Monthly Archives: April 2007


Sorry for being so absent this week folks. It’s earnings overload. I’ve got full write-ups of six airlines in this week’s issue, along with summaries of two others.

But right now, I’m taking a break, having just sent a raft of pages to our web editor. (Now he can start to have fun as he begins to format!)


Yep. It’s time for some NBA playoff watching.

I love this time of year.

Although the Dallas Mavericks had best get their act together tonight if they hope to meet Phoenix in the Western Conference Finals. They looked pretty poor the other day against the Warriors.  Looks like they’ve come out of the box a bit stronger so far tonight. But they still don’t look like they’re running on all cylinders. Dirk looks just as bad as he did the other night.

We’ll see how the night goes. (Actually I won’t. I’ll be long gone before this one is over.)

Fie on late games.

For those of you who are not NBA fans,  there’s all this great backstory between Dallas and Golden State. (Don Nelson, the coach of Golden State used to be the coach at Dallas. Let’s just say he and current Dallas owner Mark Cuban have had their, er, differences.) In addition, Dallas did not beat Golden State once during the year. Not once.

Go Suns. (Yes, I’m a Steve Nash fan. A Big Steve Nash Fan.)

Boo Kobe. Go Steve.

Plane Chatter: Boeing and US Airways About to Announce 787 Order

M Image.101688Cd0B5.93.88.Fa.7C.21743B71A

The Times Online in London is reporting US Airways is going to ditch a $3.7 billion Airbus order in favor of a competitive deal with Boeing.

And I quote, “The Times understands that US Airways will announce an order for between 20 and 30 Boeing 787 Dreamliners within the next 48 hours. The deal will be worth between $3.2 billion and $4.9 billion at list prices.”

Makes sense to me. US Airways needs to replace aging aircraft sooner than later — and the A350WXB is still kind of a “work in progress” with no definite roll-out date, and, as Steve Hazy, head of uber-leasing company ILFC said in Phoenix at the recent ISTAT Conference, the airplane itself is still a work in progress.

This news comes after Boeing scored two nice additional orders for the aircraft this week — one from Virgin Atlantic, the other from Air Canada.

Virgin Atlantic said it will buy 15 787-9 jets valued at about $2.8 billion at list prices. Deliveries are to begin in 2011.

Virgin Atlantic’s order also included options on eight additional 787-9s and purchase rights on a further 20 planes. Virgin Atlantic said the total deal could be worth up to $8 billion.

Meanwhile, Air Canada said Tuesday that it had exercised options and purchase rights for an additional 23 787s, bringing its total orders for the aircraft to 37 from 14. The order for the 23 planes is worth about $3.5 billion at list prices.

Mesaba Leaves the Grip of Bankruptcy


Mesaba Airlines left bankruptcy protection on Tuesday, not as a regional airline with a contract to fly with Northwest, but as a wholly owned subsidiary of the still-bankrupt airline.

Under terms of the Northwest acquisition plan, Mesaba creditors will receive a $145 million unsecured claim in Northwest’s reorganization. Northwest also agreed in January to sell its Mesaba stock holdings back to Mesaba.

Biggest change on the horizon? Mesaba is scheduled to start taking delivery of 36 brand-spanking new 76-seaters from Embraer between now and the end of 2008.

Skybus Scribbles

A reader just dropped me a note and let me know that I had both a mention of Seattle/Vancouver Washington, and Seattle/Vancouver BC in my last post.

I’ve obviously been making that sales tax run between Portland and Vancouver Washington way too often.

Not really. That’s just what my pilot friends tell me who live in Vancouver. (Oregon has no sales tax, while Washington State has no state income tax — makes for some interesting activity back and forth.)

Sorry for the confusion. Obviously Skybus is going to be flying to Bellingham, which is right up there on the Canadian border. I know that. I was actually there last year. So there!

Also, as he noted, “Also, just what kind of pitch is there to put 156 seats on a 319?? And if they were trying to be a really LCC, wouldn’t it have made sense to leave off one row and only have 150 seats (3 FA’s rather than 4)??”


I don’t know, but I think I’d rather not fly one if that is going to be the seat pitch.

“Space, the final frontier,” as Captain Kirk used to say.

Skybus Gets Ready to Roll


Ahh, can you feel the excitement in the air? Really?

We now have more details on the new Skybus (ad)venture, based out of Columbus, Ohio.

We now know where the new airline, which includes a number of ex-Southwest folks, and a bit of influence, is going to fly.

Frankly, I kind of like some of the airline’s off-beat selections of airports, especially using Portsmouth for Boston flights and Bellingham for both Seattle and Vancouver Washington BC traffic.

Yes, you can see the influence of the Ryanair mode of city selection at work here.

The airline announced that it will begin service May 22, with 10 seats on each flight priced at $10 a piece (not including taxes and fees) between Columbus and the following city areas: Boston, Los Angeles, San Francisco Bay

and Seattle/Vancouver areas, and to Ft. Lauderdale, Richmond, Kansas City and Greensboro/Winston-Salem, NC.

— Los Angeles will be served through Burbank’s Bob Hope Airport

— Boston, through Portsmouth International Airport in Portsmouth, NH

— Kansas City

Richmond service begins on May 23.

On May 29, Skybus will add service to:

— Seattle, WA and Vancouver, British Columbia, through Bellingham International Airport in Bellingham, WA

— Ft. Lauderdale

— Greensboro/Winston-Salem, NC

On June 12, Skybus will begin service to San Francisco, Oakland and the Bay Area, through Oakland International Airport, and add a second daily nonstop flight to Los Angeles/Burbank.

Go check out their website. It’s up and running. Don’t forget the Skybusrules” page. It’s interesting reading.

Among the items of interest for passengers, the airline advises, “Hungry, thirsty? Bring Cash. ” Not only do they tell you that everything is for sale on the plane, including pillows, they also say, “Oh, and don’t sneak food onboard unless you brought enough for the whole plane.” Are they serious? They aren’t going to allow anyone to bring food onboard?

“Don’t buy a book.” Okay, no entertainment. No problem. That’s what DVD players and iPods are for anyway.

“Don’t call us.” Interesting. The airline says it has no phone number. So what happens in bad weather?

Oh, and tickets are non-refundable. Furthermore, if you have to change a ticket, it’s $40.

Here we go. Should be interesting to watch, that’s for sure.

Pilots at United Turn Down Tentative Agreement

United Airlines Logo.03-3

This week in PlaneBusiness Banter I discussed the issue of pilot shortages, and how both regional and major airlines are feeling the pinch.

Because the outcome of the vote on a tentative agreement between the pilots and United was not known last night, I didn’t throw this part of the puzzle into the mix.

However, today, ALPA announced that the proposal had gone down to defeat. Handily. The vote against the proposed agreement was by a margin of more than 2-1.

The significance of this deal? First and foremost, It was supposed to help the airline with potential pilot shortages this summer.

According to Paul Merrion at Crains Chicago Business, the agreement would have given United more scheduling flexibility and allowed senior pilots to fly more hours per month. In exchange, pilots would have won a higher minimum number of guaranteed hours of flying time each month and elimination of a lower pay structure and other cost-saving provisions for junior pilots who fly for United’s low-fare Ted subsidiary.

It’s going to be an interesting summer.

Ticker: (Nasdaq:UAUA)



Given that we’ve had three airlines report earnings this week, what’s our quick and dirty summary of the results?

Both Continental Airlines and American were able to offset continued sluggish activity domestically with revenues from their international operations. Southwest took a harder hit, because of its lack of international exposure. Remember too, however, that Continental also continues to add capacity, while American continues to shrink.

Southwest, of course, continues to add capacity faster than both of them.

Going forward, if we are to believe what the airlines execs implied and/or actually said in their calls this week, I’d say the folks at Continental were the most cautiously bullish, while there was some Texas Two-Step as to the nature of future guidance on the American call. After all is said and done, the airline is seeing slowing in demand, although CFO Tom Horton turned it around and said no, it was an issue of too much capacity.

The old chicken and the egg syndrome.

As for Southwest, as I wrote in PBB this week, I am glad to see the airline finally admitting that it is going through a “transformation.” Admission is the first sign of recovery.

As I’ve written before, I think CEO Gary Kelly has the most difficult job of any airline CEO out there right now — and it isn’t going to get any easier. As the airline’s advantageous fuel hedges go away and costs at the airline continue to increase — revenues would seem to be the place where the airline has to look towards for the answer. But how much can the airline raise its fares before the branding of “low fare airline” really starts to disappear?

Overall, no big surprises in the numbers reported this week — although I still think forward earnings forecasts for the industry are way out of whack. As we’ve been saying since last fall, we did not think 2007 was going to be the stellar year for the industry that many had been calling for, and the numbers we saw this week, and more importantly the forward guidance we heard, merely confirms this.

Most amusing incident on the three calls this week? An obviously planted question and response on the American Airlines call. I mean, if you’re going to plant questions and if the airline CEO is going to answer them, it needs to be a little less obvious than the back and forth we got to listen to between former American analyst, and current Calyon Securities analyst Ray Neidl and CEO Gerard Arpey.

Why do I think it was scripted?

First, Gerard hardly said a word during the entire call. Tom Horton basically ran the call. But he responded to Ray’s questions — particularly his second one about labor. And what a carefully constructed question it was. Then again, Gerard’s response was so well scripted it stood out like a flashing neon sign.

Neidl: Okay, great. The second [question] on a different topic is the labor situation. I know the contracts don’t come up for another year or couple of years in the case of some labor unions there seems to be a lot of concern on the part of many of the employees, now that [inaudible] starting to make money again, that they want their so-called fair share. How are you communicating with the

employees to demonstrate to them that one or two quarters of of profitability does not solve all your problems?

Arpey: Well, Ray, I guess you’re communicating it best right now. I think that’s obvious given the years and years of losses that the company incurred that we’ve got a lot of work to do to recover from the $8 billion that we lost between ’01 and ’05. So we have

had a very open dialogue with organized labor for many years now. And partnership to work together to make our company

stronger and we’re just going to stay the course with that and do our best to continue to work together, to strengthen the

Company and we will go through the Section 6 process with all of our unions and same spirit that it’s gotten to us this point t

spirit of collaboration and cooperation and try to get the best outcome for everyone, recognizing that there’s a lot of stakeholders

at this company. So we’ll do the very best we can.

All I have to say is “Rah, Rah Team!”

I’m off to find the Midwest Airlines mascot.


Until Tomorrow..

Play nice.

We’re off for the night.

FYI, we’ve already had one reader write,

“For all I know, Ron Reber is the best regional airline executive there is – which still leaves him substantially ill-equipped to be the Virgin CEO.

Running a regional is all about operations – you learn nothing about marketing, strategy, etc, because it’s all done by the major airline.

If it’s true, it’s even worse than hiring Fred Reid. Fred at least knew something about running a real airline, if from the largely-irrelevant standpoint of a legacy major. Reber would be great at the operations side, but with no experience on all the other relevant fronts…”

As I said –it’s the rumor du jour. If I had faith in it, I would have said so. Just wondered if anyone else could confirm.

On that note — have a good night!