Category Archives: Breaking News

AMR Bankruptcy Fears Take Shares of American Airlines Hostage


As I wrote recently in PlaneBusiness Banter, a funny thing happens when a company begins to show signs of failing. Often times, the state of the company may not be as bad as outsiders perceive, but one but one, things can begin to happen that accelerate the perception that the company is in trouble.

Once that process begins, it can be very difficult to reverse course.

I think that is what we have going on with AMR, parent of American Airlines.

Late last Friday the company announced that another 129 pilots had opted to retire, effective Oct. 1. While that data point in and of itself is not indicative of anything, other than the fact the pilots want to lock in their benefit levels at stock prices that are higher than they are now — that is not how Wall Street is interpreting the news. Wall Street thinks this much-higher-than-normal exodus is a negative “insider sentiment” as to the airline’s financial situation.

This morning, while the entire industry has taken a dive across the board, Wall Street investors have dumped shares of AMR much harder and much faster.

So hard and fast that trading had to be halted in shares of the stock.

Prior to the halt, shares had slipped down more than 20%. After trading was resumed, the sell-off continued at an even faster clip. Shares have been down as much as 38%.

As of this posting (12:48 CDT) almost three times the average daily volume of AMR shares have already been traded, and the stock is sitting at $1.92, down 35% on the day.

US Airways/USAPA Injunction Update: Union Issues Notice To Pilots


As per U.S. District Court Judge Conrad’s order that was issued earlier this week, the US Airlines Pilots Association (USAPA), which represents the pilots at US Airways, posted the following letter to its members on its website today.

Funny thing is — it is not posted on the public part of the site. You have to use a member user name and password to access it behind the firewall, or be on the union’s email list. Or, as in my case, have a copy forwarded to me by an American Airlines’ pilot.

Interestingly, the last publicly posted piece on the union’s website is an article dated May 25, 2011, headlined, “US Airways Pilots Protest Slow Pace of Contract Talks.”

Methinks there has been one heck of a lot of news that has involved the union since then. Perhaps a news update might be in order.


USAPA Update on Injunction Order

In compliance with Section IV of Judge Conrad’s ruling in the United States District Court, Western District of North Carolina, USAPA is distributing the following notice to all US Airways pilots by the most expeditious means possible. USAPA will provide more information as soon as it becomes available. Thank you for your prompt and thorough review of the following:


In July 2011, US Airways filed a complaint against USAPA alleging USAPA had violated and was violating the Railway Labor Act (“RLA”) by, among other things, engaging in a concerted effort to interfere with US Airways’ airline operations, including but not limited to a slowdown, work stoppage, strike, sick-out, work to rule campaign, and other concerted refusals to perform normal pilot operations. At the time it filed the complaint, US Airways sought a preliminary injunction to prevent USAPA from engaging in the acts and conduct alleged in the complaint. After a full evidentiary hearing conducted on August 19 and 22, 2011, by decision and order dated September 28, 2011, the Court found there was evidence sufficient to meet the legal burden that USAPA had engaged in actions that violated the RLA.

The September 28, 2011 order specifically enjoins USAPA and its members, agents, and employees, and any persons and organizations acting in concert with, through, or under it, or by and through its order, from violating the status quo provisions of the Railway Labor Act and from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA. This order continues in effect unless and until modified by the Court.

All US Airways pilots are instructed to fully perform their normal working schedules and practices.

All US Airways pilots who are engaging in a concerted refusal to perform normal pilot operations are directed to cease and desist from any concerted refusal to perform normal pilot operations, by engaging in acts including but not limited to slow taxiing, writing up all maintenance items, calling in fatigued, delaying flights, refusing to answer a call from the scheduling, refusing to fly an aircraft that meets the requirements for flight, or refusing to accept voluntary or overtime flying, and to cease and desist all exhortations or communications encouraging same.

USAPA will take all steps and measures to comply with the letter and spirit of the Court’s order and instructs and directs all US Airways pilots to do the same. Any and all acts and conduct in violation of this Order may subject individuals and those acting in concert with them to punishment under the contempt powers of the Court.

A copy of the order issued by the Court is shown below.




September 28, 2011

The Court . . . HEREBY ORDERS:

1. USAPA and its members, agents, and employees, and all persons and organizations acting by, in concert with, through, or under it, or by and through its order, are enjoined from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA, pending a hearing on the permanent injunction.

2. USAPA shall take all reasonable steps within its power to prevent the aforesaid actions and to refrain from continuing the aforesaid actions if commenced, including, but not limited to, the following:

a. Instructing all pilots represented by USAPA and employed by Plaintiff to resume their normal working schedule and practices and providing Plaintiff a copy of all such instructions;

b. Notifying all pilots represented by USAPA and employed by Plaintiff, by the most expeditious means possible, of the issuance, contents, and meaning of this Preliminary Injunction and providing Plaintiff a copy of all such notices;

c. Including in such notice a directive from USAPA to US Airways’s pilots who are engaging in a concerted refusal to perform normal pilot operations, including but not limited to, slow taxiing, writing up all maintenance items, calling in fatigued, delaying flights, refusing to answer a call from the scheduling, refusing to fly an aircraft that meets the requirements for flight, or refusing to accept voluntary or overtime flying, to cease and desist all such activity and to cease and desist all exhortations or communications encouraging same.

d. Posting the notice described above on Defendant USAPA’s internet websites and providing Plaintiff a copy of the notices;

e. Including the contents of such notice on any and all recorded telephone hotlines under control of USAPA, until such time as the Court has acted on Plaintiff’s Motion for a Permanent Injunction, and providing Plaintiff a copy of all such messages; and

f. Distributing the contents of such notice through all non-public communication systems maintained by USAPA, including any telephone trees, text message lists, pilot-to-pilot communication systems, or similar systems, and providing Plaintiff a copy of the notices.

3. USAPA is prohibited from including in such notices (or distributing contemporaneously with such notices) any statements that are intended or could reasonably be interpreted to mean that pilots should continue to engage in the previously-described conduct notwithstanding the Preliminary Injunction.

4. USAPA shall report to the Court by 5 p.m. on October 4, 2011, by sworn affidavit, the methods used to effect the notice described above to all USAPA-represented pilots, and furnish to the Court copies of all notices required to be furnished to the Plaintiff under the Court’s Order.

US District Court Grants US Airways Preliminary Injunction Against Pilot Union

gavel 3.jpg

It took a little longer than some people had anticipated, but this afternoon U.S. District Court Judge Robert Conrad granted US Airways a preliminary injunction against the airline’s pilot union, US Airlines Pilot Association (USAPA).

As you may recall, US Airways sought the injunction in August, when it claimed that the pilot union had been involved in actions to deliberately slow down and/or disrupt the airline’s operations.

Judge Conrad apparently agrees.

In his ruling, USAPA and its members are now prevented from “permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal toperform normal pilot operations in violation of the RLA, pending a hearing on the permanent injunction.”

Conrad instructed the organization very clearly as to how and what they now need to communicate to its members.

USAPA was ordered to report to court no later than 5 p.m., on Oct. 4, what methods it has used to comply with the court order.

For those of you who are legal eagles like I am, click here for a .pdf of the complete TRO document.

I think you will agree that Conrad has read the union the proverbial “riot act.” Not a whole lot of positives in this order for the union. Not surprisingly, however, given how strong the airline’s initial complaint was, as we noted last month in PlaneBusiness Banter.

Steve Jobs Announces Resignation: Sad Day


When people ask me why it is that I started PlaneBusiness, why it is I continue to work as hard as I do every week producing it, (except on weeks like this one when I am supposed to be “on vacation”) and what inspired me to think I could do it in the first place, I invariably think about the quote below.

There is a longer version of the quote, but this excerpt is the one that was used in the Apple “Think Different” commercials. A legendary campaign in advertising lore, and an enduring reminder of a way of looking at the world that is no less important today — and perhaps even more so — then when the campaign was first rolled out in 1997. No coincidence that 1997 was also the year I founded and PlaneBusiness Banter.

While the “Think Different” campaign served as a mantra to those of us who are crazy enough to think we can make a difference –the misfits, the round pegs in square holes with no respect for the status quo — the quote is, at its heart, an apt description of Apple’s brilliant co-founder — Steve Jobs.

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. “

That is why today is a sad day. A very sad day.

Steve Jobs announced today that he is stepping down as CEO of Apple — a result of his increasingly fragile health. While it’s not clear exactly what he is now suffering from, we all know what this news really means. The misfit, the rebel — the troublemaker — is in trouble.

Thank you Steve for your genius, your creativity, and your incredible sense of design that was always so seamlessly coupled with intuitive functionality.

And yes, you did change the world.

McAdoo: Southwest Airlines Most Expensive Airline 80% of the Time in His Survey


Interesting follow-up research note out today from Avondale Partners analyst Bob McAdoo.

Bob decided to follow up on Southwest’s second quarter comments concerning business travel. Essentially the airline said in its earnings call that revenues, particularly business fares, were weak in the second quarter. Compared to the rest of the industry, Southwest’s revenue performance — both business and leisure– lagged.

Bob’s hunch? The airline had been too aggressive on fares.

Following up on his own experience flying out of Kansas City over the last year, when he says he has repeatedly found lower fares on legacy carriers than on Southwest, Bob decided to do a broad random sample of fares in a selection of markets to see if his theory about the airline having higher prices than the competition would hold up.

As he explained in his note,

“For each itinerary, we priced out two different close-in journeys and logged in the prices.

First, we selected 8 origin cities from across the LUV network, seeking both more and less active cities. For each of these origins, we then selected the top 50 LUV destinations from each origin and then randomly selected 20%, or 10 destinations, from among the 50 largest destinations for each origin.

…Upon review of the data, it seems Southwesthas a different pricing regimen against Alaska Airlines in Seattle than in the other cities. Southwest seems to be more aggressive in pricing below Alaska. For this reason, we excluded Seattle data and reduced the study to the 70 markets out of the 7 remaining cities.

…For the 140 trips on 70 random itineraries, there was a consistent pattern on 50 of the markets. Southwest was more expensive in 40 of the 50, or 80% of the trips. The legacy airlines were more expensive on 10 or 20% of the trips. When Southwest was more expensive,it was, on average, a $134 higher fare— a 26.4% premium. We obviously don’t know whether this pattern is driving the slower business travel on Southwest. Nonetheless,there is clearly a trend that we will continue watching in coming months.”

Having said all that, however, as McAdoo notes, if Southwest continues to slow down its capacity growth, not only will that help Southwest, it will help the rest of the industry. “A lid on LUV growth should be good for LUV and for all airlines,” he writes.

AirTran MEC Meeting on SWA Seniority Agreement Now In Progress in Atlanta


An update on the situation involving the AirTran ALPA MEC that I posted earlier this week.

The Southwest Airlines SWAPA Communication Committee has issued an update today to the Southwest Airlines‘ pilots in which they say that the AirTran MEC is now meeting in Atlanta to discuss the Side Letter 9 — that’s the pilot seniority agreement to you lay people out there.

This, after earlier in the week, the AirTran MEC had notified SWAPA leadership that the meeting had been “postponed indefinitely.”

Hmmmm. Sounds like somebody came to their senses.

I don’t care what the AirTran ALPA MEC eventually decides — that is their call — but I think they need to make a decision one way or another — which will then allow the process to continue. If the AirTran ALPA MEC decides to send the agreement to the rank and file for a vote, then we’ll see a roadshow start almost immediately.

From the SWAPA Communications Committee, August 11, 2011:

Fellow SWAPA Pilots,

Late yesterday evening, the AirTran MEC Chairman informed SWAPA president, Steve Chase that their MEC was in ATL and had started their MEC meeting originally scheduled for this week. Notice was given earlier in the week that they were postponing their meeting until some internal items and language was received for their review.

With their MEC convened in ATL, we expect their MEC vote on their equivalent of our Side Letter 9 at some point during their meeting, and we don’t know how long it may run. If their MEC votes to send the agreement to their membership, we have an extensive roadshow schedule planned to visit every pilot base in the next three weeks. In the meantime, we continue to wait on their MEC to determine if we are going on the road. As soon as we have more information we will pass it along.

Thanks for your continued patience and please stay tuned.

Is Southwest Airlines/AirTran Pilot Seniority Deal in Trouble?


No surprise that last week Southwest Airlines touted the fact that its pilots and the pilots at AirTran had already negotiated a seniority agreement as part of the airline’s merger process during its quarterly earnings call.

Given the dysfunctional situation that continues with the pilot group at US Airways, after America West acquired US Airways, and the ongoing difficult talks going on with the pilot groups of both United and Continental as they try and hash out a contract and seniority agreement, the airline had a reason to be happy.

And, as best as we could tell, after a bit of initial squawking, it did appear that the pilot group at Southwest was probably onboard with the deal, as we talked about last week in PlaneBusiness Banter.

The problem is — the AIrTran ALPA MEC was supposed to meet and give its “thumbs-up” to the deal and then push it out to members for a vote. Two weeks ago. Then it was last week. Then it was supposed to be this week.

No meeting.

Today, the AirTran MEC notified their counterparts in Dallas that the meeting of the MEC to discuss the deal has been postponed “INDEFINITELY.”

The official SWAPA correspondence is included here.

Update from your Executive Team

Two weeks ago, your board of directors reviewed the contents of Side Letter 9 and voted unanimously to send it to the membership for ratification. Since that time we have been waiting for the AirTran MEC to administer their meeting and decide if their membership will be voting with ours on the agreement. Meetings on their end, which were originally to coincide with ours, have been pushed back multiple times. They were scheduled to meet this week, Wednesday through Friday, to finally make a decision at their board level on the merits of this agreement. This afternoon, however, SWAPA was notified by ATN-ALPA via email that they have postponed their scheduled meeting indefinitely.

We have given you outlines of what this deal entails for you with the final language. A much broader education plan is in the works, if this deal is approved by their MEC. We know many of you are waiting (with continued patience) for further explanation and data, but we must still hold off until a decision on their end is made. In the meantime, SWAPA will continue preparations for arbitration.

We will update you as often and as thoroughly as possible as things progress. These delays don’t help either pilot group or the Company. “

Hot and Heavy: AirTran Pilot Union Message Board Shut Down


One of our very long-time PlaneBusiness Banter subscribers who also happens to fly for AirTran tells us that “things are very hot” in Atlanta as pilots there debate the proposed agreement between AirTran and Southwest Airlines pilots.

So hot that the AirTran ALPA MEC issued this letter this afternoon:

“July 24, 2011

Fellow Pilots,

During a special meeting today, the Master Executive Council voted to temporarily suspend the union web forum. This step was not taken lightly, as the MEC feels that pilots should be free to debate the topics that impact all of us. However, the discourse has become too uncivil at times, and policing the posts too difficult.

The MEC officers and status representatives are still available to answer questions or take feedback, either through their e-mail addresses or cell phones. A complete list of contacts is available at<>.

Thank you for your understanding.

The AirTran Master Executive Council”

Doesn’t matter what negotiation it is. Or what airline. There is no such thing as a “slam-dunk” when it comes to pilots, contracts and …. questions of seniority.

THIS part of the AirTran/Southwest Pilot Seniority Agreement Is Apparently Accurate

According to a representative of SWAPA, the union that represents the Southwest Airlines’ pilot union, the top half of the letter that was posted earlier this afternoon is authentic. The bottom part that was posted earlier with supposed agreement “details” was not. Therefore I have removed the post entirely to prevent any further misinformation from being distributed.

Thank goodness. I was trying to figure out how in the world Southwest Airlines was going to order that many planes.

I have asked the SWAPA union representative who contacted me to please forward me an accurate summary of the tentative agreement.


July 16, 2011

Fellow Pilots,

This afternoon, the AirTran Merger Committee (MC) reached an agreement-in-principle with SWAPA and Southwest Airlines on a seniority list integration and transition agreement.

This agreement will be presented to the ATN ALPA Master Executive Council for their consideration in the near future. If this agreement is approved by the MEC, it will be presented to the membership for ratification.

The MC will be working in the coming days to translate the current agreement into a full-language document. This will require a great deal of work, and your patience is appreciated as they develop a comprehensive presentation for the MEC and the pilots of AirTran Airways.

The Merger Committee believes that this a fair agreement that provides career protection for AirTran pilots, as well as significant economic gains.

In unity,

Your ATN Master Executive Council