Category Archives: Breaking News

Atlantic Southeast Puts “Ground Stop” To SureJet Name

Atlantic Southeast Airlines sent me an email this afternoon in which the airline admits that perhaps the name “SureJet” was not such a good idea after all.

“Since we value the feedback we’ve received to date, we have put a ground stop on the SureJet name,” the airline said.

Yesterday the subsidiary of SkyWest, which is merging with ExpressJet, announced the new name of the combined airline was going to be “SureJet.”

To say that the news was met with an unfavorable response from both industry observers and employees alike would be an understatement.

Here’s the statement I received this afternoon from Kate Modolo, spokesperson for the airline.

“Atlantic Southeast and ExpressJet on July 13 announced that SureJet would be the new name of our combined airline, once our merger is complete later this year.

We’ve heard our team members’ significant concerns about the new name, and it appears we’ve missed our mark. The No. 1 goal with our new name was to create an identity that represented our people, and that our people would be proud of. Since we value the feedback we’ve received to date, we have put a ground stop on the SureJet name so we can solicit further input from our people, and get this important merger milestone right.”

Jury Finds in Favor of Former TWA Pilots in DFR Suit Against ALPA

Big news this afternoon for former TWA pilots.

The group sued the Air Line Pilots Association in 2002 — claiming that ALPA had not fairly represented them during the American Airlines/TWA merger. The pilots argued that ALPA had acted in bad faith in regard to negotiations with the Allied Pilots Association (which represents pilots at American) and the eventual seniority list that was created.

Today a federal district court jury in New Jersey ruled in the pilot group’s favor, as it agreed the Air Line Pilots Association had “violated its duty of fair representation” to the TWA pilot group.

In addition, the jury agreed with the pilots that ALPA’s violation of its DFR “directly caused injury to some of the TWA pilots.”

That opens the door to — damages.

As of now, the amount and extent of damages has not been determined.

Great day for the former TWA pilots. Not such a good day for ALPA.

AMR Board Member Charged by SEC With Insider Trading

The Securities and Exchange Commission today charged Rajat Gupta, former head of McKinsey and Co., and former Goldman Sachs board member, with insider trading. The charges were filed in a civil administrative proceeding filed by the SEC’s Division of Enforcement.

What does this have to do with airlines? Gupta is a member of the AMR Board of Directors. AMR is the parent of American Airlines.

After the news broke today, Gupta voluntarily resigned from the Proctor and Gamble BOD.

According to the complaint, Gupta provided insider knowledge to Galleon Group founder Raj Rajaratnam “about companies in which he was a board member,” according to the Wall Street Journal.

The Journal says that specifically mentioned in the complaint are tips Gupta provided about upcoming earnings results for Proctor and Gamble and Goldman Sachs. He is also accused of also tipping off Raj Rajaratnam about a $5 billion investment in Goldman by Warren Buffett’s Berkshire Hathaway company.

Jet Fuel Closes Up 13 Cents on the Day: $3.22/gallon

New York Harbor Jet picked up another 13 cents in trading today. Closed at $3.22/gallon.

Last week Southwest Airlines CEO Gary Kelly said the airline would not reassess its capacity plans unless fuel hit $3.30 a gallon. Looks like that day could come sooner than he had anticipated.

Meanwhile, American Airlines became the second major US carrier (behind Delta who did so in February) to announce a cutback in 2011 capacity as a result of higher fuel prices.

The Dog Ate the PON Card: Why PBB Is Still Not Posted

Hello.

See this truck?

This is the truck that the Verizon FIOS service repair person drove to the Worldwide Headquarters this morning at 10 AM.

This visit was in response to my call to Verizon on Tuesday after a new router that they sent did nothing to solve the problem. Their customer service person at that point assured me that the problem was in the Verizon “box” on the wall.

This was after customer service at Verizon had told me Monday that we had lost connectivity because of a bad router.

But remember, I installed a new router on Tuesday — and nothing changed.

So today, at 10 AM, a live person shows up to “change out” the bad Verizon box on my wall. However, in an ominous sign, he tells me before he does it that this will probably not solve the problem. He’s been down this road before.

Live person changes out the box.

He was right.

Nothing changes.

For the next four hours he and I keep testing. Ethernet only. Router on, router off. Hard reboots. On and on. He keeps telling Verizon techs the same stories over and over and over. I can’t go anywhere else and try to get this week’s issue of PlaneBusiness Banter completed – as I have to stay and test with my laptop.

Because I am the customer. Because the Verizon tech can’t stay here by himself.

By this time, after six days of this — and a huge issue sitting half completed — I feel like I have been put through a pasta machine. Over and over and over again.

Finally, at 2:38 P.M., after test number 268, the pages magically load. The connections don’t hang. I can finally upload pages to the website again.

And post this blog post.

See that truck?

The one that is marketing Verizon’s “blazing fast internet.” What you don’t see is the small print that reads,

*Most of the time. And definitely not when your PON card is bad.

You IT geeks will understand.

For all the rest of you — Monday’s issue of PBB will be posted later today.

Mexicana Labor Unions Say No: Airline Files for Bankruptcy Protection

I am sitting here waiting for the final edits to be completed on what is, without a doubt, the largest earnings issue of PlaneBusiness Banter we’ve ever had. More on that in a bit.

But in the meantime, an update on a story we talk about in this week’s issue. Mexicana Airlines just filed for bankruptcy.

The airline had given its unions a kind of “the worse of two evils” ultimatum last week and the unions didn’t bite. As a result the airline is now in bankruptcy, and we have been told by more than one PBB subscriber that the airline has already had a handful of planes repossessed. One thing the bankruptcy filing will do is prevent additional aircraft seizures.

This news comes just days after the FAA dinged the Mexican aviation safety rating to a number “2.”

The FAA action means two things. One, until it changes, it means that Mexican airlines cannot expand their service into the U.S. But secondly, it means that existing codeshare agreements between U.S. carriers and Mexican carriers are now on the shelf.

Delta Air Lines currently codeshares with Aeromexico and American Airlines has a codesharing agreement with Mexicana.

But we can’t forget Southwest Airlines, which was, at some point in the future, slated to start a new codesharing agreement with Volaris, yet another Mexican airline.

Delta Reports Earnings And Airline Stocks Go Splat

Delta Air Lines reported earnings this morning, the first airline to report earnings for the second quarter.

While the headline numbers for the airline’s results look quite good on the surface — airline stocks began to drop after the numbers were released and they have yet to get up again.

Why is this the case — if Delta reported such a large profit?

If you are a PlaneBusiness Banter subscriber, you might have a good idea. As I said three weeks ago, I think a lot of this recent giddyness concerning the “return” of airline revenues is, I believe, on shaky ground.

Yes, no question that the second quarter numbers should be good across the board for the sector — with one glaring exception. The only major airline that will probably post a loss for the quarter is AMR, parent of American Airlines.

But as I talk about in this week’s PBB, we are now seeing a number of economic metrics that are pointing toward a recessionary recovery in the U.S. that is running out of steam.

Take those developments, coupled with the fact the airline industry is now looking at the start of a traditionally slow period in September — throw on results from Delta that disappointed on the revenue side — and poof. A perfect recipe for an airline sector selloff.

Now you know.

PlaneBusiness Subscriber New Log-In Update

Hello everyone. Holly here.

As of about 20 minutes ago, all of us here at the Worldwide Headquarters *believe* (important word here) that the new log-in system for PlaneBusiness Banter is now working properly.

We had a few hiccups this afternoon as we made the cutover, but I think those small annoying problems have all been taken care of.

What does this mean if you are a subscriber to PlaneBusiness Banter?

It means that your previous user name and password that you used to access PBB prior to this week no longer works. It’s done. Toast. Dead.

If you have not received an email from us yet — assigning you a new assigned user name and password, or if you have any other questions concerning the change, please contact our subscription manager.

Spirit Pilots Go on Strike

The deadline at midnight came and went.

The negotiations continued into the night.

But, at 5 a.m this morning, both sides called it quits and the pilots at Spirit Airlines, who are represented by the Air Line Pilots Association, left the negotiation table. And their cockpits.

Spirt Airlines President and CEO Ben Baldanza said in a statement, “We are frustrated and disappointed that our pilots have turned down an over 30 percent increase at a cost of over $70 million over five years while disrupting thousands of our customers and jeopardizing the livelihoods of our over 2,000 employees.”

Spirit is not publicly traded. It is owned by Indigo Partners LLC and Oaktree Capital Management, LLC.

Indigo is the private investment firm that is headed by former American West CEO Bill Franke. Howard Marks is Chairman of Oaktree, which tends to invest in high risk-high yield investments. To put it another way, Marks is known for being one of the most well-known “vulture investors.”

The strike marks the first time in five years that an employee group has struck a U.S. airline.

Baldanza told the WSJ this morning that his goal is to get the airline flying again as soon as possible, but he said he couldn’t say at this point what will happen, even Sunday. “He said Spirit has some management pilots who could operate flights, but it remains to be seen if some of the striking aviators would cross picket lines and return to work.”

Ah, well, yes, I could see where that might be a problem.

He also admitted that the airline had been trying to get charter carriers to fly on its behalf — in anticipation of a potential strike — but that “ALPA had pressured those companies, even those whose pilots aren’t represented by ALPA, and some dropped out.”

He also told the WSJ that the airline has purposely made sure all of its aircraft were back in the U.S. “where we want them to be” in anticipation of the job action.

As for the airline’s pilots? He said it was “their problem as to how they get home.”

That’s what I love about this industry. It’s just so damn warm and fuzzy. Can’t you just feel the love?

On a serious note — Spirit is not the most cash-flush operation in the world, and if the pilots are as successful in shutting the airline down as I suspect they are going to be, this could get very nasty, very quickly.

Not to be a conspiracy theorist, but I’ve seen managements use a lot less motivation to justify shutting down an airline. And who knows? Maybe someone might like to snap up some of the airline’s assets for a decent price.

I don’t say the pilots were not justified in what they did. It is their right to strike. And, in a weird way, it’s good to see the process still works.

But on the flip side, Spirit is not a major carrier. There is going to be no urgency for the administration to create a PEB. And like I said, the airline is not sitting on a lot of cash, nor do the guys who own this thing feel inclined to throw any more cash at it. In addition, while the airline has posted a profit for the last three years, a big reason that has been the case is because of the rock-bottom labor rates at the airline.

Should be an interesting weekend. Especially at the Ft. Lauderdale -Hollywood International Airport. Spirit handles 20% of the traffic out of there on a daily basis.

Southwest Announces New Service to Charleston and Greenville-Spartanburg

Well, one out of two ain’t bad.

Three weeks ago, after returning from my BMW Performance Driving School experience in Greenville, S.C. with the folks from Travelport , I told PlaneBusiness Banter subscribers that it appeared that Southwest Airlines was coming to town.

Ding. I am now free to accept heaps of praise that I called the new city correctly.

However, the airline one-upped me today as it announced it was not only starting service to Greenville-Spartanburg, but to Charleston as well.

Oh well. I didn’t go to Charleston. Maybe if I had I would have been able to out them on that announcement as well. Heh.

Interesting that in the press release noting the new service, the airline bent over backwards to note that service to both cities is *without subsidies.* It is even in the sub-head of the press release headline.

Hmmmm.

According to the release, “The airline’s service will not be dependent on pending legislation to provide air service subsidies.”

Guess that’s a little sideways jab at AirTran — the subsidy kings?

Yes, well, Southwest received its own basket of goodies in return for flying into Northwest Florida.

Boys, boys, boys. Let’s just play nice.

With or without subsidy, I like both choices.