Monthly Archives: May 2007

Tuesday Tribulations; Southwest Airlines Downgraded


While most airline stocks moved upward today (in small part due to a drop in the price of oil) shares of Southwest Airlines were one of  the few exceptions.

While the price of crude was down almost $2 on the day, closing at 63.15, shares of Southwest were down almost 2%, ending the day at  14.24 and change. (I’m writing this before the end of day numbers are final.)

So what was the instigator to this drop while most airlines frolicked?

Prudential Equity Group analyst Bob McAdoo downgraded Southwest shares  to “underweight” from “overweight,” saying Southwest’s “model doesn’t appear to be working anymore.”

He said the carrier continues to add aircraft at a rate of 35 or more a year, even while most of the 73 new markets it’s entered since early 2003 have been “consistent money-losers.”

“Lacking some new direction, we believe LUV shares are going nowhere,” he wrote in a note to investors. 

This shouldn’t come as news to anyone — as questions over the airline’s continued growth push, in the face of continued lessening demand at higher fares, first cropped up last fall, as I commented on at the time. The event then was the airline’s media day, and I was a little surprised at CEO Gary Kelly’s comments then that seemed, well, a bit overly exuberant, concerning the airline continuing its planned growth targets in 2007.  Actually he said then that if the airline could find more airplanes on the secondary market that met their needs, they would grab them as well. And they have done just that — picking up another pair of aircraft in addition to the new Boeing 737-700 aircraft already in the pipeline for this year.

Then, as the airline reported first quarter results, the earnings call for Southwest became one of the most contentious of the season, as analyst after analyst peppered Kelly with questions concerning the airline’s continued emphasis on more growth.

Foto Friday: TWA Constellation

Now this is a great Foto Friday specimen. (For a minute there I thought we were going to have to change this to “Cat Foto Friday.”)

Thanks to Eric Olesen from Amadeus Revenue Integrity who sent this great shot of the “Star of Switzerland.” Nice shot of the TWA Constellation. This silver beauty can be found at the Pima Air/Space Museum in Tucson.


DCA: Memorial Day Friday in the terminal

It must be a holiday weekend.
Jonathan here, talking to you from Washington Reagan National Airport. I’m flying tonight to Indianapolis, on my way with several friends to tomorrow’s Cards-Nats baseball game at Busch Stadium in St. Louis.
And, like I said, it’s definitely a holiday weekend. Check-in lines at Midwest, AirTran, and ATA were quite long when I walked off the shuttle bus and in to terminal A. Northwest’s line was thankfully short and I breezed through my bag check and through security. Hot on my heels though was one of a few large student groups in the building. I didn’t watch them go through security (that seems like something the TSA would frown upon) but I would never want to be the chaperones responsible for a trip on its way through TSA screening. Talk about a nightmare in the making.
Even taking the school groups out of the picture (Wait, where did they go? I hope they’re not all lined up at the Jerry’s Pizza & Subs counter…) the terminal is plenty crowded for all of the airlines represented here.
Ahh, another strong indicator of heavy weekend travel — oversold flight needing one volunteer. Northwest is giving one passenger on my flight a free round trip ticket to take a connecting flight and it looks like they got their man shortly after the announcement.
Today is the beginning of my first of two three-leg trips for the summer. This trip’s routing is DCA-IND, IND-DTW-GRB, GRB-MSP-DCA between now and June 4. In July, I’m headed DCA-LAS, LAS-DEN-MCI, MCI-ORD-DCA. Toss in a week-long trip out to SFO in mid-June and it’s turning in to quite a busy summer.
The last time I was here waiting for a flight, you might recall, it was raining ice pellets and we were delayed on and on. Today the forecast is hazy, but overall nice. I’m watching a cadre of Airbus, Boeing, MadDogs, Bombardier, and Embraer jets lift off to the South.
Here’s hoping the rain holds off in St. Louis tomorrow.

Foto Friday

Okay, I know. I’ve dropped the ball on this one of late. Kind of hard to go searching through photos when we’re in the midst of writing an issue or doing an interview.

But now we’re back to our usual Friday routine.

This means?

This means I need some PICTURES.

C’mon guys. Several of our American Airlines’ readers have been very good at sending me shots — but this is not the American Airlines’ Foto Friday.

So — for next week — send me your shots. Airplanes, people you work with, the barbecue pit out there under the Southwest gates in Phoenix I spied last week, (if you don’t do it, I will because I have the shots) the rumba competition you had in reservations two weeks ago.

Just send your submissions to me care of hhegeman (at)

Foto Friday in the subject line will also help me pick them out from the rest of the usual fodder.

I Blog, You Blog, We All Blog


A hearty welcome to yet another addition to the airline-related blogosphere.

Today the folks at the Ft. Worth Star-Telegram unveiled their new airline-related blog, SkyTalk.

Acting in the role of Sky King is Star-Telegram airline reporter Trebor Banstetter.

Trebor tells us the blog will be updated regularly by his partner in crime David Wethe, business editor Scott Nishimura, and, of course, Trebor.

Now we have dueling airline blogs in the Dallas Ft-Worth Metroplex, as Terry Maxon and Suzanne Marta unrolled the Dallas Morning-News aviation blog, Airline Biz,  earlier this month.

Welcome to the neighborhood boys.

Vote for War Funding and Support An Airline

Surprise, surprise.


AMR’s American Airlines and Continental Airlines will be able to cut their employee pension contributions by $2 billion under a provision that has apparently been written into the House version of an Iraq war spending bill.

The bill, approved by the House of Representatives Thursday night, would permit the airlines to assume an 8.25% annual discount rate in calculating the value of their pension obligations, rather than the 6% they use now.

Higher discount rates lower the pension obligation and pension expense.

This effort goes back to the pension legislation that was approved in 2006 that allowed both Delta and Northwest use a higher rate of 8.85%. While both AMR and Continental benefited from the legislation, in that both airlines were given extensions of time in which to fund their pension requirements, the discount rate for both was not raised.

Bloomberg reported tonight that  AMR and Continental aren’t named specifically in the Iraq bill. The proposal cites carriers with “non-frozen pension plans.” American and Continental didn’t freeze all their defined-benefit pension plans from accruing future liability, so they didn’t qualify for the higher rate extended to Delta and Northwest.

Other, smaller carriers with unfrozen defined-benefit pension plans also would qualify for the higher rate, including Alaska Air Group.

This bill now moves to the Senate, where earlier this evening their version of the Iraq funding bill was passed.

Tickers: (NYSE:AMR), (NYSE: CAL)

Yapta Out of Beta: Let the Air Fare Games Begin


An interesting little new widget finally came out of beta this week and I think it’s safe to say airline revenue management folks are probably not too happy about it.

The application is called Yapta and it is a little downloadable program that will track air fares for you, letting you know if prices are going up, going down, or staying the same.

Oh, and if you’re wondering, Yapta stands for Your Personal Travel Assistant.

As reported today,

“It’s very easy to input the flight information, but Yapta makes it even easier with a widget that you can download called Yapta Tagger. The browser add-on integrates into airlines’ websites; when browsing through available flights on, say, American Airlines’ site, you’ll see a little button next to each flight that says “Tag it with Yapta.” Click the button and Yapta will add the flight to your list of tracked flights.

All this is fairly helpful when shopping, but it’s even more helpful once you’ve already purchased your tix. Input your flight info and how much you paid for the tickets, and Yapta will continue to keep track of the price until your plane takes off. Why is that so cool? Because airlines will refund the difference if the price drops below what you already paid.

I spoke with Yapta President and CEO Tom Romary a few weeks ago, and he said the airlines are not going to be happy about a service that lets consumers track their prices day to day. Romary, a former airline guy himself, also said airlines try to keep the refund policy under wraps, and here’s Yapta building a whole business out of publicizing it.”

“By enabling travelers to tag the exact flights they want from leading travel sites and receive e-mail alerts when prices drop, we’re providing complete price transparency and presenting them with the opportunity to save a significant amount of money,” Romary added in a press statement this week.

Yes, if that name sounds familiar it should. Romary was vice president of marketing at Alaska Airlines prior to starting up Yapta.