Monthly Archives: July 2011

PlaneBusiness Banter Now Posted!

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Hello everyone. I feel like I need to crank up the theme song from “Rocky” tonight. Yes, it’s earnings week here at the Worldwide Headquarters of PlaneBusiness Banter. Or rather, the first of three heavy earnings weeks. Or is it four? Oh, they are so much fun — who’s counting?

This week Alaska, United Continental, AMR and US Airways in-depth earnings reviews are on tap for PBB readers. I know it’s hard to believe, given how long some of our earnings reviews have run in the past, but I do believe we may have posted our longest earnings review ever tonight. Alaska’s call attracted a lot of analyst attention and they all asked a lot of great questions.

That’s what happens when you are an airline and you post a fantastic pretax margin, operating margin, and an even more impressive ROIC. (That’s return on invested capital for those of you who are not financial geeks.)

Funny. I can remember quarters in the past when Alaska executives would give their presentations on the airline’s earnings call and there were hardly any analysts on the calls asking questions. I used to feel sorry for them.

Things change when you begin running one of the most profitable and well-run airlines in the U.S.

American Airlines? Oh. Earnings. Did the airline report earnings last week? Kind of hard to remember what with all the hoopla the airline generated about its split Airbus/Boeing order of an entire fleet of aircraft. Actually I’m sure the airline would prefer that nobody remembered that they also reported 2Q earnings. And we’ll talk about why that is the case.

No question American would much rather we talk about nice new shiny airplanes.

One thing’s for sure. Wall Street was not happy with the news about all the nice new shiny airplanes. We give readers a selection of analyst comments to pour over this week — and the gist of the feedback goes something like this: new airplanes do nothing to change the underlying problems with the current business model or the brand. Or the operational issues. Or the cost issues. Or the continued less-than-industry peer revenue performance.

Much less mounting cash flow issues.

Bu they, don’t worry, be happy. I sometimes think that AMR management is convinced the airline is simply “too big to fail.” That’s a somewhat dangerous assumption to make. Just ask Lehman Brothers.

United Continental is, of course, still in its transition mode, but so far so good. The airline’s revenue performance was good in 2Q, but I suspect we are going to see the airline’s revenue performance get even better over the next 12 months. My biggest concern with United Continental remains its continuing labor negotiations. Particularly the ones involving the airline’s two pilot groups.

Then there is US Airways. Even without fuel hedges, the airline still posted a profit for the quarter. All things considered, that’s not a bad thing. However, US Airways also happens to have a rather dysfunctional pilot union that still can’t negotiate a seniority agreement, much less a contract. Last week that same union decided to go public with its “safety” concerns at the airline. Uh-huh. Everything new is old again, isn’t it?

We also talk about other things this week of course. But I won’t spill the beans. That will just have to be a surprise.

Subscribers can access this week’s issue of PlaneBusiness Banter here.

Hot and Heavy: AirTran Pilot Union Message Board Shut Down

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One of our very long-time PlaneBusiness Banter subscribers who also happens to fly for AirTran tells us that “things are very hot” in Atlanta as pilots there debate the proposed agreement between AirTran and Southwest Airlines pilots.

So hot that the AirTran ALPA MEC issued this letter this afternoon:

“July 24, 2011

Fellow Pilots,

During a special meeting today, the Master Executive Council voted to temporarily suspend the union web forum. This step was not taken lightly, as the MEC feels that pilots should be free to debate the topics that impact all of us. However, the discourse has become too uncivil at times, and policing the posts too difficult.

The MEC officers and status representatives are still available to answer questions or take feedback, either through their e-mail addresses or cell phones. A complete list of contacts is available at www.airtranpilots.org<http://www.airtranpilots.org>.

Thank you for your understanding.

The AirTran Master Executive Council”

Doesn’t matter what negotiation it is. Or what airline. There is no such thing as a “slam-dunk” when it comes to pilots, contracts and …. questions of seniority.

PlaneBusiness Banter Is Now Posted!

Hello everyone.

This week in PlaneBusiness Banter I sit down for a PBB Lounge Lizard Interview with one of my favorite people — Dave Hilfman. Dave is the SVP of Global Sales at the “new” United Airlines. Prior to his current gig, Dave held the same position at Continental Airlines.

We talk corporate sales, red Mazda RX-7 convertibles, Eastern Airlines, Gordon Bethune, Larry Kellner, why some corporate clients are not happy about sharing contract performance information, the United/Continental merger, and you’ll meet Dave’s son Marshall too.

Tonight, we’re waiting to hear the news from AMR in regard to 1) American Eagle and 2) new aircraft. The pilots at American Eagle and AMR came to terms on some sticking points regarding how the pilots would be treated if there was a change of ownership at the airline today. That points to an announcement tomorrow about what AMR intends to do with its regional subsidiary.

The AMR board of directors was meeting today in advance of the airline’s second quarter earnings roll out tomorrow. If we were betting, we’d bet that Airbus/Boeing decision was probably made today at that same board meeting.

Meanwhile, over the weekend, it was announced that the Southwest Airlines and AirTran pilots had come to terms on a new seniority agreement. Still have not seen an “official” summary of that agreement. Clearly this is a big deal for the airline. More after we see the fine print.

Airline stocks? Horrible week for them last week.

In the government fun and games division, the DOT rolled out a list of 16 fees it thinks the airlines need to keep track of and report to the government last week. Of course they did this under the guise of it being “passenger friendly.” Hogwash. It’s so the DOT can force the airlines to account for ancillary revenues in a more clear and concise manner. The easier to tax those revenues — down the road.

Then we had the bipolar fare increase/fare sale activity over the last couple of days. First United and Delta began an attempt to raise fares last week. It continued through the weekend — and then Southwest balked.

Then this week Southwest and its new subsidiary AirTran rolled out a new fare sale!

Just another wacky week in the industry we all know and love.

All this and more — in this week’s PlaneBusiness Banter. Subscribers can access this week’s issue here.

THIS part of the AirTran/Southwest Pilot Seniority Agreement Is Apparently Accurate

According to a representative of SWAPA, the union that represents the Southwest Airlines’ pilot union, the top half of the letter that was posted earlier this afternoon is authentic. The bottom part that was posted earlier with supposed agreement “details” was not. Therefore I have removed the post entirely to prevent any further misinformation from being distributed.

Thank goodness. I was trying to figure out how in the world Southwest Airlines was going to order that many planes.

I have asked the SWAPA union representative who contacted me to please forward me an accurate summary of the tentative agreement.

_____________________

July 16, 2011

Fellow Pilots,

This afternoon, the AirTran Merger Committee (MC) reached an agreement-in-principle with SWAPA and Southwest Airlines on a seniority list integration and transition agreement.

This agreement will be presented to the ATN ALPA Master Executive Council for their consideration in the near future. If this agreement is approved by the MEC, it will be presented to the membership for ratification.

The MC will be working in the coming days to translate the current agreement into a full-language document. This will require a great deal of work, and your patience is appreciated as they develop a comprehensive presentation for the MEC and the pilots of AirTran Airways.

The Merger Committee believes that this a fair agreement that provides career protection for AirTran pilots, as well as significant economic gains.

In unity,

Your ATN Master Executive Council

______________________


Atlantic Southeast Puts “Ground Stop” To SureJet Name


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Atlantic Southeast Airlines sent me an email this afternoon in which the airline admits that perhaps the name “SureJet” was not such a good idea after all.

“Since we value the feedback we’ve received to date, we have put a ground stop on the SureJet name,” the airline said.

Yesterday the subsidiary of SkyWest, which is merging with ExpressJet, announced the new name of the combined airline was going to be “SureJet.”

To say that the news was met with an unfavorable response from both industry observers and employees alike would be an understatement.

Here’s the statement I received this afternoon from Kate Modolo, spokesperson for the airline.

Atlantic Southeast and ExpressJet on July 13 announced that SureJet would be the new name of our combined airline, once our merger is complete later this year.

We’ve heard our team members’ significant concerns about the new name, and it appears we’ve missed our mark. The No. 1 goal with our new name was to create an identity that represented our people, and that our people would be proud of. Since we value the feedback we’ve received to date, we have put a ground stop on the SureJet name so we can solicit further input from our people, and get this important merger milestone right.”


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SureJet? SURELY They Must Be Kidding

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Yesterday I received a press release from the nice folks at Atlantic Southeast Airlines, letting me know that after it completes its merger with ExpressJet, the two airlines will be branded and marketing under one — new– name for parent company SkyWest.

That name?

SureJet.

Yeah. Sure.

No, I’m not kidding.

I tweeted my disbelief over this horrible god-awful choice yesterday, but the emails kept coming in today, so I figured I’d go ahead and weigh in here on PlaneBuzz, since this platform has a bigger audience of both PlaneBusiness Banter subscribers and non-subscribers.

People I’ve talked to have, overwhelmingly, and without exception, reacted by shaking their heads, asking me to repeat myself, or simply saying things like 1) it sounds like a household cleaner 2) it sounds like a new maxi-pad 3) it sounds horrible coming off the tongue 3) it sounds like a cynical joke.

I tweeted yesterday that I thought it sounded like something from a Saturday Night Live skit.

One of our PBB subscribers wrote me today and shared this comment,

SureJet.. . REALLY?! We actually paid someone to come up with this?!

I’m no branding expert, but a name like that doesn’t really give me the warm and fuzzies when thinking about, oh I don’t know, reliability, completion, prospects, the future… shall I go on?
And oh the possibilities for puns… ‘Surely you can’t be serious…?’

Word from the presentation was there were audible gasps followed by silence. Brad Holt then bolted up to the mike to declare the name “grows on you.” Not quite.
Rumor today is the new brand is quietly being shelved. Wish I could log on to the company website to check, but it’s been down all afternoon…. I’m SURE they’re working on it. “

Trust me. You don’t need to be a marketing or branding expert to know this name needs to be tossed.

“The name grows on you?” Ah. No. Surely Brad Holt, you jest.

Jury Finds in Favor of Former TWA Pilots in DFR Suit Against ALPA

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Big news this afternoon for former TWA pilots.

The group sued the Air Line Pilots Association in 2002 — claiming that ALPA had not fairly represented them during the American Airlines/TWA merger. The pilots argued that ALPA had acted in bad faith in regard to negotiations with the Allied Pilots Association (which represents pilots at American) and the eventual seniority list that was created.

Today a federal district court jury in New Jersey ruled in the pilot group’s favor, as it agreed the Air Line Pilots Association had “violated its duty of fair representation” to the TWA pilot group.

In addition, the jury agreed with the pilots that ALPA’s violation of its DFR “directly caused injury to some of the TWA pilots.”

That opens the door to — damages.

As of now, the amount and extent of damages has not been determined.

Great day for the former TWA pilots. Not such a good day for ALPA.

PlaneBusiness Banter Posted!

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Hello everyone. This week in PlaneBusiness Banter we’re talking about the second quarter earnings season that begins next week. We also give you the complete rundown of the current airline stock target prices — compliments of the usual airline industry analyst contingent.

We also look at the most recent DOT Airline Consumer Travel Report for May. This month was a real grab bag of results — with airlines the usually doing well not doing well in certain measures, other doing better than expected — and then there was American Airlines. And American Eagle. The not-so-dynamic duo were clearly the worst performing airlines of the group. We were so impressed, we were moved to unanimously award the two airlines a tandem “Goat” award for their industry-lagging performance.

That reminds me. You know how airline executives always pepper their comments about how their particular airline has such “industry-leading” performance in this and that? When was the last time you heard someone say their airline is an industry laggard?

The EU is convinced that all the airlines of the rest of the world need to participate in its Emissions Trading Scheme. Needless to say the Air Transport Association, the IATA, and U.S. airlines don’t agree. The shrill cry against adding airlines to the list of ETS participating companies rose sharply last week — along with threats of an all-out trade war.

Last week airline analysts lined up to initiate coverage on shares of Spirit Airlines. Without exception they were all bullish on the shares. Their enthusiasm helped push shares of Spirit up 11% for the week.

Speaking of Wall Street, jet fuel posted a sharp uptick of more than 6% last week, even though the price of crude oil was only up a little more than 1%.

United Airlines pulled out the stops last week as it feted its most traveled frequent flyer. They even named a 747 after him.

On the merger front the proposed LAN/TAM deal is on hold as government regulators take more time to look at possible antitrust implications. I find this rather amusing, since LAN basically owns the Chilean market.

Pinnacle’s new CFO used to work for Pinnacle’s CEO when he was CEO at Frontier Airlines, Lufthansa is going to start flying passengers on biofuel on Friday, and more.

All in this week’s issue of PlaneBusiness Banter .

PlaneBusiness Banter Now Posted!

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Hello everyone. This week’s holiday week issue of PlaneBusiness Banter is now posted. Since yesterday was July 4th, you know what that means. That’s right –this week’s issue includes the legendary 2011 “Ode to a Hot Dog” column.

Aside from our usual July 4th fun and frivolity, we do have some serious business to talk about this week in addition to our yearly review of weenies.

Four major U.S. airlines are now talking to aircraft manufacturers about potential new aircraft orders. We look at what some of the industry’s more knowledgeable observers think we could see in terms of new orders.

In Australia, aviation regulators grounded Tiger Airways Australia last week. We talk at length about the reasons for the ruling, the fact that most of the major investors in the airline have essentially cashed out, and why the move by CASA should not have come as a surprise to the airline.

Another week, news of another low-cost airline in Asia. Last week Qantas and Japan Airlines announced that they are forming a joint venture — the purpose of which is to start a new low-cost Asian airline.

Meanwhile, across the pond, Flybe and Finnair have combined forces purchasing Finnish regional carrier, Finnish Commuter Airlines.

On the labor front, we had two major union representational votes last week. The flight attendants at United Airlines and Continental Airlines went to the ballot box to pick a union representative for their combined group in June. Last week the National Mediation Board announced that the Association of Flight Attendants won the election — but by a closer vote than I think the AFA had expected.

While over at Republic Holdings, pilots for all of the holding company member airlines voted in favor of one union representative. And which union was that?

In terms of airline stocks, last Thursday marked the end of the second quarter. Which airline stocks performed like champs during the second quarter — and which ones lagged behind?

We also take a look at the current mean estimates for the usual suspects heading into the second quarter. How has analyst sentiment changed since the end of the first quarter?

Lots of letters to the editor this week, including one of the most unusual notes I’ve ever received. Hint: It has nothing to do with airlines.

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

Subscribers can access this week’s issue here.