Yes, there was a line about this at the bottom of their earnings release. I just blew right past it.

Thank you again to our reader friend at Continental for the news. No wonder I couldn't find the audio of the call, much less the transcript.

That's a shame. There should be a rule against canceling an earnings call when another airline is trying to buy your airline.

Don't you think?

Just an update for PlaneBusiness Banter subscribers. As per our new schedule, which allows us to comment on end of week Wall Street activity and numbers, we will be posting this week's issue tomorrow. I think that will pretty much be the standard schedule going forward -- as subscribers seem to like the fact that it allows me to comment on the markets in a more timely fashion.

Still waiting on an earnings call transcript for Air Canada and ExpressJet though. I may wait and talk about them in more detail next week. We'll see.

Talk to you guys later. Have a great weekend. And give our best to your Mom on Sunday. Just don't take her out to eat. Worst day in the world to go out and eat.

Make something yourself. She'll love it. No matter what it is. And if she doesn't, well, then next year take her to some crowded brunch somewhere with cold roast beef, wilted vegetables and rubber chicken.

At least you will have tried to do the right thing!

Looking at this news today, and absorbing all that has been swirling around the industry this week, including the testimony of both Northwest and Delta Air Lines' execs on Capitol Hill this week, I think there are some things that need to be said.

This week Steve Wallach, chairman of the United MEC of the Air Line Pilots Association issued a statement that said, "We are aware of continued speculation in the media of a possible merger between United Airlines and US Airways, and have serious concerns that the highly touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality," Wallach said. "We therefore believe that a merger with US Airways should be a last resort and not a first choice for United."

I've been thinking about this statement.

First, who has been touting the "financial benefits" to a merger between US Airways and United?

I certainly haven't heard any, and you sure as heck haven't heard anything remotely close to this coming from Doug Parker or Glenn Tilton.

At least not yet.

So I'm not sure what benefits he's talking about, nor what assumptions. I think it's kind of hard to judge anything until you have something in front of you to pick apart. This smacks to me of the pronouncements from the Delta MEC when US Airways tried to do a deal with Delta. Before the details of the deal were even delineated, the MEC was out trashing it.

And why wasn't the United MEC making similar comments about a potential deal with Continental Airlines? Probably because the pilots at United were too mesmerized with the possibility they could bump up to the Continental pilots' pay rates. As this tidbit was mentioned to me by more than one United pilot -- I have to assume this was the case.

As to his comment that a merger with US Airways should be a "last resort," and not a first choice, I have to really scratch my head on this one.

Steve, Continental Airlines management has rejected a merger with your airline. There are no other reasonable potential partners out there. The out-of-bankuptcy financing package that United entered into when it exited bankruptcy was predicated on a merger or buyout occurring. The airline is too leveraged not to do a deal.

Did you look at the first quarter earnings report from United?

If you did, it should be pretty clear that if things stay "status quo" the airline is going to blow through whatever cash it now has (minus that nice shareholder Christmas present in December) in no short order.

In a perfect world, I don't think anyone would be looking to mergers as an answer to a problematic airline industry. Unless it was maybe those greedy investment bankers.

But this is not a perfect world.

In fact, I'd argue that with oil prices in this range, we're looking at the worst possible world for an airline to make a buck.

We're talking survival here.

And I think that all employees of this industry need to understand that union squabbles and pay rates and everything else are going to have to take second seat to something else -- survivability.

Oh, don't get me wrong. I'm the one who annointed United's Glenn Tilton as the Master of Greed. He received his own special award from PlaneBusiness Banter for it. And I think management at United has not done enough to overhaul its underlying operation. And they did little that required heavy lifting during bankruptcy -- except try and wrangle an ATSB loan and do away with their employee pensions.

But we all have to understand that we have to start looking at airlines as big companies with big infrastructure costs, and lots of moving parts. Some of those parts are making money and some aren't. Some made money at $60/barrel oil. Some still made money at $90/barrel oil. But most of them are not going to continue to make money at $125 or $130 barrel/oil or higher.

When it gets right down to it, the parts that are making money are going to be kept, and the parts that aren't, are going to have to be divested, put on a shelf, or parked in Arizona.

Passengers are going to have to get used to higher fares and fewer flights.

And airline employees are going to have to understand that we should not be surprised if we see airlines pulled apart, with pieces going here and other pieces going there. Furloughs, lay-offs. They are both very distinct possibilities. Talking to one analyst this week he and I were wondering just what airline is going to be the first to announce an across the board cut in employees -- beginning in the fall.

Unless oil drops -- we're going to see this happen.

Delta- Northwest is a perfect example.

Either Delta's Richard Anderson is living in la-la land, (which I don't believe) or I think it's a safe bet that after the merger of these two airlines is approved -- we are going to see cuts and changes that no one has even begun to guess about at this point in time.

So -- a potential merger with another airline should be a "last resort?" I think United and its employees should be happy that there exists an airline that would even consider merging with it at this point in time.

There are many more horrible fates that could befall United Airlines than a potential merger with one of the best management teams in the industry. We all have to understand what the situation is now in the U.S. airline industry. No airline is really immune from potential extinction. But the bigger you are, the better you are managed, and the more resources you can tap -- the better your chances for survival are going to be.

Tickers: (Nasdaq:UAUA), (NYSE:LCC)

Technorati Tags: airline earnings, airline industry news, airline mergers, airline stocks, airlines, ALPA, Continental Airlines, United Airlines, US Airways

You all know what I'm talking about so I won't bore you with any more of the details.

The reason I haven't said anything about it here before this is because the overwhelming majority of emails I've received seem to fall in one of two categories. Either pilots are bashing the flight attendants who have spoken out on the incident, saying that the pilot disregarded their comments and flew on to Paris without bothering to check out their reports of a loud "bang" that occurred. Naturally the pilots seem to think that flight attendants have no business commenting on the actions of a ....gasp....pilot.

Or two, the emails take the side of the flight attendants, and usually mention something about those "AArogant pilots." Or words to that effect.

I noted that Terry Maxon wrote this morning that the comments he has received publicly on his blog posts about the incident fall into pretty predictable categories as well.

As he wrote,

The pilot clearly should have gotten the airplane back on the ground, and should lose his license for not doing so.
The pilot clearly made the right decision and should be applauded.
The flight was in danger.
The flight was not in danger.
The incident shows how good Boeing aircraft really are, compared to Airbus aircraft.
The incident shows how bad Boeing aircraft really are, compared to Airbus aircraft.
Flight attendants should shut up and stay out of the pilot's business because they're not qualified to make judgments about safety of flight.
Flight attendants are well qualified to judge when something goes wrong, and pilots should listen.
No big deal.
Big deal.

What else do they have to do?

This morning analyst Kevin Crissey from UBS issued  a research note in which he said, "The outlook for the US airline industry is changing very rapidly as fuel prices play an increasing role in painting the industry’s profit (well..loss) picture. As a result, our estimates have been getting stale quickly. In response we are moving to a periodic update schedule. We will be updating our forecasts at a minimum every two weeks to reflect changes in fuel and other factors."

He continued, "There is little to like about the financials of the airlines right now. We forecast 2008 losses as large as $10/share (UAUA and LCC) and only LUV will be profitable if our numbers are correct. The extent and duration of the cash burn is the question rather than whether or not there will be profits. We have no Buy recommendations and have a Sell on AMR and JBLU."

As for earnings revisions, Kevin noted, "We are updating our forecasts to reflect recent industry news, most of which has been negative. Our estimates now incorporate the 10-day moving average of forward fuel prices (~$3.40/gal) and include the unit revenue and traffic reports from the carriers. US Airways reported April passenger unit revenue (RASM) growth of flat to down two percent and jetBlue announced an April RASM increase of 3%. Both numbers are on tough comparisons given the shift of Easter to March this year but each also prompted us to slightly lower our Q2 revenue forecasts."

My apologies for the fuzzy chart, but it was reproduced from a PDF and had to be "upsized" before converting it so you could read it.

For those of you with really enquiring minds, the spot price of NY Harbor Jet Fuel closed today up six cents to $3.71 a gallon. Remember that this is just the raw fuel cost - no tax, no "in-plane" expenses.

The airline announced that John Tague is the airline's new COO, replacing Pete McDonald.

And here is where the corporate nomenclature gets a little, ah, thick.

In its release, the airline says that McDonald will become the new chief administrative officer. But that Graham Atkinson, chief customer officer, will continue to spearhead United's customer experience work and will report to McDonald.

Seems way too top-heavy to me. Smacks of a move designed to basically demote  McDonald, but at the same time, keep him in the executive ranks long enough for him to get a nice merger-related payoff.

Ticker: (Nasdaq:UAUA)

Technorati Tags: airlines, United Airlines

$123.69.

This is up $1.85 on the day. Not only that, but once again as we have seen more than once over the last couple of weeks, higher than expected inventory numbers this morning from the Energy Information Administration did nothing to make traders back off from driving the price even higher.

Simply reinforces the belief that U.S. demand is taking second seat to the larger problem of the falling value of the U.S. dollar.

Technorati Tags: airline industry news, airlines, Economy, oil prices

Or as one of our favorite airline industry observers noted, "It's like watching a five year old pull the wings and legs off a bug. Just brutal... Taking down two more F9 markets (SMF and FLL)."

Southwest Airlines announced five new nonstop flights and three new destinations from Denver. The airline added new nonstop service between Denver and Sacramento, Ft. Lauderdale and New Orleans. The airline also will add one additional nonstop between Denver and Phoenix for a total of seven.

The new flights begin on Aug. 4.

Good. Nice to see a nonstop between New Orleans and Denver. Since Frontier stopped flying between MSY and DEN, the market has been owned by TED.

You know -- TED. Or as the excellent flight attendant I had on Ted recently explained to a plane full of passengers, with tongue firmly planted in his cheek, "People often ask me, "What is TED? Simple. TED -- the end of United."

Ticker: (NYSE:LUV)

Technorati Tags: airlines, Frontier Airlines, Southwest Airlines, United Airlines

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.

But that's just the tip of the iceberg this morning when it comes to bad news about oil prices.

Those who have been watching the rise of oil the last few years may recall when Goldman Sachs issued a research note in the spring of 2005. To say the note was controversial at the time would be an understatement. In that note, analysts at the investment firm wrote about a "super spike" in oil prices that could occur pushing oil prices between $50/barrel and $105/barrel until 2009.

This morning Goldman Sachs analysts issued an updated note saying that crude prices are now poised to potentially rise between $150 and $200/barrel. "The possibility of $150 to $200 per barrel seems increasingly likely over the next six to 24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the up-cycle remains a major uncertainty," the note said.

Why?

No surprises in their reasoning.

Demand growth is outpacing output growth. China has more than doubled oil use since New York crude dropped to $16.70 a barrel in November 2001. That has basically taken up most of the world's spare capacity, while at the same time supply has been cut in Nigeria, Iraq, and Venezuela.

Spare production capacity of the Organization of Petroleum Exporting Countries (OPEC)  is low, and the group's exports could easily fall because of "lackluster" supply growth and rising domestic consumption in member countries, the Goldman analysts added.

Underscoring this, Indonesia yesterday said it might quit OPEC as it consumes more oil than it produces, and lowered its oil sales estimate for 2008 to 927,000 barrels a day from 950,000.

United reported 80.5%, USAirways reported 83.2, Delta was at 81.4%, American reported 80.1, and Alaska was at 75.0 for the month of April. Although the load factors for UA and AA were down year-over-year (-3.6 points for UA and -2.0 for AA), others reported load factors that were unchanged or even slightly higher than April 2007.

Excess capacity? I'm not sure how that is defined, but with many carriers running load factors around 80% it sure doesn't seem like there are too many seats out there. Heck, nobody's got any room to accommodate many more passengers. With an average load factor of 80% on all flights, it is safe to say that peak flights are sold out - all the time. Hey - anybody want to start an airline!

Ironically, it is the carrier with that reported the lowest April load factor today, Southwest, that has managed to remain somewhat profitable during these last few months. Hmm......maybe the unprofitable airlines need to fire some of their customers and hire the ones flying on the profitable ones; evidently it takes fewer of them to make a profit.

Of course, I am being facetious, but here's the point. If you can't make money with an 80% load factor I am not sure the problem is too much competition. True, the cost of oil is a big factor, and the economic pressures on the consumer are real. But the size of the U.S. domestic airline market isn't the problem; the problem is finding the profitable customers within that market.