Monthly Archives: June 2010

PlaneBusiness Banter Now Posted!

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Hello everyone.

It’s a great day in America, isn’t it? Sorry, just channeling my inner Craig Ferguson.

Here at the PlaneBusiness Worldwide Headquarters it’s been a bit of a challenging 24 hours. We experienced a loss of connectivity late yesterday as a rather nasty line of thunderboomers erupted almost directly over our heads. I lost all email for a bit, and we lost our FIOS (our internet connectivity) after one particularly nasty lightning surge.

Things are now back working as they should, but it caused our editing process to slow to a crawl last night. No, let me rephrase that. It came to a screeching halt.

I finally gave up and we all started up again this morning at about 6 a.m.

And so here we are. Yes, it’s a great day in America.

After I get done here I get to go to the vet’s office and find out how difficult it is going to be to transition my cat to a new form of insulin. Why do I have to do this? Because the FDA has halted the sale of the type of insulin she was on.

I’m so looking forward to this. I know she is too.

I know that PlaneBusiness Banter subscribers are looking forward to this week’s issue — so here it is. Finally!

This week in PlaneBusiness Banter I talk about the change in command at the Allied Pilots Association. The APA is the pilot union at American Airlines, and well, let’s just say the APA and I go back a long time.

Captain David Bates was just elected as the organization’s new leader and while this is a most welcome event (anything would be an improvement over the previous “leadership” and yes, I use that term loosely) as I write this week this is a two way street. Management at the airline has to tune up its game plan as well if anything constructive is going to happen as a result of this change in union leadership. More on all this in this week’s issue.

On the passenger rights front, Kate Hanni and her followers received a nice bone to chew on last week when we once again had one of those nasty “stranded on the tarmac” incidents. This time the aircraft belonged to Virgin Atlantic, the ordeal sounded awful, but that still doesn’t mean that the airline was totally at fault. As usual, there was enough blame to go around. Airport, airline, customs officials, you name it.

A fact that should negate any move to extend the “three-hour rule” to international flights.

Of course this didn’t stop the DOT Secretary from using the incident as another excuse to pander to the masses.

We talk a bit this week about the latest Boeing 787 delay information, and we also talk about the American Airlines – FAA discovery of unexpected “cracks” that were found in some Boeing 767 engine pylons. Could newly installed winglets be creating the problem?

Meanwhile, airline stocks had a dismal week. Shares of Hawaiian Airlines took the brunt of the sector decline — fallout from an Avondale Partners downgrade and price target reduction was to blame.

Oil prices were back on the move again as well last week, as oil traders came down with a case of hurricane angst on Friday.

Finally in this week’s email bag, we hear from our subscribers on a range of issues. We have a corporate travel manager lamenting the changes at Continental, someone who agrees with us that the industry is already too regulated, not regulated enough, and someone who asks: if all the airline analysts are so bullish, isn’t that a perfect time to sell my stock? Answer? Could very well be. I am a big fan of contrarian thinking. Especially after reading my daily economic news feeds.

As usual, we talk about all this — and more — in this week’s issue. Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Hello earthlings.

Let’s see. It’s 9:49 as I write this post and it’s officially still 90 degrees outside the PlaneBusiness Worldwide Headquarters. Yeecch!

This week’s issue of PlaneBusiness Banter is also hot. HOT I tell you.

Subscribers can access this week’s issue here.

This last week I flew down to Houston to speak to the Continental Airlines Corporate Advisory Board meeting. Had a great time. They asked questions. I asked questions. I had a great time. Did I mention that already?

More airlines should do this for their best clients. It provides a feedback mechanism that is invaluable.

Why don’t they?

Airline stocks had another good week this week — as airlines began to unleash more guidance as to second quarter final numbers. As a result, most of the airline stocks we track were up for the week — with only a few exceptions.

Last week United’s Glenn Tilton and Continental’s Jeff Smisek traveled to Washington to tell their side of the United/Continental merger story. They had a pretty rough reception. So what is it about all this “re-regulation” talk?

The strike at Spirit Airlines was settled last week.

Frankly, I was surprised. I really thought the big money behind the airline, i.e., Bill Franke, would try and shut down the airline.

But no — apparently not.

All this and more — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s issue here.

This week there’s clearly one lead story — and that is the strike by the pilots at Spirit Airiines. The airline has now canceled flights through Wednesday and it does appear that ALPA has been very effective in shutting down the airline.

But if this continues for another couple of days, I think we could see the situation turn ugly pretty quickly, as I don’t think management is going to sit idly by and watch the airline go kaput. Does this mean that management will cave and come to terms with the pilots on a new contract? Not necessarily.

Could be an interesting week.

On the flip side, both JetBlue and American Airlines should see some positive revenue increase as they both fly a lot of overlap with Spirit.

This week all interested parties will be in Washington talking about the United Airlines/Continental Airlines merger in front of Congressman James Oberstar’s (D-Minn.) House aviation subcommittee.

This week we shine the spotlight on airline consultant Hubert Horan, who is going to be testifying Wednesday. Unlike almost everyone else under the sun, Horan does not think the proposed merger is a good idea. But his take is a bit different than simply calling it “bad for consumers.” We discuss why it is he feels this way, and you know what — I found myself agreeing with him more than I had anticipated.

Big week for airline analysts and airline industry research. Mike Linenberg, who called Merrill Lynch home for many many years, left there this spring and this morning he rolled out his first package of airline research under the Deutsche label. He initiated coverage on a slew of stocks. More on that in this week’s issue.

Glenn Engel, who was with Goldman Sachs for many years but who has been out of the airline research game for a couple of years, also returned this month. He recently issued a rather nifty examination of who’s doing what and to whom in the top 25 markets. We talk about that this week as well.

And hey, in honor of the hearings this week in Washington, I decided to drag out a classic Glenn Tilton corporate speak quote from the PBB archives. You’ll love it.

All this and more in this week’s issue of PlaneBusiness Banter.

Draining the iPhone Battery at 34,000 Feet

I’m currently on an American Airlines Maddog somewhere over Utah… Colorado? New Mexico? Anyway, I am on my way back to the Metromess Furnace after two lovely cool days in and around Salt Lake.

Nothing exciting about any of that…. except that this is my first time flying on a wi-fi equipped aircraft.

Pretty cool… except that I think the 7.95 flight price is too high. $4.95 would be more palatable.

Unfortunately my adventure with an electronic boarding pass on the iPhone was not as successful. I accessed it fine for TSA. but when I got to the gate, the page kept coming up with a “system unavailable” message. Gate agent had to key me in manually.

As she said… “technology is great…. when it works.”

Spirit Pilots Go on Strike


The deadline at midnight came and went.

The negotiations continued into the night.

But, at 5 a.m this morning, both sides called it quits and the pilots at Spirit Airlines, who are represented by the Air Line Pilots Association, left the negotiation table. And their cockpits.

Spirt Airlines President and CEO Ben Baldanza said in a statement, “We are frustrated and disappointed that our pilots have turned down an over 30 percent increase at a cost of over $70 million over five years while disrupting thousands of our customers and jeopardizing the livelihoods of our over 2,000 employees.”

Spirit is not publicly traded. It is owned by Indigo Partners LLC and Oaktree Capital Management, LLC.

Indigo is the private investment firm that is headed by former American West CEO Bill Franke. Howard Marks is Chairman of Oaktree, which tends to invest in high risk-high yield investments. To put it another way, Marks is known for being one of the most well-known “vulture investors.”

The strike marks the first time in five years that an employee group has struck a U.S. airline.

Baldanza told the WSJ this morning that his goal is to get the airline flying again as soon as possible, but he said he couldn’t say at this point what will happen, even Sunday. “He said Spirit has some management pilots who could operate flights, but it remains to be seen if some of the striking aviators would cross picket lines and return to work.”

Ah, well, yes, I could see where that might be a problem.

He also admitted that the airline had been trying to get charter carriers to fly on its behalf — in anticipation of a potential strike — but that “ALPA had pressured those companies, even those whose pilots aren’t represented by ALPA, and some dropped out.”

He also told the WSJ that the airline has purposely made sure all of its aircraft were back in the U.S. “where we want them to be” in anticipation of the job action.

As for the airline’s pilots? He said it was “their problem as to how they get home.”

That’s what I love about this industry. It’s just so damn warm and fuzzy. Can’t you just feel the love?

On a serious note — Spirit is not the most cash-flush operation in the world, and if the pilots are as successful in shutting the airline down as I suspect they are going to be, this could get very nasty, very quickly.

Not to be a conspiracy theorist, but I’ve seen managements use a lot less motivation to justify shutting down an airline. And who knows? Maybe someone might like to snap up some of the airline’s assets for a decent price.

I don’t say the pilots were not justified in what they did. It is their right to strike. And, in a weird way, it’s good to see the process still works.

But on the flip side, Spirit is not a major carrier. There is going to be no urgency for the administration to create a PEB. And like I said, the airline is not sitting on a lot of cash, nor do the guys who own this thing feel inclined to throw any more cash at it. In addition, while the airline has posted a profit for the last three years, a big reason that has been the case is because of the rock-bottom labor rates at the airline.

Should be an interesting weekend. Especially at the Ft. Lauderdale -Hollywood International Airport. Spirit handles 20% of the traffic out of there on a daily basis.

PlaneBusiness Banter Now Posted!

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Hello airline fans and fanatics.

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access the latest issue here.

This week we have a real mixed bag of goodies to go through. First, we had the first “suspended” agreement between a union and an airline that I have ever heard of. Then, north of the border we had an airline IPO yanked at the last minute. Porter Airlines says it was because of “volatile market conditions.” I suspect those weak first quarter numbers from the airline didn’t help much either.

We talk a lot this week about the DOT’s latest attempts to make the airline industry more consumer-friendly. Needless to say I think this whole exercise by the DOT is overly political and, for the most part, unnecessary.

And if the DOT thinks that the rules they have suggested are going to improve “customer service” in the industry, well, that just isn’t going to happen.

What really ticks me off though is the fact that, overall, the airline industry in the U.S. is turning in some of the best operational performances it has seen in a very long time.

Apparently no one at the DOT is aware of this. Or care that this is the case. Oh no, it’s more important to pay passengers if their bags arrive late.

In other news, the Ninth Circuit Court of Appeals reversed a lower court ruling in the USAPA/Former America West pilot lawsuit last week. I was surprised. Word is that the former America West pilots are going to ask that the entire 11 member court re-hear the case. A three-person panel issued the ruling last week.

Not sure if you have been keeping up with what is going on with UPS, but the company just furloughed the first 50 or so of what it says will be as many as 300 pilots.

Yes, this was the first furlough in the history of the cargo carrier.

Meanwhile. over at American Airlines, the TWU said late last week that it has “suspended” its latest tentative agreement with the airline. This was the agreement with the fleet service workers and the baggage handlers that the TWU negotiating committee had already advised members not to vote for. It’ll be interesting to hear what the back story is on this one. There are all kinds of stories floating around.

We talk about the latest DOT Airline Travel Consumer Report this week as well. Another great overall month for Alaska Airlines and another less-than-optimal month for American Airlines.

Airline stocks had a slow week. The top gainer for the week were ADRs of Ryanair — which was a result of that airline’s better than expected earnings numbers it released last week.

Lots of letters this week — most of which talked about my column last week concerning American Airlines and its merger prospects. I may post that column on a delayed basis for everyone to read. I’ll post a link here if I do.

A little of that, a little of this. And more. In this week’s issue of PlaneBusiness Banter.