Monthly Archives: July 2006

New York Times Outdoes Itself


Yes, I’m being facetious.

There’s a big article entitled “Anger Management at American Airlines” by Jeff Bailey in today’s New York Times on American Airlines.

Don’t bother reading it. You aren’t going to miss anything, unless you think news of airline employees being upset with each other and management is news.

Worse, the article completely ignores the true reason as to what caused the deterioration of relations between union leadership at the airline and the company earlier this year.

First, it seems pretty clear that this story was the idea of American Airlines. Why? First because the airline gave Bailey access to Arpey in the first place. Trust me. We all know how this works. Second, because at the end of the article the “It’s us versus the unions and the unions had better get their crap together or else” message is pretty obvious.

Yep. A clear example of using mainstream media in an attempt to influence your own employees. And investors perhaps.

There is a lot of old stuff in here. Yes, we all know American is the only legacy carrier not to file bankruptcy. Yes, we know about the way the maintenance function at the airline has changed and how the airline is now outsourcing maintenance to keep the worker bees productive and on the payroll.

But the most egregious thing to me about the article is the fact Jeff doesn’t even get close to the real reason for the recent meltdown in relations between American and its unions.

Furthermore, by including comments from management members at American concerning their bonus payments and the fact that these payments are so important in keeping top employees at the airline, members of management quoted, such as Dan Garton, keep the myth alive that the current meltdown in management/union relations is due to the fact the unions at the airline objected to bonuses being paid to members of management.

As readers of PlaneBusiness Banter are well aware, this is simply not true.

What union leaders objected to in January was the fact that the company sought to pay these bonuses out under a plan that would allow them to be paid out all in cash — not cash and stock — as the agreement negotiated between the unions and American had stipulated in 2003.

Instead, management at the airline sought to do a “Texas Two-Step” if you will, and not adhere to the payout limitations set out in the agreements that were agreed upon at that time.

When union members made this point, the company basically told union leadership to go file a grievance if they were not happy.

Not what union leaders wanted to hear. Especially after the company had worked so hard the last several years to “improve” their relationship with labor.

No, this sounded much more like the days of Gerard Arpey’s mentor, Robert Crandall, all over again.

So much for that “warm and fuzzy” trust that management had sought to instill in the union/management relationship — and so much for those millions the company has paid consulting group Overland Resource Group over the last few years in an effort to do so.

So since the New York Times was unable to do so, let’s get the facts straight here. The dispute here was NOT about the bonuses being paid. It was about the way in which the airline sought to pay them.

Union leadership was vindicated when, in the grievance hearing this spring — the judge hearing the case handed American their lunch — siding with the unions.

But you never heard about this. Nor did this article even mention this process.

No, all you saw at the time was a press release touting the fact that American, and its board, had decided to change the way in which it would pay out the bonuses — as though they had “worked this out” and this was after listening to complaints.

No, no, no. It was only after a judge forced them to do this.

But read today’s New York Times and you’ll get none of this. You’ll get a story that appears to be hand fed to them — with the underlying message basically voiced by a quote that is included by CEO Gerard Arpey.

“So, is Mr. Arpey’s budding partnership with unions crumbling? ‘I don’t control them,’ he [Arpey] said. ‘I’m continuing to press on many fronts.”

Sounds to me as though Mr. Arpey accepts none of the blame whatsoever for what is now going on.


Probably the most telling quote in the entire piece was the one from Robert Hughes, President of Overland Resource Group. Remember, they are the ones who have been working with the company and its unions since 2003 in an effort to improve union/management relations. “It’s a risk,” said Robert, “If it doesn’t go well, he’s [Arpey] put himself out there.”

Yes, he certainly has. He’s also proven he still doesn’t understand the mistake the company made earlier this year — nor does it sound like he is ready to acknowledge it. In fact, it sounds just the opposite.

(Photo copyright Mark Perlstein/NYT)

Continental Reports In — We’re not Overwhelmed


The airline earnings parade continued today with Continental the latest to release its second quarter numbers.

The airline reported earnings of $198 million, or $1.84 a share. Before special items, the airline reported net income of $208 million, or $1.93 a share. Analyst consensus was for the airline to come in at $1.94 a share, so the airline missed that number by a whisker.

We’re going to take a listen to the airline’s earnings call tomorrow, as we were writing all day today. Just looking at the numbers in our PlaneBusiness Earnings Summary, however, it would appear that costs at the airline came in higher than we had expected, and RASM figures posted by the airline were not as strong as those posted by American.

Southwest was on another planet this quarter in terms of RASM performance. The airline saw RASM up 17.9% for the quarter. Outstanding revenue performance.

Let’s hear it for fare hikes.

For enquiring minds…


Crude closed today at $72.66.

Very strange day on Wall Street today. First, it’s clear the markets think the fighting in the Middle East is going to end sooner than later. I’m not so sure. Especially since today we saw a record number of bombings on both sides.

But secondly — that thundering herd of bulls you heard today on the Street was put into motion thanks to Fed Chairman Ben Bernanke. Big Ben told Congress today that he thinks inflation can be controlled and the economy is slowing. The market did its own translation of those remarks: NO MORE RATE HIKES — FULL STEAM AHEAD.

That is why the Dow Jones Industrials ended the day up 212.19 points, the second highest gain this year.

As for the airline sector today — it doesn’t take much to figure out what happened here. It’s called the Southwest Airlines-American Airlines Profit Dance.

BuzzBomb to Spirit Airlines

Spirit April 11 2006

Okay, first things first. This BuzzBomb has nothing to do with employee benefits, lack of time to secure such things, or crappy things like that. No, we’re still trying to confirm the details on our earlier BuzzBomb “teaser” from a few days ago. Look for this on Friday — unless we hit some unexpected snag.

No, tonight dear readers I feel compelled to award a BuzzBomb to Spirit Airlines.

And what did the airline do to receive our ugly piece of notoriety today?

They were really, really stupid.

Yesterday the airline apparently went public on its website with a promotion called “The Hunt for Hoffa.”

 41207645 Hoffa Ap203

Yes, like Jimmy Hoffa.

The airline promoted the game with the tagline, “Help us find Hoffa with our Hunt for Hoffa game and enjoy fares from just $39 each way.”

According to an Associated Press report, the point of the game was to dig for Hoffa’s body by clicking grids on the airline’s site, “mirroring the massive effort at the Detroit-area horse farm in May.”

Winners of the online virtual body part scavenger hunt were then taken to another page that greeted them with the message, “YOU FOUND HOFFA,” thanking them for helping the “National Spirit Sale Center” find the missing union leader.

What in the world were these people thinking?

Obviously they thought it was funny.

Yes, well, we don’t. And apparently we weren’t the only ones.

The airline has now pulled the Hoffa body part scavenger hunt from its website. Promotion is over. Well, actually it’s been renamed.

It’s now the “Happy Sale.”

I think we’ve said enough. You get the picture.

Spirit is more than deserving.

Northwest Reaches TA with Flight Simulator Techs

Even though it was a small group, and negotiations had not generated a lot of press, just as one of our readers pointed out here this week — there was one other union group, besides the flight attendants, at Northwest, that had to come to terms with the airline.

That group was the flight simulator techs, who are represented by the IAM.

Wednesday it was announced that Northwest and the IAM have come to terms on a tentative agreement for the group.

Both the simulator techs and the flight attendants now have to ratify their respective contracts.

Profits Profits Everywhere


As expected, both Southwest Airlines and American Airlines reported nice second quarter profits today, with Southwest posting a record-setting net profit of $333 million, or 40 cents a share, more than double the $144 million, or 18 cents a share, the company reported for the same period last year.

Excluding special items, the Dallas-based company posted earnings of 33 cents a share.

This still blew away the analysts’ pre-announcement consensus of 26 cents a share.

As for American, well, they can thank Southwest for continuing to raise fares throughout the second quarter as reduced capacity and more pricing power were clearly the big factors at work here.


American reported a net profit of $291 million or $1.14 a share, up from $58 million, or 30 cents a share in 2005.

These numbers were right on the money in terms of analysts’ forecasts.

Call for Referrals


Speaking of blogs, we’re getting ready to add our list of “Recommended Blogs” and other links to our main page here at PlaneBuzz. While we have our initial list ready to go, part of what makes an effort like this successful is the feedback from you guys. Do you have a favorite aviation blog you would like us to consider for inclusion in our list? Drop us a note. We’ll send our crack team of investigators to check it out!