This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s issue here.
From the WSJ:
“Dell said an internal investigation has found accounting errors and “evidence of misconduct.” The PC maker, which is also the subject of an SEC probe, said it is still working to determine whether any financial restatements are needed. Dell hasn’t disclosed the exact nature of the issues being investigated.”
This week I take a follow-up look at our recent PlaneBusiness Ron Allen Airline Management Award column. We recently awarded American Airlines’ CEO Gerard Arpey the award. We give the award annually to the CEO who has done the most harm to their company during the course of the previous year.
We’ve received over 1200 emails in two weeks, and this week I’ll go over some of the overriding themes from those emails, and I’ll talk more about why it was I felt Gerard was the best candidate for the award.
Subscribers, look for this week’s issue of PlaneBusiness Banter later today. I’ll post here when it is available.
For those of you who are not subscribers, due to a large number of requests for copies, we will be posting that column with open access on the PlaneBusiness.com website in the next week. I’ll let you know when that column has been posted.
Oil prices have flown through the roof this morning. As we post this, a barrel of crude is now trading at 66.25, up over $2 since yesterday.
Reason? Escalating tensions about goings-on or potential goings-on in the Middle East.
American says that it will bring forward the delivery of 47 of the planes to 2009-2012 from 2013-2016.
The topic of American’s delayed decision on a Maddog fleet replacement was a hot topic of conversation this year at the annual ISTAT Conference, as I reported in PlaneBusiness Banter, with no less than Steve Hazy, CEO of uber-airline leasing firm ILFC making the comment, “The day of reckoning will come.”
Then again, as was pointed out by others, the airline has not been in a position to even purchase more aircraft for the last several years.
American is the largest operator of MD-80s. It currently owns 138 and leases 187 more of the aircraft, nearly half of the airline’s fleet.
The 737-800 carries roughly the same number of passengers as the MD-80, but will use 25% less fuel per available seat mile, according to the statement issued today by American.
After rumors of ugliness overseas that were not true pushed crude prices up in after-hours trading last night, the price of a barrel of crude retreated somewhat today, but it is still a hot property. As of this posting, a barrel of crude is up 1.57 a barrel to $64.50 and change.
Meanwhile, as the WSJ reports, a day after the government said sales of new homes fell for the second straight month while the supply of unsold homes continued to climb, one of the biggest U.S. home builders said the situation is too dim for it to provide future earnings guidance.
The financial results of Lennar are closely watched as a barometer for the housing market because it’s one of the biggest, and also because it has such a large share of homebuilding activity in Florida, Texas and California, the Miami Herald notes.
Lennar announced yesterday that its quarterly profits fell 73% from a year earlier, and that the housing slump and worries about fallout from the subprime lending market make the company’s future unpredictable.
Meanwhile, Business Week reports today that Beazer Homes, another of the major U.S. home builders, is the subject of a broad criminal inquiry, with the FBI, the Internal Revenue Service, the inspector general of the Department of Housing and Urban Development and the Justice Department looking into its lending practices and other transactions.
PBB subscribers know that we’ve been ahead of the curve in forecasting this situation. And why should we care about houses? Simple. Because we think the situation is going to worsen, and as it does, the U.S. economy is going to pay the price.
And this contraction will directly affect the ability of the U.S. airline industry to generate revenues. For that matter, it’s our opinion that this is already happening.
If that was not enough good news, the durable goods numbers came out today, and well, they were ugly, ugly, ugly.
Happy Wednesday everyone!
Crude gave up most of those gains according to one trader after reports of a confrontation were denied.
U.S. light crude for May delivery jumped $5.18, or about 8%, to $68.91 a barrel in electronic trading before giving back most of those gains to trade at $64.40 a barrel, $1.47 above Tuesday’s settle price on the New York Mercantile Exchange.
“We have no information at this time that an incident has taken place in the Gulf,” Gordon Johndroe, a spokesman for the National Security Council, said about reports of a confrontation between Iran and U.S. Navy warships.
The worst aviation accident in history happened today in 1977 when two Boeing 747s collided on a runway on the island of Tenerife, Canary Islands.
The disaster killed 583 people.
The accident involved Pan Am Flight 1736, under the command of Captain Victor Grubbs, and KLM Royal Dutch Airlines Flight 4805, named Rijn (Rhine River), under the command of Captain Jacob Veldhuyzen van Zanten.
KLM 4805, taking off on the only runway of the airport, crashed into the Pan Am aircraft which was taxiing on the same runway.