Monthly Archives: November 2006

Oops

“Speaking of airlines — my bottom call on Delta looks like a real bottom now as UAL Corp. (UAUA) is making an offer! On the 5th, at $1.04, I said about the Jan ’08 $2.50s: “Now I can just put them away and forget about them or just set a sell at .15 (.10 is not worth it) and hope for some exciting news between now and then.”

I think this may qualify as exciting news already!”

From the Phil Davis’ SeekingAlpha “Stock Market Opinion and Analysis” page today.

Somebody might want to send Phil a note and explain the facts of proper airline identification to him.

Me? I’m too busy working on this week’s issue of PBB and trying to decide if Doug Parker is truly brilliant or a true sadist.

Doug Parker. You know him. He’s the CEO of UAL Corp.

More Musings On the US Airways’ Announcement

Was just talking to a couple of my Wall Street buds and I think it’s pretty clear what the motivating factor might be in US Airways (LCC:NYSE) making this move now.

As many of you might be aware — for the last week there has been increasing speculation concerning the question of whether or not a big deal was in the works that would see United Airlines possibly go private.

I don’t think this was idle speculation. From what I hear, there has been some active behind-the-scenes planning going on in regard to a potential deal of this type.

Given that a deal of this size would require a sizable number of participants, i.e., banks and funds of one type or another, and given that one of the reasons for such a deal could certainly be to take in yet another bankrupt airline and then roll out the new entity as a new public offering at some point — I think we see a big potential reason for US Airways doing what it did today.

And yes, as this deal was made directly to the creditors, and not to the airline itself — it’s not a friendly type of proposal. Rather it signals that US Airways has forced the issue — and that perhaps Delta management has not been that receptive to their earlier advances.

Let the fun begin.

US Airways and Delta: Six Months Later It’s a Real Deal on the Table

I admit. I’m still trying to digest it.

Then again in June, I wrote this in PlaneBusiness Banter in a column on the value of mergers:

“Last week, [US Airways CEO Doug] Parker kind of made sure everyone was awake at his dinner in New York [at the Merrill Lynch Transportation Conference] when he made the comment that they, US Airways, were looking at any and all opportunities. As he said, “This situation [with two majors in bankruptcy] is a once in a lifetime opportunity.”

So, throw US Airways in the pot as well. Frankly, I like the thought of a Delta/US Airways combination. I think it could work. But it would only work if Delta was completely and totally reconstructed. It would also probably have to be set up more like a “parallel” deal — something akin to a Southwest/ATA arrangement.

Money? US Airways could get it.

For that matter, the old issue of “box of rocks” thinking should no longer be an issue for Continental management and Delta. There are not many “box of rocks” thinkers left at Delta. “

Oh boy.

Fast forward to this morning when it was announced that US Airways (LCC:NYSE) has made an offer to Delta creditors that would involve both equity and cash — for a total of $8 billion. The deal would be a merger, and the resulting entity would be named, “Delta.” (“New” Delta, I suppose would be more technically correct.)

Needless to say this blows the content in-the-works for this week’s issue of PBB.

A few quick things — as we’ll no doubt be talking more about this in the coming days and weeks.

First — strictly from a creditor perspective, the deal is a pretty good one.

Two — given this alternative, will Delta continue to maintain that it wants to remain independent?

Three — yes, it’s a nightmare of logistics. I mean, where do you start?

Four — from a regulatory perspective, this deal would undoubtedly see capacity pulled from the East Coast — and the Shuttle would have to be sold.

Interestingly, because of the new opportunities for other airlines the merger would open up — major competitors might not be that opposed to the deal.

The scope of it boggles my mind.

Update: Maddogs Out of Service Down to 10 or 11

Thanks to a number of readers who wrote to tell me that American has now inspected and repaired all but 10 or 11 of their MD80s that were forced to spend much of the weekend on the ground.

Good news for American. Should mean the airline can be back up to full capacity by the end of the week. If not sooner.

American Airlines Grounds MD80s Following Maintenance Miscue

Only a week before Thanksgiving, American Airlines (AMR:NYSE) is apparently scrambling to work through a maintenance snafu that has seen tens of its MD80s grounded in various locations around the country because of fuel contamination problems.

From what we understand, American Airlines’ maintenance crews improperly prepped fuel tank access doors of the affected aircraft before painting them.

The mistake then apparently caused the paint to contaminate the fuel filters of the aircraft.

We understand that American Airlines was forced to ground 54 of its approximately 300 MD80s on Friday and as of yesterday, there were still a fair number of aircraft parked around the system.

Needless to say, not even considering the cost of repairing the actual problem, this has become a costly mistake for American, as thousands of travelers have had to be compensated and/or rerouted since the aircraft were pulled from service.

Given the date, it’s going to become even more costly if the airline can’t get those aircraft back up and flying soon.

Speaking of On-Board Cell Phone Usage

Kudos to Continental’s (CAL:NYSE) CEO Larry Kellner, who told an attendee in response to a question at the International Trade Summit and Expo 2006 Monday that he is against the use of personal cellular telephones on aircraft while in-flight.

Kellner didn’t see a need to ban brief calls in flight, but he favors Internet access as well as text-messaging on cell phones or BlackBerries. He also said that Continental hopes to make broadband Internet access available to passengers by 2008. But that VOIP usage would not be included.

This topic is back in the news because of Emirates’ announcement last week that it plans to bring onboard cell phone access to its flights beginning in January.

Emirates said last week that it hopes that passengers would “respect the privacy of those around them” when using their phones, but just how this is going to be accomplished is certainly a mystery to me.

I guess flight attendants will now be expected to act as “cell phone cops” for the entire flight?

Good News for High Altitude iPod Users

Yeah! Unlike onboard cell phone usage, here’s an onboard enhancement that makes sense.

Apple Computer today announced it is teaming up with Air France, Continental, Delta, Emirates, KLM and United to deliver the first seamless integration between iPods and in-flight entertainment systems. These six airlines will begin offering their passengers iPod seat connections which power and charge their iPods during flight and allow the video content on their iPods to be viewed on the their seat back displays.

In-flight iPod connectivity will be available beginning in mid-2007. Apple is also working with Panasonic Avionics Corporation to bring even more airlines in-flight iPod connectivity in the future.

One Aircraft I Would Love to See in Person

A friend of ours sent out these pics this week that were taken in Las Vegas. The aircraft? The only one of its kind –a Russian Antonov 225. It is also the largest aircraft in the world. Wingspan on this baby? About the length of a football field.

The airplane was delivering a power transformer for Nevada Power, which had been manufactured in Turkey. I wonder what the air freight charges were on that shipment?

In case you’re interested, here are the aircraft’s specs.

Wingspan – 290 Ft.

Height. 59.4 Ft.

Length – 276 Ft.

Number of wheels..24

Max T.O. weight – 1,322,750# (A little over 660 Tons)

Max payload – 551,150# (Over 275 Tons)

Engines – six Lotarev D-18T turbofans

Max speed at altitude – 530 MPH

Cruise speed – 495 MPH

Range – 8310 NM

PBB is Now Posted

Subscribers can now access this week’s issue of PlaneBusiness Banter here.

PBB Posting Update

We’re back on our normal schedule this week with PlaneBusiness Banter. No running around the countryside this week for yours truly.

And we’ve got a huge issue for subscribers to dig through as I take a closer look at the recent quarterly results of ten, yes, ten airlines.

Look for this week’s issue to be posted later today. As always, I’ll let you know when we’re up.