Monthly Archives: January 2008

Heads Up for United Retired Pilots; Please Add Your Name to the Headcount


Are you a retired United Airlines’ pilot?

If so, a retired pilot group in Chicago is attempting to estimate precisely just how many United pilots who lost their defined-benefit pension plan and ESOP shares are alive and kicking.  (Probably screaming as well, but that is another issue.)

We were asked if we could help this effort by publicizing their call for information.

To add your name to the official headcount, or if you have any questions about this effort, please contact Dave Wickersham at MacWicker “at”

(Address listed that way to prevent Dave from being overwhelmed with unwanted spam.)

PlaneBusiness Banter Posting Advisory; Oil Price Update

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Stop the incoming! Stop! Stop!

No question. This week is the heaviest week we will see this quarter in terms of major and not-so-major airline earnings reports.

And on top of all the biggies who had already reported this week, then Frontier had to go and add its numbers to the mix last night. Thanks guys.

Looking at where we are in the writing and editing process — I am forecasting either a very late posting tonight for this week’s issue or it may be Saturday. Big, big, issue this week.

But that is one of the beauties of Internet publishing. We can either give you something at the same time every week — or we can give you the full story we think is important when we get finished writing and editing it.

As I once told a subscriber who wrote to me and complained that we did not post at the same time every week, “We are not a print publication. We are an Internet-based publication. That is an advantage. I think our subscribers would rather have the full enchilada then just a piece of one — which is then pushed out the door in an attempt to meet some arbitrary deadline.”

That’s so dead tree media.

I was glad to read the editor of Texas Monthly more or less talk about the same thing recently, as he explained why it was that the publication is now using its website to release singular stories on a totally “as warranted” basis — instead of waiting for the normal print publishing deadline for its dead tree flagship publication.

Then again, I guess I could clone myself. That would solve the problem and increase my productivity by 100%.

Heh. This is starting to sound like one of those goofy Southwest Airlines commercials.

One bullet point before I leave — as of this posting, crude futures are back up over $91 and change.

Have a good Friday everybody. I’m off to dig through spreadsheets, earnings call transcripts and analyst reports.

Ouch! Frontier Posts $32.5 Million Loss for Quarter


It’s been a long week for earnings.

And it’s not over yet.

Tomorrow Frontier Airlines will give more color to the information behind its press release that was issued late today.

You can access the press release, including all the gory details here.

Bottomline? These are very ugly numbers folks. No other way to put it.

For the quarter ending Dec. 31, Frontier Airlines Holdings, parent of Frontier Airlines, reported a consolidated net loss of $32.5 million, or $0.89 per diluted share, This compares quite unfavorably to last year when the airline posted a net loss of $14.4 million, or $0.39 per diluted share, for the same period.

CEO Sean Menke said in the release, “The two primary drivers for our loss were the 16.3 percent year-over-year increase in fuel cost per gallon and losses from our regional fleet operation. To some extent these losses were generated by sub-optimal scheduling in our Mexico flights, both those originating in Denver as well as from other cities in our network, and schedule adjustments required to cover the delayed start-up of our Lynx service.”

Should be a rather somber earnings call tomorrow.

First Credit Downgrade Hits the Sector; Fitch Lowers Southwest Rating


Our PlaneBusiness Brown Bag Analyst sent me a note last week after Fitch Ratings published their credit update on the airline sector, and he asked me, “How long do you think it will be before one of the airlines has its credit rating downgraded?”

I should have made a contest out of it for all of you.

Then again, it didn’t take long.

Today Fitch Ratings downgraded the debt of Southwest Airlines. The downgrade affects the issuer default, senior unsecured debt, and bank credit facility ratings of Southwest, and applies to about $1.6 billion in debt. Fitch said its rating outlook for Southwest is negative. The issuer default, senior unsecured debt and bank credit facility ratings were cut to ‘A-‘ from ‘A’.

We noted in last week’s PlaneBusiness Banter that Southwest had announced a new $500 million stock buy back — and as longtime readers of me are aware — generally I am not a big fan of buy backs.

In this case, given the industry metrics we are looking at, I thought the announcement by Southwest was ill-timed. It  appeared to me that  the airline was making a play to increase market support for its stock price, at a time when it might be a better idea to keep its cash in the bank.

Today the airline paid the price for the move, made as it was against an increasingly problematic industry financial background. Fitch noted the buyback in its reasoning for the downgrade, adding that the downgrade reflects its expectation that a fragile airline industry over the next few quarters will weaken Southwest’s credit profile.

Ticker: Southwest Airlines, (NYSE:LUV)

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Good News on Oil Prices; Crude Drops Back More Than 2% On the Day


One of the most glaring good news/bad news situations we have on Wall Street in regards to the airline industry is, of course, the issue of oil prices.

The generally accepted economic theory is that when the economy tanks, oil prices should drop because it is expected that lower economic activity means lower demand for energy products.

Unfortunately, while many kept thinking this scenario would happen in 2007 — given the growing banking, real estate, and mortgage mess — it didn’t.

But now, at least for the time being — it does appear that the markets may finally be thinking, “Okay, this is really going to be a global slowdown –and if it is a global slowdown, oil prices need to come down.”

That’s the good news. Of course the bad news is we would not be having this conversation if the economy was rockin’ and rollin’.

Then again, with oil prices where they are now — one has to wonder if the rules regarding this economic  situation have not been somewhat modified over the last few years. In other words, oil is still, even after a week or so of continued declines, trading at $86 a barrel.

But I digress.

The long and the short is that oil prices continued to drop today. And hey, we’ll take it. At the close of trading, crude oil was at 86.99, down more than 2% on the day.

United, Delta, and Southwest Report Earnings


This week we’ve now had three major airlines report earnings for the fourth quarter — United, Delta and Southwest. They join American and Continental, who reported earnings results last week.

Tomorrow we have two more major airlines spilling their fourth quarter and year-end beans — US Airways and Alaska Airlines.

Just one comment on the United earnings call from yesterday. 

United CEO Glenn Tilton disappointed us this quarter.

Readers of PBB are aware that every quarter Glenn usually puts forth some heavy-duty corporate jargon in these calls. This quarter, however, I must say I did not find any overt abuse of such words as “disaggregation.” Glenn pretty much behaved himself in that regard.

United Airlines Earnings Call Transcript

Bloomberg Summary of United Results

Meanwhile, the headline of the day award has to go to this story. It’s an Associated Press story by Harry Weber. I read it on the Rocky Mountain News website.

Headline: Egos Slow Airline Merger Talks.

I’m shocked, I tell you. Yes, simply shocked.

Actually I’m more swamped than shocked.

Talk to you guys later. I have earnings calls to listen to.

Airbus Pushes Back Window on New Single Aisle Aircraft

Flight International is reporting today that Airbus is now looking at a potential 2017-2020 timetable before the airline will have a new single-aisle aircraft ready to roll.

This push back confirms what was being bandied around last year at the ISTAT conference. The problem is fuel consumption. Before Airbus and Boeing can guarantee that a new aircraft is 15-20% more fuel efficient — they are not going to put out a new airplane. And if  they can’t post at least that level of efficiency improvement, airlines are not going to want any of the new airplanes.

So — it all goes back to the engines.

According to the article,

“Airbus’s chief operating officer customers, John Leahy, says the development of new engine technology is dictating the pace of new narrowbodies from Airbus and Boeing. “The engine-makers say the technology won’t be around until 2015, so we’re looking at 2017-20 for the next-generation single-aisle,” he says.

This is later than Airbus previously indicated, having until now maintained that it expected the next-generation aircraft to be available from the middle of the next decade – a schedule with which its rival Boeing concurred last year.”

Trust me. Boeing doesn’t have a hot shot rocket engine parked on the back forty that burns 20% less fuel either.

Clearly one of the U.S. airlines most affected by this delay is American Airlines — which now finds itself in the unenviable position of sitting on an increasingly expensive fleet of older MD-80s it would like to get rid of sooner than later. But with no new single-aisle aircraft now on the horizon for possibly another 10 years from either Airbus or Boeing — this is going to leave American in the position of having to beef up its fleet with existing generation aircraft.

Bad timing.