Monthly Archives: December 2008

American Airlines Presentation From Monday

For those of you with inquiring minds, you can access the presentation that American Airlines made to the negotiators for the Allied Pilots Association by clicking here.

Meanwhile, as far as the APA is concerned, they told members yesterday,

“NEGOTIATING UPDATE: After a nearly seven-week break, formal negotiating sessions with AMR resumed this afternoon. According to the National Mediation Board mediator-directed agenda, AMR’s negotiators were slated to offer specific counters to APA’s responses to portions of management’s latest scheduling proposal. To our disappointment, management had no scheduling proposals or responses to discuss. In fact, they were not prepared to conduct bargaining on any area of the contract.

In a subsequent caucus with the NMB mediators, APA discussed the current status of negotiations. Bargaining was suspended and another day was lost because AMR was not prepared to negotiate, did not adhere to the agenda, and was not held accountable by the NMB. They continue to ignore the NMB’s direction and agenda, are non-responsive to APA proposals, and refuse to discuss major issues such as compensation, stagnation and furlough protections.”

As one of our longtime AMR/APA watchers observed this morning, “APA’s version has nothing about walking out or the Powerpoint slide show. That said I think both sides are getting their ducks in a row for the new sheriff coming to town in January.”

American Airlines and The Allied Pilots Union: Ugly, Ugly

Trebor Banstetter over at the Ft. Worth Star-Telegram reports today that things got a little heated at a meeting yesterday between the negotiators for American Airlines and pilot union representatives.

AA blasts union, pilots walk out

Officials with American Airlines gave a presentation to federal mediators Zachary Jones and Mike Tosi yesterday that criticized the pilots union for its approach to contract negotiations. The presentation accused the union of refusing to negotiate, pushing for an impasse (which would allow the union to strike), and ignoring the economic realities of the airline industry. It’s strong stuff, and far more aggressive than most of the airline’s public comments about the talks with pilots, which have made little progress after more than two years. Shortly after beginning the presentation, union negotiators “opted to leave the session,” according to the airline.

Don’t you just love the holidays? The season brings out the warmth and the joy in everyone, wouldn’t you agree?

British Airways and Qantas Crank Up the Merger Machine

It seems that we have news of a merger a minute these days — but nothing U.S. based. Yet.

This morning, hot on the heels of the news that Ryanair was once again mounting a hostile attempt to take over the 70% of Aer Lingus it does not currently control (a move which, not surprisingly the Aer Lingus management team quickly denounced) today we have news of an attempt at a true blockbuster link-up.

British Airways and Qantas are apparently in discussions to do the dastardly deed.

According to Bloomberg,

“The airlines are discussing a combination after the Australian government said today in a policy paper that it might ax a rule barring individual foreign holdings of more than 25 percent and total foreign airline holdings of more than 35 percent. Still, there are no plans to abandon the so-called “Qantas Sale Act” that says the carrier must remain 51 percent locally owned.

‘Any transaction would also comply fully with Qantas’s Sale Act and Australia’s international Air Services Agreements,’ Qantas said separately.

Negotiations on a merger are “advanced,” the Australian Financial Review said earlier. British Airways, Europe’s third-biggest carrier after Air France-KLM group and Deutsche Lufthansa, said it issued today’s statement in response to “media speculation.”

A merger of the two airlines would create an entity with annual sales of about $23 billion.

What a coincidence.AMR, parent of American Airlines also generates about $23 million in annual revenue.

And yes, you’d have to a blind person not to see why it is that the American Airlines-British Airways anti-trust piece of the pie is so important to this oneworld concept of world domination.

According to various reports out this morning, both airlines would retain their own brands. Sounds like another Air France/KLM type of set-up that is being proposed.

Continental Airlines Comments Confirm What Thin Thanksgiving Crowds Indicated

I love the airline stock sector. Just when you think it’s safe to stay in the water….

Last week the sector enjoyed one of the best week’s it has had in, well, weeks, with the majority of the stocks we track here at PlaneBusiness posting nice double-digit gains.

Today? Not so much.

And tomorrow? Probably worse. Much worse.

After the close of trading late this afternoon Continental Airlines announced its traffic numbers for November, along with its RASM estimates.

The numbers were not good. Ugly might be a better way to describe them.

You can read the release here, but here’s the Cliff’s Notes version.

Consolidated load factor was down 2.8 points to 77.3%, while mainline posted a load factor down 2.6 points to 77.8%.

On a consolidated basis, traffic was down 10.5% while capacity declined only 7.3%.

But here’s the nasty news. Consolidated passenger revenue per available seat mile is estimated to have increased only between 1% and 2% compared to November 2007. while mainline passenger RASM was up between 2% and 3%.

To put these numbers in perspective, last month the airline posted a consolidated RASM figure that was up 9.5% over October 2007, while mainline passenger RASM was up 10.4% year-over-year.

In addition, these estimates are also below recent analysts’ estimates, and the airline’s own recently revised guidance, which had the airline posting RASM increases of between 4% and 6%.

For those of you who don’t follow the sector that closely, the RASM numbers that Continental reports are looked upon as an indicator for the rest of the industry. Sometimes the airline can be a bit above or below the rest of the pack for various reasons, but most of us airline financial types still use their “first out of the box” look at RASM as a kind of indicator as to what’s on the horizon.

If this is what Continental did for the month, I’m not sure I want to see any more numbers.

Can United Airlines Be This Stupid?

From one of our most revered industry observers, a note this afternoon.

“United cannot be stupid enough to promote Saver awards Denver-Vail. Oh wait. Yes they can.”

I have to say, if the airline is pushing its customers to redeem freebie miles for Denver-Vail in January — Chicago I think you do have a problem. Or maybe more than one.

PlaneBusiness Banter Now Posted

PlaneBusiness Banter addicts, er, subscribers, can get their weekly fix here. Enjoy.

Ryanair Makes New Bid for Aer Lingus

Let no one say that Ryanair’s CEO Michael O’Leary is not a determined person.

This morning Ryanair announced that it will pay $1.78 (€1.40) a share — or $950 million in cash — for the remaining 70% of Irish flag carrier Aer Lingus. This price represents a hefty 28% premium over the current stock price.

Two years ago Ryanair tried to buy the airline, but only got as far as putting together a 30% stake in the airline.

Significance of the move? When was the last time we saw a low cost carrier purchase what is considered to be a Legacy carrier?

I suspect Mr. O’Leary may be successful in his attempt this time. There are too many things working in his favor as compared to two years ago.

Have We Digested All That Food Yet?

I don’t know about you, but I’m still working on mine.

Happy Monday After Thanksgiving everyone. We here at the PlaneBusiness Worldwide Headquarters enjoyed the last few days doing what most of you probably did as well. We ate too much turkey, watched too much football, and ate too much homemade pumpkin pie.

Yes, I think we ate more than we watched.

Yes, yours truly blew it out this year. Made a pumpkin pie from scratch I’ll have you know. And I have to tell you — it was truly a feast for the senses. Almost orgasmic. But then again, I guess you have to be a real foodie to understand.

But today is the start of a new week and a new month. And it’s back to work for all the elves here at the Worldwide Headquarters, including me, as we wrap up the latest issue of PlaneBusiness Banter. (Yes, I decided to give the elves a much needed holiday weekend off so they too could eat too much and watch too much football.)

PlaneBusiness Banter subscribers — we’ll be posting the latest issue later today. I’ll let you know when it is ready to be perused here. As usual.

All you other folks — why don’t you subscribe? Aren’t you tired of feeling left out?

Back later.