunities without being constrained by more restrictive DIP provisions, according to a release the airline put out.

Sounds much better to me.

Posted by Holly at 5:37 PM | Permalink | Comments (0)

The Associated Press reports this afternoon that United Airlines says it has reached an agreement with ALPA to "limit what the company calls work slowdowns that forced cancellation of hundreds of flights and cost millions of dollars."

Neither the airline nor the union is talking specifics about just what was worked out. But whatever it is, supposedly this "agreement" will be in effect until hearings are held Aug. 27-28 on the airline's suit seeking a preliminary injunction against the union.

According to the report, all parties met in open court on Thursday to schedule hearings. When it became clear that the hearing on the preliminary injunction would not take place until the end of the month, U.S. District Judge Joan Humphrey Lefkow asked the parties to reach an agreement protecting United from excessive cancellations.

The parties met behind closed doors in Lefkow's chambers on Friday morning and then canceled a second session set for Friday afternoon.

Instead, the airline said that an order would be filed with the court setting Aug. 27-28 for the hearing on the preliminary injunction.

Technorati Tags: airlines, ALPA, United Airlines

Posted by Holly at 4:55 PM | Permalink | Comments (0)

This morning Frontier Airlines announced that it has received a $75 million debtor-in-possession (DIP) financing commitment from Perseus, LCC, a private investment firm based in Washington, D.C.

Perseus has also agreed to act as equity sponsor for Frontier's plan of reorganization, allowing Perseus to purchase 79.9% of the equity in the reorganized company for $100 million.

Frontier filed a motion today with the U.S. Bankruptcy Court for the Southern District of New York. Upon court approval, Perseus will provide funding under the proposed DIP credit facility in two installments to support the company's working capital needs.

"The proposed DIP funding, coupled with Frontier's negotiations with partners to improve liquidity, reduce expenses, and preserve cash, is expected to provide sufficient working capital for the Company's operations. The Company continues to work with its partners and employees to obtain additional liquidity, reduce expenses and enhance revenues," the airline's release said.

Okay, so are we taking bets on how long it will be before Southwest Airlines announces a quadrupling of its service out of Denver?

As for the infusion of capital on the part of Perseus, I have to kind of wonder ....why? You would almost think maybe there was another shoe to drop -- that there was another airline involved at some level.

Maybe there is, but we just don't know it yet.

But given the airline's current position in the Denver market, and the fact that Southwest has clearly determined that they are going to take the Denver market away from Frontier -- I'm not sure why a third party investor would be interested in making a bet like this -- at this time.

Then again, this is the airline industry, and as one analyst said not too long ago, "The airline industry's ability to find new sources of equity never ceases to amaze me."

Amen to that.

Posted by Holly at 11:59 AM | Permalink | Comments (0)

Mesa Air Group filed an 8K with the SEC today, in which it said:

"On June 20, 2008, Mesa Air Group, Inc. (the “Company”) issued a press release announcing that it received a Nasdaq Staff Determination letter (the “Notice”) on June 18, 2008, indicating that the Company fails to comply with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4450(a)(5) (the “Rule”). Therefore, in accordance with Marketplace Rule 4450(e)(2), the Company has been provided 180 calendar days, or until December 15, 2008, to regain compliance. If, at anytime before December 15, 2008, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Company will have regained compliance with the Rule.

The Notice also states that if the Company does not regain compliance with the Rule by December 15, 2008, Nasdaq Staff will provide the Company written notification that its securities will be delisted. In the event of such a notification, the Company intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company’s request for continued listing.

The Notice arises as a result of the fact that for the last 30 consecutive business days, the bid price of the Company’s common stock has closed below the minimum $1.00 per share requirement for continued inclusion under the Rule."

Technorati Tags: airlines, Mesa Air Group, Nasdaq delisting

Posted by Holly at 3:01 PM | Permalink | Comments (1)

Yet another heavy shoe hit the floor today as Midwest Airlines announced that it is grounding its entire MD-80 fleet.

The Business Journal of Milwaukee reports:

"Midwest Airlines will be grounding its entire fleet of MD-80 aircraft -- used largely for long-haul flights to the West Coast -- and lay off an undetermined number of employees as part of its planned restructuring efforts, airline spokesman Michael Brophy said Friday.

The Oak Creek airline will stop flying about a dozen of the less-efficient MD-80 planes in its effort to counter the skyrocketing cost of fuel. Brophy said the number of affected employees, which would include pilots, have yet to be determined.

The aircraft are used largely for long flights to West Coast destinations like Los Angeles, Seattle and San Francisco. Brophy said the airline has not yet determined whether it would eliminate some of those destinations or reduce the frequency of some of those flights. Midwest has the option of serving those cities with the other airplanes in its fleet, Boeing 717s, from its Kansas City hub."

Between Maddog groundings at American Airlines and Midwest, Allegiant is going to have a bevy of MD-80 beauties from which to pick their next aircraft.

Posted by Holly at 1:58 PM | Permalink | Comments (0)

Ah, I'm not sure you want to look at the price of oil. Much less jet fuel.

But, I guess, alas, there is no choice.

After oil futures posted their biggest one-day surge in history yesterday -- $5.49 -- oil prices closed up almost $11 Friday, ending trading at $138.75/barrel after European Central Bank President Jean-Claude Trichet suggested the bank could raise interest rates. This news caused the  euro to climb against the dollar.

As all good readers of PlaneBuzz know, when interest rates rise in Europe, or fall in the U.S., the dollar tends to fall against the euro. The falling dollar then also makes oil that much cheaper for buyers everywhere except the U.S.

The current record high of $135.09 was hit on May 22.

Prices were also pushed today by comments made by analyst Ole Slorer of Morgan Stanley, who wrote in a note that he expects a "short-term spike" in oil prices -- the result of rising demands in Asia.

I'll be back in a bit with an update on jet fuel prices.

Posted by Holly at 2:13 PM | Permalink | Comments (0)

This morning United Airlines held what was billed internally as a "John Tague" leadership call to announce, basically, what we told you was in the works two days ago.

While Tague was not officially tagged with a higher position as part of the announcements today, the fact that it was Tague making the bulk of the comments, and not Glenn Tilton, I think, speaks for itself.

In his comments this morning Tague outlined these changes for the airline:

The airline is removing a total of 100 aircraft from its fleet. As we had written here yesterday, the entire 737 fleet will be parked. (Provided the airline can work out the necessary ugly details with its lessors.)

This is going to take place over 2008 and 2009.

The airline will also retire six Boeing 747-400s in 2008 and 2009.

About 80 total aircraft are now expected to be out of the United system by the end of this year.

And yes, Ted is, indeed, dead.

The airline will kill the brand, and simply reintegrate the 56 A320s back into the mainline configuration as the airline retires its 737s.

As for layoffs, the official total number of employees who will now be laid off is between 1400 and 1600. These will be salaried management staff members. This includes the previous 500 reductions already announced, so, again, our numbers we posted here yesterday were right on target.

The one interesting twist to the announcement this morning was that Joe Kolshak, who just quit his job at Midwest Airlines Kolshak was named the new SVP of Operations. You may remember Joe when he was at Delta Air Lines. Well, he then moved to Midwest in what I always thought was a kind of strange move, and now he's at United.

Leaving United, for the second time, will be Sean Donahue. Sean was the big mover behind the Ted product, and has already enjoyed one severance package from United previously. Bill Norman, SVP of United Services will also be leaving the company.

All in all, just about what we had told you about here previously on the bit items, for the exception of some additional personnel shifting about.

Ticker: (Nasdaq: UAUA)

Posted by Holly at 10:56 AM | Permalink | Comments (0)

Suppose you fought tooth and nail, expending millions of dollars -- just so your airline was awarded the right to fly somewhere -- and then, after all this, you told the guys who had awarded you the right to do so -- thanks, but no thanks?

Today Alaska Airlines, Inc., American Airlines, Inc., Continental Airlines, Inc. Delta Air Lines, Inc. Northwest Airlines, Inc., United Air Lines, Inc. and US Airways, Inc., did just that as they jointly filed a request with the Department of Transportation asking that the group be given a "temporary, blanket waiver of all dormancy conditions applicable to their frequency allocations and other limited entry international authority for a period of two years, beginning as soon as possible."

The request also asked the DOT to establish a six-calendar-day answer period.

Got that? Six whole days. Then again, who is going to object?

Not much else to say. It's an unprecedented move. It's historic. And just another signal of how dire the financial situation is for the U.S. carriers.

As one of our readers noted tonight, "Looks like the ATA carriers are battening down the hatches bigtime..."

United and US Airways had already said publicly that they were going to delay their respective China route awards.

The thing that is noteworthy about this news tonight is that all the airlines are asking for a "joint" blanket waiver.

When was the last time we saw this group agree on anything?

It's rare. And that alone says a lot in and of itself.

Posted by Holly at 10:50 PM | Permalink | Comments (0)

Set your alarm clocks.

What is being dubbed as a United Airlines' "Leadership Call" with United COO John Tague is scheduled tomorrow morning at 8:00 AM CDT.

So will Mr. Tague be handling this call as COO of United Airlines or as CEO? Or as President?

The plot thickens.

Sources tell us that the airline intends to issue press releases before the markets open tomorrow, so my guess is that releases will come first -- then the call.

Ticker: (Nasdaq:UAUA)

Technorati Tags: airlines, United Airlines

Posted by Holly at 10:21 PM | Permalink | Comments (0)

The Miami Herald is reporting this morning that privately held  Spirit Airlines may lay off or displace as many as 60% of its flight attendants and 45% of its pilots in two months.

The low-cost airline, which is struggling to cope with rising jet-fuel prices, sent Worker Adjustment and Retraining Notification Act or "WARN" letters to union leaders late last week, informing them of the decision, the Miami Herald's web site is reporting.

The carrier stated that it would furlough or displace up to 448 flight attendants and 242 pilots on Aug. 1. The airline plans to close its New York LaGuardia, San Juan and Detroit bases and reduces its Fort Lauderdale base, according to the report.

Spirit would not confirm the exact effect the layoffs would have on flight numbers, the report said.

'Everybody is shocked,'' Sean Creed, chairman of the Spirit Airlines pilots union is quoted as saying in the article. Creed, who is based in Fort Lauderdale but lives in Connersville, Ind., continued,  "We had a meeting [May] 21st with the company, when they gave a completely different impression of the state of the industry as far as Spirit Airlines is concerned.''

Posted by Holly at 1:03 PM | Permalink | Comments (0)

From one of our readers this morning:

"Here is what I am hearing on the United front:

1. Culling  the B737 fleet (94 airplanes) by Fall 2009.

2. Selling off 7 B747s by Fall 2008.

3. 25 percent staff cuts by Fall 2008.

4. Death to TED (quickly but painfully).

5. John Tague becomes the de facto President. (Hopefully after some quick-but-intense "Grooming by Glenn").

6. Massive reorganization - "all the
wrong people are being promoted."

Are you hearing similar rumblings?"

Yes. And more.

In fact, the Tague comment is especially interesting, as after the US Airways/United deal fell apart, we were told by several folks close to the deal that one of the big reasons was because John Tague wanted to become CEO of United, USTed, or whatever the merged airline would have been called.

So this dovetails with those comments.

We've also had a slew of other comments from readers this morning telling us that the entire United Boeing 737 fleet will be parked. So this seems to coincide with our reader's comments above as well.

So it looks like instead of parking 70 aircraft, the total number of aircraft parked at United Airlines may be over 100.

Technorati Tags: airline CEOs, airlines, airplanes, United Airlines

Posted by Holly at 11:46 AM | Permalink | Comments (0)

Never a dull day in the airline bidness, that's what I say.

And today proved that point when, instead of hearing about a potential merger, or parked planes, or higher fuel costs, instead we have a hefty 52 page lawsuit that USAPA, the newly formed independent union that represents the pilots at US Airways has filed against their brethren, the former America West pilots.

You may recall that it was because the bulk of the US Airways East pilots voted to break off from ALPA earlier this year that ALPA no longer represents the pilot group at US Airways.

The whole move to displace ALPA was rooted in one cause -- the ALPA arbitration award concerning the merged seniority list for the two airlines.

Short and sweet -- America West guys were generally okay with it, while the US Airways East guys were not. Mind you, ALPA  rules at the time were that the arbitration award was to be followed. But the guys at US Airways didn't like the award -- so they decided to leave ALPA instead.

And there you go.

Today, USAPA filed a suit against a group of America West pilots accusing the group of "racketeering activity, and acts in violation of federal and North Carolina state law, in which the defendants have engaged in pursuit of their declared goal of destroying the plaintiff union."

The lawsuit contends that since April 18, 2008, the defendants and their co-conspirators have subjected USAPA, its officers, and individual US Airways pilots to a concerted campaign of sabotage, which has included:

1) a deluge of frivolous calls to USAPA’s toll-free telephone line in order to jam the service and impose costs on the Union;
2) false communications to USAPA’s safety line – the equivalent of maliciously triggering a fire alarm;
3) communications to US Airways pilots asserting that their “safety” will be jeopardized if they pay dues to USAPA;

4) the false attribution of defamatory statements to USAPA officers by use of a slightly altered e-mail address; 5) maliciously arranging for USAPA officers to receive subscriptions to electronic services, including sexually-related services, in an apparent effort to defame these officers and sabotage their electronic communications;

6) a concerted effort to deprive pilots at US Airways the ability to commute to work by denying USAPA members the use of the cockpit jump seat; and

7) a conspiracy to violate the union security provisions of the applicable collective bargaining agreements and to induce US Airways to violate these same provisions.

Yee haw.

For those of you with enquiring minds, you can download the entire .pdf file of the lawsuit here. Let me assure you, it makes for some very interesting reading.

Interesting, but pretty sad at the same time.

Ticker: (NYSE:LCC)

Posted by Holly at 7:12 AM | Permalink | Comments (0)

Our informed sources tell us this afternoon (hey, I'm on Pacific time) that we should hear more details Tuesday on United's plans to contract.

On the cutting board (and I know this is going to upset Cranky Flier immeasurably) will be Theodore, better known as yet another tried and then discarded airline within an airline adventure. Yes, you all know the adventure as "Ted."

Secondly, we're told that the airline will announce the grounding of at least 70 aircraft.

Layoffs? Did someone say layoffs? (A nod to Coach Jim Mora there...)

Yes. We're hearing at least 1500 folks are going to be on the short end of pink slips at UAUA headquarters.

Posted by Holly at 6:34 PM | Permalink | Comments (0)

And I quote,

"United Airlines told US Airways on Thursday that it had decided not to continue talks on a possible merger, people with direct knowledge of the situation said.
The chief executive at US Airways, W. Douglas Parker, was told of United’s decision during a meeting with its chief executive, Glenn F. Tilton. The airlines are expected to announce Friday that the discussions have ended, these people said late Thursday. They spoke on condition of anonymity. Both airlines plan to cite the difficulty and expense of combining various labor contracts, particularly agreements covering pilots, these people said."

The Associated Press, meanwhile, reported this afternoon, " The CEOs of United Airlines and US Airways met Thursday but there were no indications a decision was near on whether to combine the two carriers, a person with knowledge of the meeting said."

If the Times' version is accurate -- then I'd say the folks at US Airways can start to prepare for some serious crunch time. We are told that US Airways' President Scott Kirby was pretty straightforward today in his assessment of what the airline is looking at now, as a result of higher fuel prices. Kirby, who spoke at a luncheon with a group of US Airways' pilots,  would not rule out the possibility of potential furloughs, further reductions in block hours, or the removal of some aircraft from the system as the airline tries to figure out how it is going to pay for an estimated additional $1.6 billion or so in fuel costs for the year.

Oh, yeah, and there are all those "ala carte pricing opportunities." Which begs the question.....how long until US Airways matches the American Airlines' $15 bag charge?

As for United -- I don't know what they intend to do. But given communications we have read over the last week from United employees -- particularly pilots -- apparently one thing we know very few United employees apparently wanted to do -- was a deal with US Airways.

Posted by Holly at 8:28 PM | Permalink | Comments (0)

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, airlines, Hawaiian Airlines, Jonathan Orstein, Mesa Airlines, Peter Murnane

Posted by Holly at 3:56 PM | Permalink | Comments (2)

One of the biggest changes announced today is this one.  If you are a heavy-use business traveler that flies Southwest, that is, if you fly 32 one-way trips in one year, you will get the best available boarding pass available when you book any fare. In other words, if there are already the maximum number of "A" group boarders when you check in, you'll get an automatic "B" or whatever. But the assumption is that you will get an "A" group assignment more often than not. Whether you are flying on a Business Select fare or not.

Ticker: (LUV:NYSE)

Technorati Tags: airline industry news, airlines, Southwest Airlines

Posted by Holly at 12:16 PM | Permalink | Comments (0)

Southwest Airlines just unveiled its new changes in a webcast press conference.

The airline is changing its fare products. Business Select, Business, and Wanna Get Away. Within the Wanna Get Away fares are other fare breakdown classifications.

Business Select fares will be higher than the highest fares the airline has charged in the past. The amount will vary depending upon the flight.

The airline says for now about 10% of its seats will be available on that basis.

Business Select fliers will get more Rapid Reward credit, get "A" boarding, and a free drink.

Business class fares as essentially the same as the previous full fare refundable ticket.

Another change in the Rapid Rewards program -- if you want a Rapid Rewards ticket that is good on any flight, for the exception of the usual holiday periods  (how it used to be), you have to turn in two regular Rapid Rewards tickets and pay $50.

Remember that the airline changed its Rapid Rewards program a couple of years ago to a "capacity controlled" system like other airlines.

So essentially, this is going back to what the program used to offer -- at a higher cost.

The press conference is still ongoing at this point.

Southwest Airlines' CEO Gary Kelly says that the airline expects the changes to bring the airline $100 million in additional yearly revenues.

Ticker: (LUV:NYSE)

Technorati Tags: airline industry news, airlines, Southwest Airlines

Posted by Holly at 11:44 AM | Permalink | Comments (0)

Attired comfortably in my Ratty Old Bear Suit, I am perfectly calm and collected as I say this.

What does the market expect is going to happen when the Fed cuts interest rates again -- in an effort to bail out the growing mortgage debt/banking mess? That's right. The dollar is going to drop further, and the price of oil is going to go even higher.

Be careful what you wish for is what I say.

Today, a barrel of crude closed at $96.70 -- another new record. At one point, it was trading as high as $97.10.

Posted by Holly at 4:22 PM | Permalink | Comments (0)

Trick or treat! The dollar hits a new all-time low, oil hits a new all-time high, and Wall Street rallies on news of a rate cut.

I think Wall Street has a bipolar disorder. It's the only place I know where it's time to celebrate because the Federal Reserve has been forced to cut rates because the housing market has fallen off a cliff.

Meanwhile, as we cut rates, those overseas continue to shake their heads  -- and bid up the price of oil -- which now costs them less than it did a month ago because the dollar continues to drop in value.

Got that? Okay. Forget it. It's time to go trick or treating.

Posted by Holly at 5:58 PM | Permalink | Comments (0)

Mesa's Jonathan Ornstein had best get his checkbook out.

Breaking news from the Honolulu Star-Bulletin:

"Mesa Air Group, parent of interisland carrier go!, must pay Hawaiian Airlines $80 million for using confidential information obtained during Hawaiian's bankruptcy to enter the Hawaii market, a federal judge ruled today.
Bankruptcy Judge Robert Faris, who had taken the matter under advisement on Oct. 4 following a nine-day evidentiary hearing and trial, said Mesa breached a confidentiality agreement by failing to return to Hawaiian or destroy evaluation material on a timely basis, then using that material to gain a competitive advantage when entering the Hawaii market.

Faris also ruled that Mesa must pay Hawaiian interest of 3.97 percent per annum as of the date of today’s ruling, but denied Hawaian’s request for a one-year injunction against go! for selling tickets because he said the award of the money damages adequately redressed the harm suffered by Hawaiian."

More info here.

Our first take? About what we had expected. Judge Faris basically split the money request down the middle and let's go! continue to fly. I never thought he would shut the airline down. The only question was how much in damages he would award to Hawaiian. (Please see this post for an updated take.)

$80 million is no small hit for Mesa. Should be interesting to hear the Mesa response to the ruling. Nothing yet. Guess we'll hear from them tomorrow.

Ticker: (MESA:Nasdaq), (HA:AMEX)

Technorati Tags: Hawaiian Airlines, Mesa Airlines

Posted by Holly at 8:31 PM | Permalink | Comments (0)

Read it and weep.

"Pushing prices higher today? Mexico's state-owned Petroleos Mexicanos, one of the largest crude suppliers to the U.S., halted production of 600,000 barrels a day due to inclement weather on Sunday. Petroleos Mexicanos, also known as Pemex, said it hopes to resume production in days.

Mexico is U.S.'s second largest crude supply country after Canada, shipping 1.66 million barrels a day in the first eight months, according to the Energy Department. Pemex is Mexico's largest company with annual revenue of nearly $100 billion. It's also the third largest producer of crude oil in the world, according to the company's website."

Posted by Holly at 4:42 PM | Permalink | Comments (0)

Citing "diminished confidence in the aircraft," Scandinavian airline SAS has issued a statement today stating that it has decided to immediately discontinue use of the Bombardier Dash 8 Q400 aircraft.

The announcement comes after yet another "incident" involving the aircraft and SAS.

Saturday an SAS Q400 crash landed at Copenhagen airport. There were no deaths or serious injuries reported in the accident.

On Sept. 9, an SAS Q400 caught fire after its landing gear failed upon arrival in Aalborg, Denmark. Five of the 69 passengers onboard were injured. On Sept. 12, a portion of yet another SAS Q400's landing gear collapsed after the plane landed in Vilnius, Lithuania.

The two crashes in September prompted a grounding of all Q400s worldwide. The grounding and subsequent aircraft inspections showed evidence of corrosion in the landing gear mechanisms of other aircraft.

"Confidence in the Q400 has diminished considerably and our customers are becoming increasingly doubtful about flying in this type of aircraft," said SAS CEO Mats Jansson in a statement.

The move came after Scandinavian aviation authorities on Saturday issued a new flight ban on all SAS's Q400 turboprops.

The airline said that it will seek compensation of $87 million from Bombardier. No matter what the cause of the incident was on Saturday, this is one very black eye for Bombardier.

This can't be good news for Horizon Airlines, the regional partner of Alaska Air Group either. The airline has 33 Q400s underfoot with an order in place for 15 additional aircraft. Frontier Airlines has also structured its new Lynx Aviation unit around the aircraft. Frontier has taken delivery of five of 10 total aircraft on order.

Bloomberg reports that Bill Conniff, spokesperson for Alaska AIr Group, said today that Horizon plans to keep flying its Q400 fleet.

Posted by Holly at 4:55 PM | Permalink | Comments (2)

This is getting to sound like a broken record.

How could I forget jet fuel? Yes, well, maybe it would be better if we all could just forget jet fuel.

New York harbor jet fuel closed at $2.56/gallon today. New record.

Posted by Holly at 3:53 PM | Permalink | Comments (0)

Another day, another record close for crude oil today. Oh, and for those of you who heat your home with heating oil, it too set a new all-time record today. Heating oil closed at $2.43 a gallon in New York.

Technorati Tags: airline industry news, airlines, crude oil

Posted by Holly at 3:48 PM | Permalink | Comments (0)

I don't know about you, but this baseball game tonight is a total waste of time.  I'd much rather be on an A380.

Specifically the one that is now enroute between Singapore and Sydney.

Yep. The inaugural Singapore "Flight of the Beast" is now in the air. Can't wait to hear the first reports from onboard the flight.

Not surprisingly, spoofs have been making the Internet rounds the last couple of days.

Here's a particularly good one from the Daily Mash I read today.

Safety Fears After A380 On-board Safari Incident

SAFETY concerns have been raised about the A380 super-jumbo after two passengers were attacked by lions during their on-board safari.
The two business class passengers had to be rescued when their Land Rover became bogged down near a watering hole and they tried to get back to their flat-bed seats on foot.

The incident comes as Airbus announced that the next generation of A380s will feature a 25,000 seat auditorium based on the Roman Colosseum.

Vasily Borodin, vice-president of Russia's Aeroflot, said first class passengers will be able choose up to a dozen people from economy and then command them to fight to the death.

"The winners and their families will be upgraded, so we should get some terrific contests," he added.
But the giant plane has been criticised by business travellers after it emerged that its on-board golf course was only nine holes, and not the 7000-yard championship links as originally promised.

Jean Floriette, A380 lead designer, said new planes coming off the production line would be upgraded to include a Jack Niklaus designed 18-hole course with club house and spa, although he admitted this could lead to compromises elsewhere.

He said: "We may end up having to cut back a bit on the grouse moor, but there's already a stag hunt and some world-class salmon fishing, so we hope this minor change will not inconvenience passengers too much."

He said there was no question of the A380 jettisoning Der Stuka, it's six storey high water slide which sends passengers down a 250 feet near vertical drop and on to a 300 foot long runway.

Posted by Holly at 10:40 PM | Permalink | Comments (0)

No, not really.

I'd much rather Boeing get it right, rather than get it rushed.

(That's my new aircraft manufacturer mantra. Hear me Bombardier, Boeing, Airbus and Embraer? Actually we already know Airbus hears me, don't we?)

And I quote from my Speednews email:

"Boeing has announced a 6-month delay in its planned initial deliveries of the 787 due to continued challenges completing assembly of the first airplanes.

Deliveries are now slated to begin in late November or December 2008 vs original schedule of May 2008. First flight is now anticipated around the end of first quarter
2008."

What does bother me about this is that it was just September 5 that Scott Carson, CEO of Boeing Commercial Airplanes, told us all that the airplane's first flight had been delayed, but that "the 787 remains on track to be delivered to its first customer, ANA, next May."

Yeah. Right. Okay Scott.

We didn't believe you then, and well, anyone now taking bets on the "fall of 2008" date? Or is this more "wishful thinking"? In the meantime, anyone got a new measurement on the length of Scott's nose these days?

Technorati Tags: Airbus, Boeing, Boeing_787, Bombardier, Embraer

Posted by Holly at 11:17 AM | Permalink | Comments (0)

The Associated Press reports tonight that American Airlines and the TWU have ended talks concerning a potential "extension" of the current  TWU contract.

Instead of extending the current contract that expires in May, the company and the TWU will now apparently start at square one, negotiating an entirely new contract.

"Over the past few weeks, American Airlines and the Transport Workers Union held a series of informal, facilitated meetings to discuss a limited number of contract issues," said American spokeswoman Sue Gordon. "These meetings have concluded and the parties have agreed to proceed into formal negotiations ... as originally planned beginning Nov. 7."

No question this is a major setback for American management. American clearly was trying to get the TWU to sign on to an extension -- which would have taken some of the pressure off. Now, the airline is again looking at three major labor contracts being negotiated at the same time.

Click here to read the Associated Press article.

Technorati Tags: airline unions, American Airlines, TWU

Posted by Holly at 8:49 PM | Permalink | Comments (0)

Here we go. Here's the breaking story at the Star-Bulletin.

Yet another person we know who was there in the courtroom today has sent us a note updating us on today's events. Yes, the story gets even more bizarre as the days go by.

In reading through the notes it appears that Mesa's attorney informed the court today that it had possession of two hard drives that were supposedly hidden by Mesa CFO Peter Murnane until 9/13 but only disclosed to Hawaiian attorneys and the court this morning as a basis for the judge not to rule on the motion for sanctions, and to delay ruling on the trial.  This goes to the argument that Mesa was trying to show again how they were victimized by their own CFO.

Hawaiian's attorney Sidney Levinson then apparently pointed out that this stunt was another example of how Mesa was trying to forestall a decision on the motion by only providing evidence to Hawaiian and to the court when it is convenient for them.

Levinson noted that instead of "firing this CFO who was victimizing them," Mesa put him on paid administrative leave and gave him a "warm pat on the back" in a press release, commending him for his fine work.

Judge Robert Faris denied Mesa attorney Maxwell Blecher's request not to rule, noting that the discovery deadline had passed and if Mesa could not produce documents that was Mesa's  fault.

Both sides then made their closing arguments to the judge.

Drumroll please.

And as for the judge's ruling?

Judge Robert Faris  ruled today that Mesa Air Group did intentionally destroy evidence that could have been used by Hawaiian Airlines in the lawsuit against its competitor.

Faris also found that Mesa executives made their decision to start a their low fare airline in 2006 based on information they got while looking at Hawaiian's books  -- when the airline was still in bankruptcy protection.

The amount being sought by Hawaiian in damages was also disclosed today in court documents. That amount is $173 million.

Hawaiian Airlines is also seeking an injunction that would block Mesa's interisland carrier, go!, from operating in Hawaii for a year.

Ticker: (Nasdaq:MESA), (AMEX:HA)

Technorati Tags: airline CEOs, Hawaiian Airlines, Mesa Airlines, puppy

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

Okay all you airline nerds out there. (And you know who you are!)

Here is something that I think is really cool.

MIT's International Center for Air Transportation and the Global Airline Industry Program is making available to the public a new website hat for the first time collects a comprehensive data set looking at individual carrier and industry trends.  The Airline Data Project (ADP) represents an ambitious effort to compile key data for 15 of the largest U.S. airlines.

Why is this so cool?

Because while the information used in this project is all "out there," this is the first time this information has been put together in a way that is quickly accessible for normal people like you and me. And it goes back to 1995.

Thanks to Bill Swelbar, Research Engineer at MIT, who let us know about this nifty new toy.

Technorati Tags: airlines, MIT

Posted by Holly at 1:55 PM | Permalink | Comments (0)

According to CNN, the problem was in the telephone company's switching offices.

Posted by Holly at 6:07 PM | Permalink | Comments (0)

Reports say that the Memphis Center ATC lost all frequencies about 2 hours ago and that its airspace was shut down.

The Fox television station in Memphis reports that FAA spokeswoman Kathleen Bergen said a ground stop had been in place for any flight that would transition through the airspace. "We held them on the ground wherever they were, whether it was Miami, Seattle, Los Angeles, Boston," she is quoted as saying.

The airspace was completely cleared at 1:30 ET.

The reason being given for the shutdown?

"Equipment failures."

Posted by Holly at 2:36 PM | Permalink | Comments (2)

Just taking a look here tonight at a note from Kevin Crissey, analyst with UBS.

It seems that American Airlines tried the old, "issue the news late on Friday and maybe no one will notice " trick last Friday.

After the close, American issued updated third quarter and full year guidance.

The skinny?

The airline's revenue performance is looking weak, compared to American's peers and costs are going up.

Consolidated passenger revenue per available seat mile (RASM) is expected to be up 3.7-4.7% and mainline passenger RASM up 4-5% in Q3. "These figures are in line with our forecast but are disappointing relative to recent competitor results," Crissey noted.

American management also guided non-fuel unit cost (CASM ex-fuel) upward by roughly 1%. Put this together with a higher fuel cost estimate for Q4 and you get lower Q3 and Q4 EPS estimates.  Crissey said, "Our Q3 EPS falls to $0.78 from $1.03 and Q4 moves to -$0.06 from $0.26."

Pretty significant drops. And yes, that translates into a loss for the fourth quarter.

What did we say last quarter -- that we didn't think all the negative numbers the airline posted were because of "bad weather?"

Looking more and more like that was the case.

Ticker: (NYSE:AMR)

Technorati Tags: airline analysts, airline earnings, airline stocks, airlines, American Airlines

Posted by Holly at 12:32 AM | Permalink | Comments (1)

You may recall that after AirTran and its pilots came to terms on a tentative agreement this year -- union officials went back to the airline after beginning their road shows and told management  essentially that the agreement was not going to fly.

So back to the table both sides went.

Today, it was just announced that the pilots at AirTran have voted down the successor to that TA -- and by a resounding margin.

Pilots voted voted down the proposed agreement by a margin of 61.37% to 38.63%.  87% of the pilot group voted.

There were 1,477 eligible pilots and 1,284 voted.

After being informed of these results the National Mediation Board, which has been overseeing negotiations since September 2005, put  talks in recess until after the New Year.

Technorati Tags: airline pilots, airlines, AirTran

Posted by Holly at 12:43 PM | Permalink | Comments (0)

Last Friday we noted here that we had heard of a potential contract extension deal in the works between TWU and American.

Today Trebor Banstetter at the Ft. Worth Star-Telegram confirms that information, citing letters the TWU has posted on the union's website which detail a contract extension proposal that would link pay raises for mechanics and other ground workers to company performance.

According to Trebor:

"The proposal, made late last week, stems from an August meeting between Gerard Arpey, American's chief executive, and Jim Little, the TWU's international president. At the meeting, Little told Arpey that union members are willing to continue collaborating with management, but only for some type of additional compensation, according to sources familiar with the negotiations.

Little followed up with a letter to Arpey outlining his concerns, and Arpey responded with a letter in which he said he is committed to maintaining their collaboration.

"As a result of a letter from Little to Arpey, the company approached the negotiating committee with a proposal to explore the possibility of seeking non-traditional compensation, and a possible contract extension," union officials told members in a message. Labor leaders said they have appointed a committee to examine the proposal during the next two weeks."

Ticker: (NYSE:AMR)

Technorati Tags: airlines, American Airlines, AMR, TWU

Posted by Holly at 5:03 PM | Permalink | Comments (0)

The Federal Reserve announced a little while ago that it was cutting its overnight interest rate by a half of a percentage point -- the first cut in that rate in more than four years. The rate is now at 4.75%.

The result on Wall Street was dramatic.

At last look, the Dow Industrials were up about 326 points.

The Fed also cut what is called the discount rate by half a percentage point -- down to 5.25%.

Put it all together and you have the reason why the Dow Jones Industrials were up about 326 points the last time I looked. These moves by the Fed were broader than what most folks had anticipated.

Of course these moves are nice for some people, but the bigger picture here is that the Fed must feel that the threat of recession is bigger than that of inflation.

We'll see how the rate happy hangover affects the Street tomorrow.

Next up? Oil prices.

Technorati Tags: wall street

Posted by Holly at 3:02 PM | Permalink | Comments (0)

Today Bombardier told airlines to ground 60 of its Q400s after two of the planemaker's aircraft experienced landing gear failures in one week.

According to Bloomberg, "All Q400s with more than 10,000 cycles -- comprising a takeoff and landing -- should be grounded until they're inspected, Montreal-based Bombardier said today." The landing gear was made by Goodrich Corp. of the U.S., Bombardier added.

The grounding does include aircraft flown by Alaska Airlines regional airline, Horizon Air, as well as a number of international airlines.

Apparently both landing gear incidents occurred in Europe and neither incident involved any fatalities.

You can read the article here.

Ticker: (NYSE:ALK)

Technorati Tags: airlines, Alaska Airlines, Bombardier, Horizon Airlines

Posted by Holly at 12:41 PM | Permalink | Comments (3)

Major news sources are reporting that an air search is under way for air adventurer Steve Fossett, who was last seen Monday morning taking off from a private Nevada airstrip in a small, single-engine aircraft, according to the Federal Aviation Administration.

The 63-year-old, who in 2002 became the first person to complete a solo circumnavigation of the globe by hot air balloon, was reported missing Monday night by a friend, according to the FAA. Fossett had not filed a flight plan for his Monday morning departure.

Fossett departed in a single-engine Citabria Super Decathlon, Civil Air Patrol spokeswoman Maj. Cynthia S. Ryan told the Record-Courier newspaper of Nevada, ABC News reported.

Three crews are in the air looking for Fossett's blue and white aircraft above rural western Nevada, Ryan told the newspaper, and more are en route to help in the search. "We will be launching more shortly," Ryan told the newspaper.

Authorities have some idea where Fossett may have been heading, according to the FAA. The search was being coordinated by the Air Force's Rescue Coordination Center in Langley, Va.

Fossett has set a number of aviation records, including the hot air balloon trip in 2002, a 67-hour around-the-world trip without refueling on the Virgin Atlantic GlobalFlyer in 2005 and the world glider altitude record, which he set with a co-pilot more than 50,000 feet above the Andes Mountains. In July, Fossett's flight accomplishments earned him a place in the National Aviation Hall of Fame.

"I'm hoping you didn't give me this award because you think my career is complete, because I'm not done," Fossett said at the July induction ceremony in San Diego, Calif., adding that he would be in Argentina in November to try to break another glider record.

Fossett, who has also broken more than 20 speed sailing records,  was reportedly in Nevada in August working on a jet racer to try to break the world land speed record.

Technorati Tags: FAA, steve fossett, Virgin Atlantic

Posted by Holly at 2:11 PM | Permalink | Comments (0)

Okay -- I'm not sure if I mentioned this here in the blog or it was in PlaneBusiness Banter, but months ago as the Delta CEO derby cranked up -- I said that my money was on Richard Anderson. (Anderson is, and has been a member of the Delta Board of Directors.)

I get a really gold star. Because this was months and months ago.

The news is scheduled to be announced after the end of the today's trading.

Ed Bastian, current CFO, moves up to President -- and Jim Whitehurst is out the door.

Anyone taking bets that Whitehurst shows up at Virgin America?

Technorati Tags: airline CEOs, airlines, Delta Air Lines

Posted by Holly at 2:38 PM | Permalink | Comments (0)

From the press release that just hit the wires:

"Midwest Air Group (AMEX: MEH),parent  company  of  Midwest Airlines, today announced that it has signed a definitive merger agreement to be acquired by an affiliate of TPG Capital, L.P.  in  a  transaction  valued  at approximately $450 million. The merger agreement  was  unanimously  approved  by  the  Midwest  Air Group Board of Directors.

Under  the  terms  of  the  agreement,  each outstanding share of Midwest's common  stock  will be converted into the right to receive $17.00 per share in  cash.  On  December  12,  2006,  the last trading day before the public announcement  of AirTran's indication of interest in acquiring Midwest, the per  share  price  of  Midwest's  common  stock  was  $9.08.  Midwest  has approximately  26.6 million shares outstanding, including shares subject to options, restricted share awards and outstanding warrants."


$17 a share. Who would have thunk it?

More follow-up tomorrow. Meanwhile, we've got to do a bit of editing.

Posted by Holly at 11:43 PM | Permalink | Comments (0)

It was reported today that Singapore Airlines is now set to take delivery of its first Airbus A380 on Oct. 15 and has set Oct. 25 as the date for its first commercial flight.

SIA says in a statement that the first A380 will be handed over to it by Airbus on Oct. 15 at a ceremony in Toulouse.

It says the first commercial flight, flight SQ380, will depart Singapore on Oct. 25 for Sydney in Australia. It will return to Singapore the following day.

Meanwhile, as had been earlier reported, tickets for that first flight will be sold on eBay. Those auctions, which will include seats in all three classes, are now set to begin on Aug. 27.

Posted by Holly at 11:26 AM | Permalink | Comments (0)

Before we sign off for this evening -- just a word of caution concerning tomorrow's market activity. According to CNBC, the Asian markets are getting "hammered" in trading that is still ongoing. Japan's Nikkei Average is down 3.5%, and the South Korean KOSPI is now down about 7% as of this posting.

The yen has also hit a five-month high against the U.S. dollar.

Methinks it's going to be a rough one on Wall Street Thursday.

Technorati Tags: airline stocks, wall street

Posted by Holly at 12:01 AM | Permalink | Comments (0)

And we only thought AirTran was out of the competition. (No, actually we didn't.)

This afternoon AirTran issued a press release in which it announced a new offer for Midwest Air Group.

"AirTran Holdings, Inc.,  the parent of AirTran Airways, today announced that, at the request of Midwest shareholders, AirTran has increased its offer for Midwest Air Group, to $16.25 per share in a negotiated merger transaction.

The offer includes $10.00 per share in cash and 0.6056 of a share of AirTran common stock. Based on the closing price of AAI on August 13, 2007, the total value of AirTran's increased offer represents approximately $445 million."

This news comes after the largest Midwest shareholder issued a statement today saying that said it was not convinced a sale to a private equity firm is a better deal than the one offered by AirTran.

Pequot Capital Management apparently told Midwest's board that it's not convinced the $16 cash offer per share from TPG Capital is a better deal than AirTran's when other factors are considered.  AirTran had previously offered $15.75 per share.

The Pequot letter filed with the Securities and Exchange Commission claimed that there are a large number of synergies available in a Midwest-AirTran deal which might not be available with TPG.

Pequot managing director Steve Pigott said in the filing that TPG and Northwest may not be able to match the growth opportunities and job creation promised by AirTran.

Not surprisingly, these were basically the same arguments given by AirTran CEO Joe Leonard in this afternoon's announcement from AirTran -- as to why their offer is a better one for Midwest.

Tickers: (NYSE:AAI); (AMEX:MEH)

Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, TPG

Posted by Holly at 4:07 PM | Permalink | Comments (0)

In May of this year, we reported in PlaneBusiness Banter that former Frontier Airlines' SVP Sean Menke had purchased a home in the Denver area. We were contacted by a couple of folks we know at Frontier who expressed the opinion that they hoped this meant Menke was going to return to the airline as the new CEO. I also assumed this was probably the case.

But then a weird thing happened. Menke was named to a new position at Air Canada.

Hmmm.

But it looks like our hunches and those of the Frontier employees were on target after all.

Today it was announced that Menke will return to the airline in September as CEO.

What is so strange about all this is that, for Frontier, it's deja vu all over again.

Menke left Frontier a couple of years ago to take a position with Air Canada. Personally, it was my belief, and still is, that Menke left because the board of directors at Frontier would not give him the CEO position.

As Frontier watchers no doubt recall, current CEO Jeff Potter did exactly the same thing. He left Frontier and became the CEO at Vanguard years ago -- after he felt the airline was dragging its heels -- by not naming him the CEO.

Well, what do you know?

My take on the news is that this is a good move for Frontier. I think Sean is a sharp guy. And, he has that major airline experience that Jeff was lacking. I also think he is probably the one person on the planet who knows Frontier the way he does. Overall, this is a good move for the airline -- which is facing big challenges on almost every flank it has.

So remember -- follow those real estate closings. Never know what you may find.

Ticker: (Nasdaq:FRNT)

Technorati Tags: airline CEOs, airlines, Frontier Airlines, Sean Menke

Posted by Holly at 11:27 AM | Permalink | Comments (0)

Looks like the assumptions about  Northwest doing a deal for Midwest were true.

Friday, AirTran's offer for Midwest was set to officially expire, but officials then had said AirTran would wait until Monday before making a final decision on an extension or change of the offer. Or a removal of the offer.

Tonight, it looks like AirTran is out, and Northwest is in, along with some help from a familiar source -- TPG.

According to a release issued late tonight, Northwest Airlines has confirmed it is a passive investor in the acquisition entity that TPG has created to pursue an acquisition of all of the outstanding shares of Midwest Air Group, Inc. at $16 per share. The bid submitted by TPG is subject to the satisfaction of "certain conditions." Total value of the offer is roughly $400 million.

The TPG offer was presented to the Midwest Air Group board of directors today.

According to the release, NWA, which is providing financing to facilitate the transaction, will not participate in the management or control of Midwest should TPG acquire Midwest. The previously announced codeshare agreement between NWA and Midwest Airlines will remain in place and the two airlines will explore cost reduction activities such as joint fuel purchasing.

And the most important part, from what we understand -- Midwest CEO Tim Hoeksema gets to stay put as the head of the new privately-held entity.

If this deal goes through, and at this point, I don't see why it won't, this will be the second major merger strike out for AirTran and Joe Leonard. Three years ago the airline lost out to Southwest Airlines as they sought  a potential deal with ATA.

And, as expected, Joe Leonard is not going down without a fight. Today he was quoted in the Milwaukee Journal-Sentinel.

"Leonard said AirTran's purchase of Midwest Air would have resulted in a big increase in air travel from Milwaukee's Mitchell International Airport, as well as a major surge in local hiring for the airline."

According to Leonard,  "Instead, the Midwest board has chosen a path that will benefit current senior management by selling out to a private equity firm and a so- called 'passive' investor whose involvement will surely raise antitrust concerns, casting doubt for shareholders on whether a transaction can, in fact, close," Leonard said, referring to Northwest's involvement."

He continued, "Furthermore, private equity investors are laser focused on generating short-term returns and the only way to accomplish that goal is to slash costs by cutting back on service and eliminating jobs," Leonard said. "If the Midwest board is successful in selling the company to a private equity investor, the Midwest employees should be concerned about their job security and Midwest's customer service is sure to suffer."

Reports tonight say a formal agreement is expected to be announced by Wednesday.

Tickers: (AMEX:MEH), (NYSE:NWA), (NYSE: AAI)

Technorati Tags: airline CEOs, airlines, AirTran, Midwest Airlines, Northwest Airlines, TPG

Posted by Holly at 12:34 AM | Permalink | Comments (3)

Midwest Air Group announced tonight that it has entered in to an agreement with TPG Capitol to sell the Milwaukee-based airline holding company for $16 per share in cash. This comes just hours after AirTran allowed its hostile tender offer to expire.

No mention was made of any other investors, such as the "passive" investor mentioned by AirTran, in Midwest's statement, but The Milwaukee Journal Sentinel is reporting that the investment group does include Northwest Airlines.

AirTran's offer was valued at $15.75, a mix of cash and AirTran stock. Midwest Air Group is the parent of Midwest Airlines and Skyway Airlines.

We're still waiting for comments from Chip the Cookie, the Midwest Airlines mascot.

[Read "Private equity group to buy Midwest Air" at The Milwaukee Journal Sentinel.]

Posted by Jonathan at 10:06 PM | Permalink | Comments (0)

Usually Sunday night is fairly quiet for airline news, but we see now that AirTran has issued a press release stating that their tender offer for Midwest Air Group has expired.

AirTran's language indicates that its not the end of this soap opera as another suitor or suitors, private equity and a "passive" investor, are going to be the winners of the Milwaukee cookie race. Rumors about an investment from Northwest have abounded in the last week.

Milwaukee news outlets are indicating that we should hear more from Midwest tonight. Stay tuned.

[Read "AirTran halts negotiations with Midwest" at The Milwaukee Journal Sentinel.]

Posted by Jonathan at 9:49 PM | Permalink | Comments (0)

Next time you fly not only will you have to pull out your laptop and put it in a grey plastic bin, but you'd better put most any other electronic device you carry in there as well.

True?

False?

True. Only don't expect the TSA officials to know what the hell is going on for the next few days. And we all know what that means.

According to Joe Brancatelli this morning,  effective at 12:01 a.m., Saturday, August 4, "the TSA will require travelers to remove the following items from their carry-on bags and submit them for separate screening: video games, video cameras, DVD players and CD players. They will now be treated like laptop computers. You'll have to remove them from your carry-on and run them separately through the X-ray machines."

And yes, I'm sure the airlines are cursing the TSA under their breath this morning. According to a couple of folks we pinged this morning, nobody was given advance notice of the new rules.

Posted by Holly at 12:17 PM | Permalink | Comments (1)

Midwest Airlines said this afternoon in a statement that it has entered into confidentiality agreements with four potential suitors. Yes, four. (Okay, so we only show two in our pictorial. The other two must be in the closet.)

Yes, I would imagine this means AirTran and three other parties that will remain unnamed. For the time being.

Anyone else think the recent events  at Frontier may be somehow related to the goings-on at Midwest? That bigger fish eating the smaller fish eating the tiny fish syndrome as I was talking about in PBB last week?

Okay so it's Friday and I'm in my conspiracy mentality.

More later. PBB is in final edits. We should post no later than 6 p.m. CDT.

Ticker: (AMEX:MEH)

Technorati Tags: airlines, AirTran , Midwest Airlines

Posted by Holly at 4:20 PM | Permalink | Comments (0)

Late, after-close press release tonight announcing the departure of Frontier Airlines' CEO Jeff Potter. According to the release,

"Frontier Airlines Holdings, Inc. (Nasdaq: FRNT - News) today announced that its President and Chief Executive Officer, Jeff Potter, will resign to accept a new position outside of the airline industry. Potter has been Frontier's President and CEO since April 2002 and has been with Frontier in various capacities since 1995. Potter's new position will be announced next week and his resignation will be effective after Frontier's annual stockholders meeting on September 6, 2007. The Frontier Board of Directors has commenced a search for his successor."

Potter, who according to the release has accepted another position outside of the airline industry, will remain a member of the airline's board of directors.

Whoa boy. This is one CEO position that I would not want to take on. The airline, which is on our PlaneBusiness Titanic Watch, just announced yet another set of weak quarterly earnings numbers last week.

Ticker: (Nasdaq: FRNT)

Technorati Tags: airlines, Frontier Airlines

Posted by Holly at 9:10 PM | Permalink | Comments (0)

Not directly airline related, except that we have a lot of readers in the MSP area -- the I-35W bridge going across the Mississippi River in Minneapolis collapsed sometime after 6 p.m. CT. The bridge apparently connects the University of Minnesota area and the Metrodome. (And yes, the Minnesota Twins are playing at home tonight.)

Unfortunately reports say the bridge collapsed during the height of rush hour, when traffic was apparently "bumper to bumper."

Posted by Holly at 7:35 PM | Permalink | Comments (0)

Hot off the presses.

"The Board of Directors of Southwest Airlines today announced details of its new employment contracts with Executive Chairman Herb Kelleher, President and Corporate Secretary Colleen Barrett, and Vice Chairman and CEO Gary Kelly.

    -- Herb Kelleher, 76, will continue as Executive Chairman of the Board for
      one year and will step down from that position at the Company's 2008
      Annual Meeting of Shareholders.  Kelleher is a Founder of Southwest
      Airlines and has served as Executive Chairman since 1978.  From 1981
      through June 2001, Kelleher also served as President and CEO of
      Southwest Airlines.
 
-- Colleen Barrett, 62, will continue as President for one year and will
      step down from that position on July 15, 2008.  Barrett has served as
      Secretary of the Corporation since 1978; Vice President Administration
      from 1986 to 1990; Executive Vice President Customers from 1990 to
      2001; and President since 2001.

-- Gary Kelly, 52, will remain as CEO with a contract expiration date of
      February 1, 2011.  Kelly began his career at Southwest Airlines as
      Controller in 1986; was named Vice President Finance and CFO in 1989;
      Executive Vice President and CFO in 2001; and CEO and Vice Chairman in
      July 2004.
 
After relinquishing their current management and Board positions in 2008,
Kelleher and Barrett will remain for five years as Employees of the airline
they nurtured from the very beginning, working fulltime at the Company's
Dallas headquarters.

    "After 41 years as an Officer and Director of Southwest Airlines, I will
be resigning from those positions as of our Shareholders' meeting in May
2008," Kelleher said.  "Why?  Because our organizational transition that began
in 2001 will then be complete and because I have unalloyed respect for, and
confidence in, our CEO Gary Kelly and his superb cadre of Southwest Officers.
Southwest's future is bright -- and so are they!

    "The People of Southwest have always been my pride, my joy, and my love.
Their indomitable dedication and esprit de corps have taken Southwest from a
three-airplane dream to a 500-airplane reality.  I am grateful that I will
continue to have the opportunity to work with our People and to bask in their
good humor and excellence for many years to come," he said.

    Barrett said, "Though I will be resigning as Corporate Secretary and a
Board Member as of our May 2008 Annual Shareholders' meeting and from my
management position (i.e., President) as of July 15, 2008, I am delighted that
I will still be able to practice/follow my Customer Service passion and
continue the work that I absolutely LUV:  serving the Internal and External
Customers of Southwest Airlines.  Southwest is characterized by the high
spirits of its Employees and its industry leading Customer Satisfaction
record.  The 'business of business' is ultimately about People, and I am very
proud of the fact that Southwest's humanistic focus has served as a luminous
beacon in this respect.

    "I have been very blessed over the last 40 years of my career -- blessed to work with -- and for-the most caring, most altruistic, and most giving People that anyone has ever been fortunate enough to meet.  Those years have been a true 'Labor of LUV.'  My heart tells me it is time to allow the next generation of SWA Leaders their day to lead.  I have always thought that one of the best traits of a Leader is to know when to follow.  And, I am looking forward to following the example set by this new Leadership generation and to continuing 'to live the Southwest Way' for several more years," she said.

    Kelly said both Kelleher and Barrett have helped make Southwest Airlines
one of the most studied corporate success stories in the history of American
business.

    "I, along with all of our 33,000 Southwest Employees, will be forever
grateful for Herb's visionary Leadership and gritty entrepreneurship," Kelly
said. "Corporate America knows that Colleen is the force behind our cherished
family culture and enviable Customer Service record."

    "I know every Employee joins me in promising Herb our continued dedication
to the cause he loves -- giving Americans the Freedom to Fly and providing job
security and a great place to work for our Employees," he said.  "I am
grateful to both of them for their friendship, mentorship, and commitment to
the future success of Southwest Airlines.  We are all fortunate to continue to
have them as an important part of our Southwest Family."

Ticker: (NYSE:LUV)

Posted by Holly at 2:29 PM | Permalink | Comments (0)

The APA Hotline just gave us the final numbers on the election:

"For President, Captain Lloyd Hill received 4,573 votes and Captain Ralph Hunter received 2,180 votes. 

For Vice President, First Officer Sam Bertling received 2,068 votes and Captain Tom Westbrook received 4,665 votes. 

For Secretary-Treasurer, First Officer Jim Eaton received 2,723 votes and Captain Bill Haug received 3,986 votes."

Not as close as I had thought would be the case.

Just a side note. The new officers don't have much time to slack-off. They take office effective July 1.

Oh boy -- this should be interesting.

Posted by Holly at 6:08 PM | Permalink | Comments (0)

Here you go. Here are the final results for the APA elections. All three candidates on the Unity2007 ticket that included current President Ralph Hunter were defeated.

President – Lloyd Hill

VP – Tom Westbrook

Sect/Treasurer – Bill Haug

Ticker: (NYSE:AMR)

Posted by Holly at 5:50 PM | Permalink | Comments (0)

From an American Airlines' pilot reader we hear that with DFW and ORD votes still out --  challenger Lloyd Hill is about 1900 votes ahead of current APA President Ralph Hunter.

If this count is correct it would mean that Ralph would have to carry both domiciles with about a 90% vote.

Don't think this is going to happen.

We'll keep you posted.

Posted by Holly at 5:33 PM | Permalink | Comments (0)

United Airlines' flights  were grounded across the country for hours this morning because of a computer failure.

Reports say that the computer system, based in Chicago, which calculates weight and balance for departing flights shut down. At one point this morning there were only five United flights in the air, according to several media reports.

United now reports that the system is back up and flights are back up in the air, but "delays are expected to continue throughout the day."

Ahhh, I'd say that might be a little optimistic considering that the entire United fleet was essentially grounded for more than two hours this morning. If I were you, I'd just cancel that flight and tell your business partners you'll  see them when United can reschedule you.

Ticker: (Nasdaq:UAUA)

Posted by Holly at 11:49 AM | Permalink | Comments (0)

For those of you who are PBB subscribers, you will recall that when Frontier Airlines announced their "shuttle" service between LAX and San Francisco last year, we were not big fans of the idea. Too much competition, not enough market "heft" for Frontier to pull it off.

Today, the airline sent a note to employees telling them that the LAX/SFO shuttle service will be discontinued on July 10.

Just one year and about 10 days after they started it.

Frontier Airlines is, reluctantly, on our PBB Titanic Watch. We put airlines on the list that we feel are in either strategic or financial difficulty.

Ticker: (FRNT:Nasdaq)

Posted by Holly at 3:33 PM | Permalink | Comments (0)

Not sure if this one has legs or not, but a couple of folks have written to us tonight to let us know that word on the street is that Ron Reber, President and COO of SkyWest is headed over to Virgin America to replace Fred Reid.

Anyone have any more information?

Ticker: (Nasdaq: SKYW)

Posted by Holly at 12:02 AM | Permalink | Comments (0)

CNN reports that U.S. crude oil futures briefly spiked over $5 a barrel in electronic trading late Tuesday on rumors that Iran had fired on U.S. Navy warships.

Crude gave up most of those gains according to one trader after reports of a confrontation were denied.

U.S. light crude for May delivery jumped $5.18, or about 8%, to $68.91 a barrel in electronic trading before giving back most of those gains to trade at $64.40 a barrel, $1.47 above Tuesday's settle price on the New York Mercantile Exchange.

"We have no information at this time that an incident has taken place in the Gulf," Gordon Johndroe, a spokesman for the National Security Council, said about reports of a confrontation between Iran and U.S. Navy warships.

Posted by Holly at 9:51 PM | Permalink | Comments (0)

Well, maybe. I'll believe all of this when I actually see it happen. But it does seem we passed a major milestone in the bigger fight today.

The European Union today entered a deal with the United States that will boost competition and the number of passengers flying across the Atlantic, but said the accord was only a first step to prise open the US air travel market.

Under the so-called "open skies" agreement - the first of its kind - EU air carriers will be allowed to fly from any airport in the 27- member EU bloc to any airport in the US and vice versa.

The accord will replace bilateral pacts between the US and EU countries, ruled as illegal by the EU's highest court.

German Transport Minister Wolfgang Tiefensee, whose country currently holds the rotating EU presidency, hailed the unanimous agreement as a "breakthrough" for trans-Atlantic aviation ties.

However, he acknowledged that the deal was only second-best for the EU, as it did not fully open the trans-Atlantic air travel market.

EU ministers said they were poised to immediately start negotations on a second deal with the US in a bid to gain more access to the closed US market.

For the rest of the story, please click here.

However, at Britain's request, EU ministers agreed to delay plans to implement the deal from October this year to March 2008.

The UK had raised concerns that open skies reform did not go far enough on US airline ownership rights.

As most of you are aware, the US has insisted on limiting any foreign company from owning more than 25% of a US airline's voting rights.

This is a huge deal folks. Especially for the cargo carriers. I'm sure the champagne is apoppin' at FedEx, even if their numbers yesterday left a little to be desired.

One thing is for sure. It should certainly make for a very entertaining 12 months as the details of how this "big picture" change will be implemented in practice.

Kicking off that line of thinking this morning was Continental, which immediately filed with the U.S. Department of Transportation for rights to serve new routes to Europe, including a Houston-Heathrow route and a Cleveland-Paris route.

Bada Boom, Bada Bing. Let the fun begin!

Posted by Holly at 12:14 PM | Permalink | Comments (0)

Goodness knows I have not always been a fan of Gerald Grinstein at Delta Air Lines. I've questioned a number of his decisions over the last couple of years, and I have wondered why he didn't do more at the airline when he was on the board of directors to change the direction in which the airline was headed.

But it's hard to find fault with the airline's proposed management compensation plan that was filed in bankruptcy court today.

Unlike the top-exec bloated compensation plan that management at United Airlines put forth, and largely saw remain intact after the airline came out of bankruptcy protection, Delta Air Lines is not going down that path.

Unlike United's Glenn Tilton, who could walk away with as much as $60 million from the United bankruptcy, Delta's Grinstein apparently will walk away with no additional stock options whatsoever.

In addition, the airline will pay all of its non-union employees about $480 million in stock and cash when it emerges from Chapter 11, plus a July 1 pay raise and future profit sharing awards. Pilots have a separate deal with similar elements.

Delta says the immediate stock and cash payout will be worth close to $13,000 for a typical worker if they sell the stock immediately.

More in this week's PBB after we've read the rundown of the executive payouts. But again, kudos to Gerald Grinstein.

Tickers: (OTC: DALRQ), (UAUA:Nasdaq)

Posted by Holly at 9:29 PM | Permalink | Comments (0)

For Hire: Ex Airline CEO and President. Completely flexible. Can dress up or dress down -- depending upon the company culture and opportunity. Please call Fred Reid.

Virgin America has been given the okay to fly by the DOT.

But, as anticipated, not without restrictions.

Those restrictions include:

"**Requiring that the disinterested directors on the Virgin America board (that is, U.S. citizens) separately approve of the appointment or replacement of the trustee of Virgin Group's shareholdings.

**Amending the voting trust agreement to require that the Trustee vote its shares proportionally to the other shareholders as to any matter that, in the opinion of the U.S. investor directors, creates a conflict of interest between the interests of Virgin Group and that of U.S. shareholders.

**Modifying the Virgin Trademark License Agreement to remove certain geographic and operational restrictions on Virgin America and the requirement that it pay royalties to the Virgin Group should the applicant conduct operations independent of the Virgin name.

**Confirming that the current CEO has terminated employment with the applicant within 90 days of the certificate being issued and any follow-on consultancy within 180 days following termination of employment.

**Submitting copies of all executed and signed agreements prior to certification.

**Reporting to the Department in advance if any additional loans (or other debt funding) are to be provided to it from the Virgin Group."

Whew. I'm kind of surprised that the DOT took the airline up on its "sacrificial offering" to fire Reid. I'm also not sure if Richard Branson is going to be too happy about the restrictions to be placed on the Virgin Trademark License Agreement.

Then again, I guess if I were Virgin, I'd probably go with the deal and work out any infractions or problems after the fact.

Though the decision is tentative, the DOT's rulings in such matters have historically not been overturned. The DOT said "interested parties may file an objection to the proposed decision within 21 calendar days."

It wasn't immediately clear just how soon Virgin America would begin flying after the obligatory 21-day period has passed.

Posted by Holly at 4:23 PM | Permalink | Comments (1)

Thanks to a PBB subscriber who took the time yesterday to alert us to this interesting piece of news, tagged with a subject line entitled, "Holy Crap!"

Subject lines like that usually pique my interest.

According to media reports out of Vancouver late yesterday, Dr. David Ho, heir to the Hong Kong tobacco fortune and head honcho of Vancouver - based Harmony Airways was pulled over by Vancouver Police at 5:30 a.m. a couple of days ago in Vancouver's seedy east side for erratic driving.

With Dr. Ho in his Porsche Cayenne were apparently two, er, ladies of the evening and, oh yes, a bag of "what was believed to be" crack cocaine was found on the rear seat.

Dr Ho, who has, according to the media report, made numerous donations to the Vancouver Police Dept. over the years, was overheard by the officer involved calling the VPD Chief and asking him" to do something" about the issue.

Harmony currently has four 757's, but is dropping back to three in April. The airline is pretty much getting hammered financially.

Conventional wisdom in the Canadian market has been that Ho wants out but does not want to incur loss of face in the very large Vancouver Chinese community.

As our subscriber said, "You gotta believe getting caught on the east side of downtown Vancouver at 5:30 a.m. with some lovely ladies and a bag of rock pretty much ensures loss of face."

If not more.

Posted by Holly at 10:35 AM | Permalink | Comments (3)

Oh boy. Here we go again.

Business Week in its Feb. 26 issue, reports that AMR, parent of American Airlines, may be a buyout target of a group including Goldman Sachs and British Airways.

The proposed bid is said to be between $9.8 billion, or $46 a share, and $11.1 billion, or $52 a share, according to the magazine.

Sources say it is uncertain that a bid for the company will materialize.

Neither Goldman nor British Airways would comment on the matter to BusinessWeek. AMR told the magazine that while it has lots of conversations, it doesn't comment until discussions result in substantial outcomes.

Sounds familiar.

Just an aside. Earlier today, Goldman Sachs analyst Robert Barry cut his rating on AMR to "neutral" from "buy" saying the stock is now up about 20% since he began coverage of the stock in November.

Barry said he doesn't anticipate shares to rise much further ahead, especially given expected labor talks and costly plane replacements ahead.

Heh. Wonder if this means the investment banking department at Goldman doesn't talk to its analyst -- or does this mean the deal is now dead, so Robert decided it was time to lower his rating on the stock?

I know. I'm so jaded.

Can't help it.

On another front, over the years Business Week has published a couple of "rumors" concerning this industry that were simply that. And nothing more.

So I'd say, "Don't get excited -- yet."

Posted by Holly at 7:10 PM | Permalink | Comments (0)

Lamar Muse, the feisty, controversial, egotistical, and always opinionated co-founder of Southwest Airlines, died late Monday in Dallas after a battle with lung cancer.

Muse, who was still feisty until the end -- contributing regularly to an airline industry email list from a rehabilitation facility in Dallas after having undergone treatment for the cancer -- was, along with Herb Kelleher and Rollin King, one of the three founders of Southwest Airlines. Or Air Southwest as it was originally dubbed.

As Terry Maxon mentioned in his article on him today in the Dallas Morning-News,

"In early 1973, Braniff began offering $13 fares on Southwest’s routes, a half-price fare that threatened to steal many of Southwest’s customers. Southwest and Mr. Muse responded with large newspaper ads proclaiming: "Nobody is going to shoot Southwest Airlines out of the sky for a lousy $13."

Southwest gave travelers a choice: They could fly on a full $26 fare and get a free bottle of liquor, or get the $13 fare. The offer boosted ridership so much that Mr. Muse later credited the Braniff offer for Southwest’s eventual financial success."

Just one of many, many stories out there.

But, as Southwest grew in the 70s, so did tensions between King and Muse. Not surprising -- given the egos involved. Finally, in March 1978, Muse thought he would force a showdown with King, after which the board of directors would choose Muse over King. Muse submitted his resignation.

Big mistake, as Muse admitted later.

The board accepted his resignation and named Herb Chairman of the Board. Bye bye Lamar.

What many people may not remember is that later that same year, Southwest named Howard Putnam (yes, the same Howard Putnam who starred in the infamous Bob Crandall recorded telephone conversation) the airline's President and CEO.

Putnam would leave for Braniff and his date with airline anti-trust history in 1981. It was then that Herb became CEO of Southwest.

Muse, meanwhile, along with his son, started Muse Air in 1981. Given the circumstances, it was nicknamed, "Revenge Air" at the time. The airline was eventually sold to Southwest, which shut down the remains of the carrier in August 1987.

Posted by Holly at 2:02 PM | Permalink | Comments (1)

Oh, boy. I can upload graphics again. Yes, we had some kind of little technical glitch with the program we use to upload stuff yesterday. Hence, we were graphic-less.

Horrible state to be in.

How is everyone today, on this, the 31st day of January?

This date is significant, in that tomorrow had been the deadline US Airways had given Delta's creditor's committee to get its act together and either allow US Airways to move forward on its merger proposal or not.

According to reports this morning, and confirmed by a US Airways' official statement about 10 minutes ago, the deal from US Airways is now off the table.

From that release:

"We received word earlier today that Delta’s Official Unsecured Creditors’ Committee would not be able to meet our demands by the Feb. 1, 2007 deadline. As a result, we have withdrawn our offer to merge with Delta Air Lines. While we are disappointed that the Committee has chosen to ignore its fiduciary obligation to Delta’s creditors, we are excited about our future and proud of our team’s performance during this process."

Ticker: (NYSE:LCC)

Posted by Holly at 11:31 AM | Permalink | Comments (0)

Just never know what a Thursday is going to bring, do you?

Today it was reported that Pinnacle, the Northwest Airlines' regional with a newly rejuvenated life -- thanks to Northwest -- is buying smaller fry Colgan Air.

Heh. I flew on Colgan Air twice. And you know, nothing personal to the fine folks at Colgan, but that was enough for me.

The most interesting thing about this news is that Colgan currently flies for United, US Airways and Continental.

So what does all this mean? Hmmm. The twisted turbine is in high gear over this move.

You can read about it here.

Posted by Holly at 12:53 PM | Permalink | Comments (0)

No surprise here.

MarketWatch reports tonight that the Unofficial Committee of Unsecured Claimholders of Delta Air Lines has officially urged the airline to "provide thoughtful and unbiased consideration" to the new bid from US Airways.

The committee said it believes the best interests of shareholders will be served if Delta takes steps such as providing "reasonable and customary access" for US Airways to perform due diligence, and postponing Delta's Disclosure Statement hearing scheduled for Feb. 7 to allow Delta to fully evaluate US Airways' proposal.

Posted by Holly at 8:10 PM | Permalink | Comments (0)

Before we left on our holiday hiatus, we mentioned in PBB that we thought the next "major" news we would hear concerning a potential merger link-up would involve Northwest.

Well, sometimes things take time to come to fruition.

Today the Wall Street Journal is reporting that the two airlines are discussing a potential merger, perhaps "after bankruptcy."

Not sure why they would want to wait -- but that is the word this afternoon.

As for the logistics of such a deal, analyst David Strine with Bear Stearns wrote in November,

"All told, the combination would create a massive airline with global reach, better able to harness the power of the SkyTeam alliance as both DAL-Air France and Northwest-KLM separately have transatlantic anti-trust immunity., While the international networks are reasonably complementary, there is no domestic overlap between the carriers' top 20 city pairs. Further, the fleets have one plane type in common and nine that differ. Finally, the pilots are both represented by ALPA, and none of Delta's other major [employee groups] is unionized, a potential boon for Northwest. "

Posted by Holly at 2:31 PM | Permalink | Comments (0)

Monday we wrote about the additional financial heft US Airways had put in place as it was announced Morgan Stanley had been added to its merger finance team. Today, as expected, that increased financial heft manifested itself in a "sweetened" deal for Delta Air Lines.

US Airways this morning raised its bid for Delta from $4 billion and 78 million shares to $5 billion and 89.5 million shares. Terms of the deal? The new offer will expire on Feb 1 unless US Airways receives creditor support for the commencement of due diligence, there is an HSR filing, and the currently scheduled Feb. 7 hearing on Delta's disclosure statement is postponed.

Gary Chase, analyst at Lehman Brothers wrote this morning, the "new deal terms [are] very much in line with current bond prices which had advanced well beyond initial LCC deal terms. Offer value is $10.2 billion based on last night's close to a comparable Delta stand-alone valuation, in our view, of $8-9.5 billion."

Ticker: LCC:NYSE

Posted by Holly at 10:51 AM | Permalink | Comments (0)

From MarketWatch:

"A federal bankruptcy judge has ruled that Comair can impose wage cuts and other changes in work rules on its 1,500 pilots, according to a report after Thursday's closing bell. Judge Adlai Hardin gave the regional airline permission to throw out its contract with the pilots, the Associated Press reported. Comair is a subsidiary of Delta Air Lines Inc. Earlier this month, the pilots, represented by the Air Line Pilots Association, voted to authorize a strike if their contract was rejected by the court."

Posted by Holly at 4:22 PM | Permalink | Comments (0)

Yesterday bad weather was the name of the game at DFW, before the storm that is now socking Chicago moved East.

Needless to say, for American, considering that both St. Louis and Chicago are now out of the mix, DFW has been pretty much a nuthouse this morning.

And that was before the power went out.

Yep. Just had two confirmations that most of the DFW Airport now has no power.

The outage apparently includes the control tower.

Oh boy.

Posted by Holly at 12:10 PM | Permalink | Comments (0)

Investment bank Macquarie Bank and private equity firm Texas Pacific Group have proposed buying out Australian airline Qantas Airways in a deal that could be worth more than A$10 billion ($7.7 billion). News of the potential deal pushed Qantas shares up as much as 21%.

The deal would apparently involve Macquarie taking a 25% stake in Qantas, other Australian investors taking 25%, Qantas senior management 1% and international players led by Texas Pacific Group taking the rest, according to a story in the Australian Financial Review.

This ownership mix would allow the consortium to get around current ownership restrictions that limit one individual entity to no more than 25% of the airline, and international interests collectively owning no more that 49%.

To protect landing rights at airports around the world, Qantas would have to remain majority-owned by Australians, as take-off and landing rights are negotiated between countries.

Analysts told the Financial Review that Macquarie could sell Qantas aircraft to Macquarie's aircraft leasing business and put Qantas's terminal assets into Macquarie Airports.

My only comment is this. If a private deal can be put together for Qantas, it can be put together for a major U.S airline just as easily.

Posted by Holly at 11:09 PM | Permalink | Comments (0)

I admit. I'm still trying to digest it.

Then again in June, I wrote this in PlaneBusiness Banter in a column on the value of mergers:

"Last week, [US Airways CEO Doug] Parker kind of made sure everyone was awake at his dinner in New York [at the Merrill Lynch Transportation Conference] when he made the comment that they, US Airways, were looking at any and all opportunities. As he said, "This situation [with two majors in bankruptcy] is a once in a lifetime opportunity."

So, throw US Airways in the pot as well. Frankly, I like the thought of a Delta/US Airways combination. I think it could work. But it would only work if Delta was completely and totally reconstructed. It would also probably have to be set up more like a "parallel" deal -- something akin to a Southwest/ATA arrangement.

Money? US Airways could get it.

For that matter, the old issue of "box of rocks" thinking should no longer be an issue for Continental management and Delta. There are not many "box of rocks" thinkers left at Delta. "

Oh boy.

Fast forward to this morning when it was announced that US Airways (LCC:NYSE) has made an offer to Delta creditors that would involve both equity and cash -- for a total of $8 billion. The deal would be a merger, and the resulting entity would be named, "Delta." ("New" Delta, I suppose would be more technically correct.)

Needless to say this blows the content in-the-works for this week's issue of PBB.

A few quick things -- as we'll no doubt be talking more about this in the coming days and weeks.

First -- strictly from a creditor perspective, the deal is a pretty good one.

Two -- given this alternative, will Delta continue to maintain that it wants to remain independent?

Three -- yes, it's a nightmare of logistics. I mean, where do you start?

Four -- from a regulatory perspective, this deal would undoubtedly see capacity pulled from the East Coast -- and the Shuttle would have to be sold.

Interestingly, because of the new opportunities for other airlines the merger would open up -- major competitors might not be that opposed to the deal.

The scope of it boggles my mind.

Posted by Holly at 10:46 AM | Permalink | Comments (2)

Only a week before Thanksgiving, American Airlines (AMR:NYSE) is apparently scrambling to work through a maintenance snafu that has seen tens of its MD80s grounded in various locations around the country because of fuel contamination problems.

From what we understand, American Airlines' maintenance crews improperly prepped fuel tank access doors of the affected aircraft before painting them.

The mistake then apparently caused the paint to contaminate the fuel filters of the aircraft.

We understand that American Airlines was forced to ground 54 of its approximately 300 MD80s on Friday and as of yesterday, there were still a fair number of aircraft parked around the system.

Needless to say, not even considering the cost of repairing the actual problem, this has become a costly mistake for American, as thousands of travelers have had to be compensated and/or rerouted since the aircraft were pulled from service.

Given the date, it's going to become even more costly if the airline can't get those aircraft back up and flying soon.

Posted by Holly at 3:04 PM | Permalink | Comments (0)

Sources say that the aircraft that crashed into a high-rise condominium in New York City this afternoon was owned by pitcher Corey Lidle of the New York Yankees.

It is also reported that Lidle was piloting the plane at the time of the crash.

The aircraft was apparently a Cirrus SR20, which was capable of carrying four passengers.

It is not clear how many people were onboard the aircraft.

Posted by Holly at 5:51 PM | Permalink | Comments (0)

Breaking news from New York City, where a small fixed-wing aircraft has apparently crashed into the Belaire Condomiums -- located at 524 E. 72nd Street -- close to the intersection of York Street.

The FBI says at this point there is no indication of any terrorist links to the crash.

Posted by Holly at 4:58 PM | Permalink | Comments (0)

Just in case you thought there were more important things for our fine friends in Washington DC to deal with this week, on Friday both the House and Senate approved the compromise agreement brokered by Dallas, Fort Worth, American Airlines (AMR) and Southwest Airlines (LUV).

AMR's website only appears to be updated during waking hours on Amon Carter Boulevard, so we can't actually link to their press release, but the Fort Worth Star-Telegram wasted no time posted an update to their website.

I'm sure this comes as good news for most of the parties involved, and while the language blocking an anti-trust review seems to have survived, I wouldn't be breaking out the silver party hats just yet. There's still a lawsuit pending against the City of Dallas by the owners of the former Legend Terminal, and this road has been far too long and winding for me to really believe that the end of the Wright Amendment could actually be near.

Then again, near is a relative term, when you consider the fact that today's high school freshmen class will be seniors in college when the restrictions are actually lifted.

Posted by eolesen at 11:09 PM | Permalink | Comments (0)

This is certainly not a good way to wake up on a Sunday morning when I'm supposed to be on vacation.

Or any morning for that matter.

I thought tracking Hurricane Ernesto yesterday was bad news enough. But while news about his future exploits seem to be more favorable to those of us in the New Orleans area this morning, unfortunately there was bad news of another kind.

This morning Comair flight 5191, which was on its way from Lexington, Ky., to Atlanta crashed shortly after take-off. The flight had 47 passengers and three crew members. One report says there is one survivor. Other reports say all aboard were killed in what was described as a "fiery" crash.

The aircraft was apparently a Bombardier CRJ-100.

As the Associated Press reminded us this morning,

"The crash marks the end of what has been called the "safest period in aviation history". There has not been a major crash since November 12, 2001, when American Airlines Flight 587 plunged into a residential neighborhood in the Queens borough of New York City, killing 265 people, including five on the ground.

On January 8, 2003, an Air Midwest commuter plane operated by Mesa Air Group crashed on takeoff at Charlotte/Douglas International Airport, killing all 21 aboard.

Last December, a seaplane operated by Chalk's Ocean Airways crashed off Miami Beach, Florida, when its right wing separated from the fuselage shortly after takeoff, killing the 18 passengers and two crew members. That plane, a Grumman G-73 Turbo Mallard, was built in 1947 and modified significantly in 1979."

Posted by Holly at 9:59 AM | Permalink | Comments (0)

Okay folks, I'm writing today, so I can't get into this too much right now, but here's the gist of U.S. Bankruptcy Judge Alan Gropper's decision concerning Northwest Airlines' request for an injunction against the AFA.

No. Nada. Zip.

The AFA's right to strike has been upheld, as Gropper has denied a request from Northwest for an injunction that would have prevented the Northwest flight attendants from striking.

Posted by Holly at 12:27 PM | Permalink | Comments (0)

TOKYO -- At least one U.S. domestic airline, Alaska Airlines (and corporate sibling Horizon), is advising passengers to just check all bags and avoid extra hassle at the security checkpoints.

Checkpoints?

Yep.

The TSA announced that random screenings at the gate will start today for all flights, not just those headed to Great Britain. The move harkens back to the post-Sept. 11, 2001 "random" security screenings that passengers endured at the gate before boarding flights.

"We recognize that many of our customers prefer to carry their luggage onboard," said Steve Jarvis, Alaska Airlines' vice president of sales and customer experience in a press release issued late Thursday night by the airline. "However, we also are striving to minimize flight delays. We plan to maintain our scheduled departure