Category Archives: Ratty Old Bear Suits and Raging Bulls

PlaneBusiness Banter Is Now Posted!

home-typewriter copy 1Hello everyone! While I still haven’t decided what to do with our PlaneBuzz blog, this week’s issue of PlaneBusiness Banter is just too ripe with goodies not to talk about. So if you are a subscriber, that is a good thing, if you are not, you need to be.

This week we take our in-depth look at the recent earnings reported by United Airlines, American Airlines, Southwest Airlines, and Alaska Air Group. 

Or as I like to say, three of the big four, and the best managed, most financially stable airline in the U.S. Yes, that would be Alaska Airlines. 

How much debt do you think Alaska is carrying on its balance sheet? Just take a guess. No, you’re way off.

A grand total of $750 million. The airline is not only a great airline for passengers, it’s not only one of the best in terms of operational performance, but it is a financial treasure — certainly worthy of investment grade status by the rating agencies. The problem the airline has? What is it going to do with its cash?

Nice problem to have.

As for the other three — they all made a lot of money in 2Q15. We will attempt to sort out the differences we see with what each airline reported.

We also run down the recent results from Lufthansa, IAG, parent of British Airways, and Ryanair. 

Yes, everybody made money. That’s what happens when the price of oil is between $40 and $50 a barrel.

Oh, and yes, we have PlaneBusiness Earnings Summaries posted for all the remaining U.S. and Canadian airlines that have reported earnings as of today.

What also happens is that PRASM levels fall. And for whatever reason, airline investors (and some analysts) seem fixated on this — as though it is akin to the end of the world. It’s not. I wrote a column in PlaneBusiness Banter last week that took a longer look at this. We use the recent earnings results to follow-up this week.

I spent six days in Orlando last week between the Global Business Travel Association and the Women In Travel Summit, where I was honored to present onstage along with Delta Air Lines’ SVP of New York, Gail Grimmett, and Amex’s Global Business Travel’s Christine Ourmieres. 

GBTA. What can I say? For those of you who are a member, and who attended the conference, you know what I mean. It is a grueling mix of business, parties, light lunches, more parties, and more business. I was fortunate to be asked to present on a panel there as well. I’ll be talking more about GBTA, the conference, and the organization’s political problems, in our next issue of PBB. 

Oh, and what the hell happened to shares of Republic Holdings last week? We talk about that situation in-depth this week as well. That is not a good situation.

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1Good evening everyone. This week’s issue of PlaneBusiness Banter is now posted.

This week we’re talking a lot about Southwest Airlines and the follow-up to the recent comments made by CFO Tammy Romo at the Wolfe Research Transportation Conference that sent shares of U.S. airline stocks tumbling.

For those of you who missed the excitement, Tammy indicated in her comments there that the airline was going to see capacity up between 7% and 8% for the year. This was above what the airline had said was the case in its 1Q15 call, (the airline had said a flat 7%), and given the backdrop at the time, i.e., American Airlines management was sounding alarm bells over the possibility of the industry pushing out too much capacity, that is all it took.

Investors shed shares of airline stocks like crazy two weeks ago as a result.

Last week, the madness slowed, but U.S. airline stocks were still struggling.

This week we go in-depth about what the airline told institutional investors at a Credit Suisse meeting in Dallas last Friday,  followed up by an additional interview with Bloomberg that broke earlier today. (Monday.)

Long and the short? Southwest went on the offensive. To the extent that the airline said it was now capping growth at 7% and it will announce an increase to its ROIC shortly.

Wrap it up and what do we have? We had, over the last two weeks, a perfect time to buy shares of U.S. airline stocks. Particularly the big four.

Perception. It’s the name of the game.

This week we also talk about the recent “all-women” delivery flight involving United Airlines and Boeing; we look at the deal that the Irish government gave the okay to this week — allowing IAG Holdings to purchase Aer Lingus;  we give you the latest scoop on why oil prices continue to inch up;  we talk about a couple of new executive appointments;  we talk about the recent forum in Seattle where Alaska Airlines’ CEO Brad Tilden admits the airline was  “shocked” at the actions of Delta Air Lines over the last few years, and a whole lot more.

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


PlaneBusiness Banter Now Posted!

DONHello everyone. Yes, I am a “Mad Men” fan. And yes, I am going to be glued to the television this evening for the series finale.

Oh, airlines? Did someone say something about airlines?

This week’s issue of PlaneBusiness Banter is now posted. It’s got something for everyone. First, we have in-depth analysis of the earnings call and results from both Republic Holdings and SkyWest Airlines. In a nutshell, I’d rather be CEO of SkyWest, as the pilot situation at Republic remains grim. In addition, the airline has to get a contract with its pilots before the new contract kicks in with American. I thought after the last pilot contract was voted down, we’d have to see a change in management before we’d see a contract.

We’ll see. But overall, not a very pleasant situation.

We also talk about a topic that I think is very serious. Last month we talked in PBB about a Wired story in which a cyber researcher claimed that he knew how to hack an airline’s avionics by going in through its onboard IFE system.

The story did not get that much traction, which surprised me.

But last week, the second shoe fell, and now more people are paying attention.

What changed? A Canadian news source published the search warrant that the FBI filed when they requested permission to search Chris Robert’s computer equipment, after he landed on a United flight to Syracuse.

Anyway, we update you with the latest — which seems to indicate that Roberts did, in fact, manage to hack into the avionics of a real life airplane. Not just during a “simulated” run.

Dave Siegel is no longer CEO at Frontier Airlines. We told subscribers last year when Barry Biffle was brought on as President of Frontier that there was no room for both of them. Chairman Bill Franke and Biffle are co-running the airline for now.

But this is just the tip of the iceberg of this week’s issue. We’re talking Open Skies, airline executive sock choices, GBTA presentations, Air Canada’s sneaky way of reporting earnings, (okay, let’s say, “less than transparent”), an AvGeek’s trip to the “Pan Am Experience” and a whole lot more, including the next airline Azul’s CEO David Neeleman seems to be enamored of.

Subscribers can access this week’s issue here. 

For those of you who don’t subscribe, the obvious question is …why not?


Mega-Earnings Issue of PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone! Yes, it’s circus time here at PlaneBusiness Banter. That’s when yours truly is tied up at an industry conference for three days and has five in-depth earnings reports to do, two new earnings reviews to finish, and well all the rest of the stuff!

This week, we take an in-depth look at the recent 1Q15 earnings reported by: JetBlue Airways, Hawaiian Holdings; Spirit Airlines; Allegiant Travel Co. and Virgin America. 

We also have PlaneBusiness Earnings Summaries posted for WestJet and Republic Holdings. 

Other than our lengthy earnings call analysis this week, I also share some juicy tidbits from this year’s Phoenix Sky Harbor International Airline Symposium. While attendance at the event seemed to be down, as a result of the CAPA Americas Summit having been held just two weeks prior, it is still a great event to meet and mingle with some of the best industry leaders and insiders around.

Next week, I’ll go into more detail about the Open Skies panel, er, brawl, that took place. This week I share some of the comments that were made on the executive panel, as well as a few other tidbits from other panels.

You get a prize if you can tell me which successful airline investor and executive called fuel hedging a “scam.”

I agree.

This week we’re also talking about the Airbus A380, which is in the news for a variety of reasons. Oh, and yes, American Airlines did successfully launch commercial service on its new Boeing 787 aircraft last week as well.

Shares of COPA took a dive last week after the airline announced earnings. All in all it was a rather so-so week for the sector.

We talk a bit about Allegiant and its recent public to and fro with its pilots. The judge did come back late on May 1 with a ruling in favor of the airline, but like I say this week, that is just the tip of the iceberg. The pilots were successful in generating a great deal of negative press about the airline, the stock dropped, and the Federal Aviation Administration put restraints on the airline’s operations.

Meanwhile, negotiations between the Teamsters and the airline on a new contract continue later this month with the National Mediation Board. 

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone. It’s that time of year…..EARNINGS TIME!

Last week in PlaneBusiness Banter we took an in-depth look at the results posted by Delta AIr Lines. This week — our mega-earnings issue tackles the 1Q15 results from American Airlines, Southwest Airlines, United Airlines, and Alaska Air Group. We’ve also got earnings summaries for JetBlue, Spirit, Virgin America and SkyWest — all of whom reported this week.

Volaris also reported last week and the Mexican ULCC did very well — which was reflected in the uptick in its share price.

But there was much more going on besides earnings the last week or so. First, it looks like the IAG-Aer Lingus deal is going to go down. Reports this week listed a number of conditions that it appears British Airways and IAG are willing to make. Looks like we could hear something definite on this in less than a month.

Meanwhile, in the Open Skies  dispute involving the three major U.S. airlines and their argument that the agreements between the U.S. and the UAE and Qatar are being violated because of illegal subsidies being given the airlines in those countries by their respective governments, over 260 members of Congress signed a letter this week supporting the U.S. carriers’ argument.

Remember, all the U.S. carriers are asking for is for the U.S. to open up “consultations” on the agreements — a legal right the U.S. has — if it believes countries are not acting in good faith per the agreements.

We had a ton of letters this week from subscribers. I always like it when this happens. We’re talking about everything from wide-bodies landing at LGA to goats clearing airport grounds to an alternative view of the Open Skies argument to a study that looks at what happens in countries that turn over ATC functions to third parties. And more.

It’s a huge issue this week. Come in, pour yourself a large cup of coffee, and enjoy.


PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone. While last week we talked about the Germanwings crash, (and the hyped-up coverage we wish would just stop from CNN), this week we’re talking a lot about labor. Delta, United, American, Allegiant. One thing is a given in this industry. Just when you think things have quieted down or are under control — they come apart at the seams.

No question that the biggest labor-related shocker last week was the news that the International Association of Machinists were pulling their request to the National Mediation Board for a representational election for the flight attendants at Delta Air Lines. 

Problems with signatures? Problem with cards? We haven’t heard the last of this yet.

Whatever the reason, this means the IAM will now have to wait 12 months before they can try again.

In more positive news, American Airlines received its SOC on Wednesday of this week — on schedule. Exactly. To the day. Seriously. The airline set up the schedule of deadlines for each of the nine sections of the process back in 2013, and Wednesday was the date targeted for the awarding of the certificate.

Pretty impressive.


In other news, we’re getting more clarity on how the U.S. airline industry’s 1Q15 results are shaping up.  Delta surprised last week with less than expected PRASM estimates and higher than expected cost levels. But Thursday morning United Airlines guided to better than expected PRASM numbers and lower costs. Southwest Airlines also reported March PRASM estimate. They were pretty much in-line.

Delta Air Lines opens up the 1Q15 earnings report season next Wednesday.

In our opinion column this week we take on the issue of major air transportation reform. The Open Skies Squabble is one thing. But major transformative changes are desperately needed in the U.S. airline/governmental relationship.

Two weeks ago former American Airlines CEO and Chairman Bob Crandall spoke at the Wings Club about this topic. We reference his comments and give you our take on how the FAA could be, and should be restructured so that reforms such as NextGen can become a reality.

Meanwhile, which U.S. airline saw shares drop dramatically last week? Goat of the Week honors went to Allegiant. We’ll tell you why.

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

PlaneBusiness Banter Now Posted!

home-typewriter copy 1You know, one of these days we need to stop posting in the middle of the night. One of these days.

Hello earthlings! Goodness. We’ve had back to back issues within less than a week this last week due to yours truly traipsing around the countryside.

Last week I was at the ISTAT Americas conference in Scottsdale. Subscribers got to hear about the Bombardier/Embraer presentation that proved Bombardier doesn’t have a clue as to how to address the perception issues of its CSeries. Then we talked a great deal about AVITAS SVP Adam Pilarski’s update on the price of oil and why he thinks it’s not going higher anytime soon.

For more than a few years, Adam has steadfastly said that oil was going to drop to $40 a barrel — and his reasons seem pretty valid today.

Then we talked about just what Air Lease Corp.’s Steve Hazy wants in Boeing’s new airplane. Hint: Twin aisle. 200-225 seats.

But we talked about a lot more — but that was last week.

In this week’s follow-up issue we give you our take on the Aviation Summit that was held in Washington on Tuesday. This year it became a place where both sides of the Open Skies fight presented their respective cases. Lots of noise around all of this — but all of that really means nothing. We remain convinced that the report the U.S. carriers has put together is more than enough for the State Department to open up consultations on the Open Skies agreements.

We also talk this week about American Airlines’ inclusion in the S&P 500; Ryanair’s plans to start up a trans-Atlantic operation; Spirit’s descent into adolescent frat house humor again; Spirit’s arrival in the monthly DOT Air Travel Consumer Report, and we also have another Cranky Analysis column by Brett Snyder. This week Brett, who moonlights as a contributing editor for us, looks at the Atlanta market. Have fares gone down since Southwest Airlines has eliminated AirTran? Not hardly.

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



PlaneBusiness Banter Now Posted!

home-typewriter copy 1This week’s “Blizzard” edition of PlaneBusiness Banter is now posted.

This week we bring you all the good stuff from this week’s JP Morgan Aviation, Transportation and Industrials Conference. This conference is always timed perfectly — it lets airlines update 1Q guidance, and it also allows them to look out into 2Q as well. All the major U.S. carriers presented, including United Airlines, American Airlines, JetBlue, Southwest Airlines, Delta Air Lines, and Alaska Airlines, in addition to Air France, IAG, and WestJet. 

We also take a look at who could win and who could lose if the New York and New Jersey Port Authority decides to remove the current perimeter rules in effect at LaGuardia.

Oh, and then there is that cat fight going on in Georgia between legislators and Delta Air Lines. But is this really just about taking the airline’s jet fuel tax exemption away? No, as is usually the case with politics, there is more to the fight than meets the eye.

Meanwhile, across the pond, reports this weekend claim that British Airways apparently hacked into the laptops and phones of employees back during the nasty union/management fights in 2011. The catch? The airline owned the phone and/or computers. Interesting story on how all of this came to light.

It was a horrible week for airline stocks last week. Wasn’t too much better for the market as a whole, but the airlines took it on the chin especially hard.

Meanwhile, the price of crude dropped again, but the price of jet fuel rose. We’ll tell you why.

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


PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone! This week’s issue of PlaneBusiness Banter is now posted!

It’s another heavy earnings week issue this week as we take an in-depth look at the recent 4Q14 earnings reported by American Airlines, JetBlue, Allegiant, and Hawaiian. We also have the PlaneBusiness Earnings Summary for WestJet, which reported earnings Tuesday.

So which airline surprised us with their report — and not in a good way? That would be Hawaiian Airlines. If you’re wondering why shares of the stock fell of a cliff after the airline reported earnings, we’ll tell you why.

As for American, while some investors decided that lower-than-anticipated RASM guidance for 1Q15 was something to get worried about, (and one analyst actually downgraded the stock as a result of concerns over short-term sluggishness) I am not worried.

For that matter, Delta Air Lines announced lower than expected PRASM estimates for December on Tuesday.

Things are sluggish out there right now.

Now American has both its pilots and its flight attendants set with new JCBAs, the airline can devote more time and attention to other integration issues.

Best integration news we heard in the call? The airline has almost completed all the steps necessary to obtain single carrier status.

We were happy with JetBlue’s call as well. I like the attitude of the new management team. I think whatever drama has been sitting over the management team at JetBlue has finally left the building. That is a good thing.

Allegiant? What can I say? I hate the business model. But the airline continues to make money. With fuel dropping, it is only going to make more money.

We also talk about the situation developing with alliances — particularly with the Middle Eastern carriers, European carriers and U.S. partners. In case you missed it, Qatar announced a 10% stake in IAG Holdings last week, and today Korean Airlines announced a codeshare deal with American on Seoul/DFW routes. Why is this a big deal? Because Korean is a founding member of the SkyTeam alliance. Not sure what the folks in Atlanta think about this development.

All of this, and more, including the latest update on oil prices, in this week’s issue of PlaneBusiness Banter. 


PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello earthlings. Long time no talk. My apologies. I attempted to upgrade our version of WordPress for the blog last week and ended up, apparently, eliminating the post announcing that last week’s issue had been posted.

Bad Holly. I was clearly out of practice.

Yes, well, that brings us to this week, our second back in the saddle since our usual three-week Holiday Hiatus.

This week we’re talking about 4Q14 earnings. Delta Air Lines rolled out of the gates today with their numbers. They were in-line. I didn’t hear anything on the airline’s call that was out of line. However, with the dramatic drop in the price of fuel, the airline is now on the wrong side of some pretty major fuel hedges.

Followers know what I think about fuel hedges. I think the practice should be discarded, or if used, used only minimally.

Note that United Airlines just shed some of their hedges. And of course American Airlines has no hedges. They sold them all off shortly after the merger was completed.

Southwest Airlines,  on the other hand, does continue to hedge.

This Thursday, United, Southwest, and Alaska will report 4Q14 numbers. Next week we get to hear from Hawaiian Airlines,  Allegiant, JetBlue and American Airlines.

It’s going to be, for the most part, a record breaking earnings season. For one reason — oil.

In other news, we take yet another look at the JCBA that the pilots at American are currently voting on. Last week we took a long look at how we go to where we are now. This week I give you my take after wading through a raft of domicile blasts, talking to pilots on both sides, and members of management at American.

In a rather surprising move, we also had a lot of emails this week from unhappy Southwest Airlines pilots. I mentioned the union negotiations at the airline rather briefly last week, but it was enough to generate a healthy response.

It looks like the question on the labor side for 2015 is: which is going to be the biggest story of the year — the IAM’s attempt to gain representation of the flight attendants at Delta Air Lines, or the ongoing labor situation at Southwest?

FYI, the IAM is putting on one hell of a representational effort at Delta. Take a look at the union’s IAM Delta website if you don’t believe me. I don’t believe I’ve seen a more professionally designed site for a representational effort by any union.

In other news we talk about Bombardier’s woes, the newly launched Airbus A321LR, the first commercial A350 WXB Qatar flight, and United’s about-to-be-announced deal for at least 10 Boeing 777-300ERs.

As for airline stocks, it was as rather slow week, not a lot to report on that front, other than the 26% plus decline in shares of Bombardier. 

We also have a great look this week at the most recent comments from three of Wall Street’s top airline analysts — their look at 4Q14 and their look out to 2015 and which stocks they like.

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