Monthly Archives: May 2008

Update on US Airways/United Potential Deal


Late news out this afternoon has United’s Glenn Tilton and US Airways’ Doug Parker now scheduled to “talk” tomorrow. Where is that Star Trek miniaturization device when we need it, so we could all be the proverbial flies on the wall?

Not surprising that the deal is not officially “dead.” It does seem there has been a lot of “posturing” in the press with this one, so I have made it a point to take whatever is “reported” with a heavy grain of salt, as I mentioned earlier.  (Makes that turkey taste better as well.)


The latest scoop has United still considering the more “traditional” merger agreement  with US Airways, or a more marketing/alliance type of agreement with Continental Airlines. So nothing has changed on that front.

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Delta Flight Attendants Once Again Say “Thanks, but No Thanks” To AFA By Not Voting

Delta Nw Merger Image

In its second attempt to gain the right to represent the flight attendants at Delta Air Lines, this time the Association of Flight Attendants once again came up short. But this time it was because not enough flight attendants voted.

Apparently 5,253 of 13,380 eligible flight attendants cast “yes” ballots, well short of the majority required, the National Mediation Board reported today. Employees who don’t vote are counted as “no” votes. A total of 5,306 ballots were cast.

So while the AFA made the point on its website that it received a majority of the number of votes cast, a majority of eligible voters must vote for an outcome to be certified by the NMB.

This is an interesting election for a number of reasons. One, because AFA probably thought it had its best chance in years to get the prize, considering the Delta flight attendants are going union-less into a merger deal with Northwest.

Secondly, AFA represents the flight attendants at Northwest.

So this presents an interesting scenario, as Delta F/As easily outnumber the total at Northwest. So it is going to be very interesting to see how the representational vote goes for the merged group — if and when the Delta/Northwest deal finally comes to pass.

Ticker: (NYSE:NWA); (NYSE:DAL)

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Back in the Saddle Again…

Hi guys. I know. I’ve been absent for a couple of days. And look what happens when I go off and leave you on your own.


First, the US Airways/United deal appears to be floundering, or at least that is what the New York Times reported late yesterday. Although for those of us who read such reports carefully, if I was a betting woman, it would appear that there were some union “sources” talking to Ms. Maynard and Mr. Sorkin because of that one telltale line in the story.

The line? “In particular, it became clear that the labor agreements would have to be sorted out before the combined airline could see any of the savings from the deal, which could have been in the hundreds of millions of dollars.”

My translation of this is that union leaders wanted a seat at the table – before negotiations could go any further. And having listened to US Airways’ Chairman and CEO Doug Parker talk this spring about how he did not think giving labor a mandate to sort out their differences ahead of time was such a hot idea (aka Northwest and Delta) — I doubt that US Airways would agree to give labor that kind of position in a potential deal up front.

If the deal is indeed dead, this certainly puts Mr. Tilton and United in a strange position. After putting themselves on the block openly for years — this will be the second deal to fall through involving the airline in less than two months. So much for the great deal hunter.

I wish management at United would figure out that it’s more important to actually run a good airline, as opposed to constantly running numbers on various merger scenarios.

Alas, now it looks like the airline is rather inept at both.

Meanwhile, Airbus warned earlier this week about additional problems with its manufacturing process, and American Airlines has been announcing cuts in routes right and left — including JFK/Stansted.

American said Tuesday it is discontinuing flights between Chicago and Buenos Aires, as well as its Boston to San Diego route. It will also reduce its flights from Chicago to Honolulu to only  “peak demand days.” The airline is also restructuring its operations in San Juan, Puerto Rico.

Today the airline announced it is cutting service between New York’s John F. Kennedy International Airport and London’s Stansted Airport effective July 2.

As one of our industry buddies wrote today, “I’m shocked. Simply shocked.”

Wise guy. Yeah, right.

No one should be shocked at this news, as American added this flight less than a year ago in response to competitive service on the route by EOS. EOS is now gone, so bye bye American.

Anyone taking bets as to when American finally shuts down its money-losing Love Field adventure?

But hope springs eternal at JetBlue, which this week not only announced it was delaying a slew of new aircraft deliveries — 21 aircraft for as long as five years — the airline also issued a prospectus on a $160 million bond offering.

Gotta hand it to them — it’s probably better to do an offering now than later this summer. Stock up those cash assets while you can.

Finally, while there were a lot of headlines yesterday talking about “lower” energy prices, remember that term is soooo relative. Prices yesterday were not that much lower. Not only that, but today, prices were back up again.

Crude oil closed at $131.03/barrel today, up almost 2% on the day, while N.Y jet fuel closed at $3.96/gallon. West Coast jet fuel is still running above $4/gallon.

Ticker: (Nasdaq:UAUA); (NYSE:LCC); (NYSE:AMR), (Nasdaq: JBLU)

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Raising Fees Versus Raising Fares

rattlog.jpgHere snakey snakey, come on snakey snakey, give us a little rattle. Come “say hello to my lil friend”, Mr. .22 long rifle. Oh, sorry. In between trips taking Skydog to the vet I’ve been hunting for a rattler in my back yard. My walled in, sealed up, and supposedly snake-proof back yard, at least until this week. We’ve had snakes before in the walled in dog run, which is down in the wash behind the house, but never in back of the house. Ms. Skydog isn’t feeling that well, but we’re hoping to nurse her back to health. Meanwhile Nikko and I have been patrolling the back looking for revenge.
In between sorties to the backyard today I was reading some press releases by several airlines announcing the inevitable fare increases made necessary by you know what. (I am committed to write at least one post without using the “O” word).
United announced a $10 – $60 roundtrip fare increase (I hope it’s closer to $60 than $10). Midwest Airlines announced it would begin charging $20 for the second checked bag. I know people in Wisconsin are nice, but that boat already sailed. Airlines are begining to charge for the First checked bag now, if the recent American Airlines initiative sticks.
One announcement that was relatively amusing was that Frontier had raised a whole host of their service fees, including raising the fee to check antlers from $75 to $100. Their baggage fees will obviously have the biggest positive revenue impact, since presumably more passengers check bags than animal parts, but I could be wrong.
Of the three announcements I think the United initiative will generate the most revenue for the least additional cost. Ocean.jpgA fare increase is the most logical and equitable way to recoup costs that are caused by the rising cost of you-know-what; although baggage (and antlers) do add more weight and consequently incrementally increase the cost of flying the airplane, it’s like urinating in the ocean. Not much of a difference to the ocean whether you do, or whether you don’t.
However, unless the airline is set up to force those fees into the initial transaction while the customer is buying their ticket, or at least provide the flexibility for the customer to pay the baggage fee while checking in at the kiosk, I think the revenue benefit will be mitigated. Maybe a lot. Down in the FAQ section of the Frontier announcement is a statement that says “You must pay the baggage fees at the ticket counter only.” That doesn’t sound to me like it is available at a kiosk. This will force lots of additional people to check in with a live person, and those are sometimes at a premium while at an airport. Head count is usually the first cost to eliminate when it is time to cut costs, so implementing a fee that requires a passenger is manually processed by a person is counter-productive, or ticket counter-non-productive, if you will.
Most traditional airlines have traditional distribution systems, meaning they are pretty good at collecting fares and not-so-good at collecting ancillary fees. Airlines like Allegiant or Air Canada, who have gone to great lengths to commodotize their products can more easily charge for each feature. Airlines with more traditional distribution who try and match this flexibility without corresponding flexibility in how they collect the fees, will be increasing their costs to collect the fees.Godzilla.jpg
In addition to the hard costs of personnel, the boarding process becomes more complex. It will be interesting to see how airlines will handle checking those carry-ons that don’t fit on the airplane. That there will not be enough room for carry on bags doesn’t usually become apparent until towards the end of the boarding process. The usual drill is for the bag to be tagged at the jetway and then put in the baggage compartment – will that be cash or credit card sir?
Just raise the stupid fares.

Our Best to Skydog; Why Arizona May Not Be on our Top Ten Places To Live List

Frank Arciuolo, aka Godzilla, who blogs for us here at PlaneBuzz on a semi-regular basis, and his lovely wife MB have two dogs. One is a beautiful German Shepherd named Nikko. He really is the nicest German Shepherd I’ve ever met.

The other is a Heinz 57 pound puppy by the name of Skylar. Or, as her friends are allowed to call her, Skydog. Skydog is a mess. In the absolute best sense of the word. She also is the alpha of the two dogs, even though Nikko now towers over her.

Wednesday Skydog was apparently doing what she usually does outside the Arciuolo compound in Tucson — sniffing, looking to see what new smells were to be had in the sunshine.

Apparently there was more than just a few new smells in the sunshine, as Skydog was bitten by a rattlesnake.

See poor Skydog’s swollen face here.


Frank tells us that the snake bit her inside the mouth so she is in some pain, “but her heart rate and stuff is good. The vet said her blood platelets were about 100,000 yesterday, and normal is 200,000, while below 50,000 is very bad.  So we decided not to give her the anti-venom because of that, plus the anti-venom treatment isn’t a lot of fun for the dog anyway.  The swelling around her neck is gone but her face is still swollen.”

“They told us to watch for bruising on her skin, which would indicate

internal bleeding.  So we found some bruising this morning and are on the

phone to the vet now to see if we should bring her in for another blood


“Mr. Nikko has been guarding her when she goes outside.  Still haven’t found  Mr. Snake yet after looking a few times, but I’ve got the rifle at the ready.”

I wouldn’t expect Godzilla to respond in any other way.

Our best to Skydog. Hope you feel better soon sweetie.

Trading in Shares of SilverJet Halted


Bloomberg reports this morning that trading in shares of Silverjet have been suspended in London because the airline has yet to receive a promised $5 million investment.

The airline said today in a statement that it had asked for the money as part of a loan agreement from Viceroy Holdings LLC, a U.A.E.-based fund. But the airline said that it has yet to receive all of the money. Shares were suspended from trading on the London Stock Exchange’s Alternative Investment Market at the request of the Luton, England-based airline.

In the statement, the airline said, “Silverjet’s working-capital reserves are limited and advances under the loan facility are required as a matter of urgency,” the carrier said. “Silverjet continues discussions with other parties, which have confirmed an interest in investing in the company.”


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My Eyes Are So Swollen I Must Still be In North Texas

Anybody got a cucumber?

Okay, smart guys. It’s for my eyes!

It’s Friday in the great DFW Metropolis and yours truly is now trying to see the computer screen. This is day three of waking up with swollen, scratchy eyes and congestion.

(Day one — Tuesday, I was not so similarly afflicted in that I had been nicely confined in a controlled environment, i.e., the Grand Hyatt at DFW International.) And when I say “nicely” confined in the Grand Hyatt, I’m not kidding.


I’m not sure I have stayed in a nicer room — speaking from someone who wants a comfortable bed, a fairly large room that doesn’t feel cramped, a comfortable place to work, and and all the latest tech goodies to boot. On this front the room offered up an iPod charger/player clock radio, nice 32 inch flatscreen Samsung television, a chair that is actually not built for dwarfs — that adjusts just like a real office chair. And a  good sized desk that you can actually work on. And hey, all of this is accompanied by the sound of jet turbines — right outside your window. Who could ask for more? Well, you could, and you’d probably get that as well. The food was great, the service from everyone was excellent and hey, there’s a pool on the roof. Not to mention the black marble “spa-like” bathrooms.

I wonder if the airport has considered putting in penthouse suites on the top of the hotel? It would be a great place to live.

But I digress. My thanks to Joe Lopano and the rest of the folks at DFW who had me over on Monday for a nice 2 hour session.

I think I’ve now figured out  how I am going to board any flight going out of DFW. I’m going to go over to terminal D, park my car, go through the short security lines, enjoy the beautiful terminal and yes, it is gorgeous, and then take the tram to wherever else I need to go from there.

Almost like having a brand new airport. And a chance to pixel peep at airplanes between the concourses. Sounds pretty good to me.

But first I need to be able to see. Period.

After all that blowing dust and whatever yesterday (yes, another windy day here in the metropolis) yours truly looks like she’s gone about 7 rounds with someone. Not sure who. I really will have to resort to putting a bag of ice over my eyes after I finish this post. Then I’m off to Walgreens for the Zyrtec I forgot to pack. Thank goodness they sell it over the counter now.

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Closing Numbers of Note: Jet Fuel Basically The Same, Oil Down a Smidge; S&P Downgrades Nine U.S. Airlines


Or would that be a “smudge”?

We got a small bit of relief on the energy price front today, but not much.

Crude closed at 130.81 for the day, but jet fuel prices pretty much stayed the same, with the average closing price for New York Jet, Gulf Coast Jet, Mid-Continent, and West Coast Jet coming in at $4.09/gallon.

For the day, shares of ExpressJet posted the biggest loss for the day, as they dropped back a whopping 41%, closing at 1.61. Another day of decline for the airline — after it said Wednesday it was cutting its branded flights by 30%.

Shares of Mesa Air Group didn’t have a good day either, as the airline was forced to talk about its dwindling cash situation and potential revenue shortfall as a result of the loss of the Delta Air Lines/Freedom Air contract today in SEC filings. Shares here dropped back 16%, closing at 48 cents after the airline’s discussion of a potential bankruptcy filling. With the equity in this stock already shot for the most part, one has to wonder why the airline has not already filed for bankruptcy protection.

Republic didn’t have a good day either, as shares here were down 12%, ending the day at 12.45.

SkyWest was the one regional that pretty much held down the fort, as shares here were only down 1% on the day, closing at 15.48.

As for big Wednesday loser AMR, parent of American Airlines, the stock posted a small recovery today — but nothing to write home about. The shares recovered 5%, closing the day at 6.56, after its 24% jump off the cliff on Wednesday.

Things didn’t get much better for airline stocks after hours as S&P put the ratings of nine U.S. airlines on CreditWatch negative.

“The dramatic increase in jet fuel prices has increased airline costs significantly over the past two months, and, if sustained, could threaten their liquidity and financial profiles,” said Standard & Poor’s credit analyst Philip Baggaley in a statement.

S&P placed the following airlines on CreditWatch: AirTran Holdings Inc.; Alaska Air Group Inc., the parent of Alaska Airlines: AMR Corp., parent of American Airlines; Continental Airlines Inc.; JetBlue Airways Corp.; Southwest Airlines Co.; UAL Corp., which owns United Air Lines: and US Airways Group Inc., which owns both US Airways and America West Airlines.

Southwest Airlines, the most heavily-hedged U.S. airline, and Alaska Air Group, the second-best fuel hedged carrier, are in a “somewhat better” position than others, according to S&P.

Northwest Airlines Corp. and its Northwest Airlines unit are already on already on CreditWatch due to the proposed merger with Delta Air Lines Inc., which is currently on positive CreditWatch.

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