Monthly Archives: August 2012

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpg Hello everyone. No surprise that we are publishing on Wednesday night this week. Has something to do with some activity that was centered around the DFW Metromess today. Yes, there were three American Airlines‘ union votes announced today — two passed and one didn’t. And the one that didn’t was the big one.

The pilots at American Airlines decided that they would rather put their fate in the hands of U.S. Bankruptcy Judge Sean Lane than accept what many pilots apparently thought was an “unsatisfactory” contract.

As you can read in the blog post below, I thought the pilots should vote yes.

Meanwhile, the flight attendant voting period during which they need to decide if they are going to vote yes or no on their “last best and final offer” from the company continues.

As it is scheduled now, Judge Lane is supposed to rule on the airline’s request to abrogate the union contracts that have not been renegotiated next Wednesday as part of the standard Section 1113 procedure.

However, the outcome of the flight attendant vote will not be known by that time.

It will be up to the airline — whether it asks the judge to delay a ruling — or it simply allows him to abrogate the contracts that have not been agreed upon (which would then include the flight attendant contract) on Wednesday.

Meanwhile, this week is yet another big earnings week issue, as we take an in-depth look at the recent results of Spirit, Allegiant, Alaska Air Group, WestJet, and Republic Holdings.

We also give you overviews of the recent earnings news from IAG Group (owner of British Airways and Iberia), Virgin Atlantic, Lufthansa and Cathay Pacific.

Speaking of Allegiant, the airline said on its earnings call last week that it was very happy with the first month of its new service to Hawaii. The airline is using 757s to fly to Hawaii, and today, the airline announced even more service to Hawaii. Know what new routes were announced? Better yet, know which airline Allegiant seems to be targeting with their latest choices?

WestJet had an interesting announcement last week — for those of you who agree that passengers will pay for meaningful upgrades. The airline announced it was putting in four rows of “premium economy” seats on all of its 737s. It is also adding seats to its 737-800s.

Meanwhile, Spirit just keeps making money. Although I think the airline showed evidence of some growing pains in the second quarter — as costs were above where the airline wants them to be.

In terms of Republic Holdings, the hybrid holding company did quite well, as the Frontier Airlines’ restructuring process is really beginning to shine. So now what?

Meanwhile Republic continues to work through its issues with its Chautauqua, aka Chicken Taco, operation. Republic remains convinced it can make the 50 seat aircraft work –but it is going to have to be flown at exceptionally low rates to mainline airlines if that is the case.

While we don’t do a full earnings review of SkyWest this week, as they reported earnings today, I will tell you that the airline blew away estimates — sending shares of the stock up 23% on the day.

As always, all this, and more — in this week’s issue of PlaneBusiness Banter.

Also — a friendly reminder for our subscribers. This is our last issue for August. We are now officially on vacation. Our next issue will be published after Labor Day!

Why American Airlines’ Pilots Need to Vote Yes


To say that I have been bombarded over the last week with emails pertaining to the American Airlines’ pilot TA vote would be an understatement. This is not to say that the voting that is also going on with the airline’s flight attendants and its TWU groups which did not vote for the “last best” TAs are also not important.

But we all know how this works.

The pilot union vote is the one that carries the most clout.

While I already voiced my opinion on this matter two weeks ago in PlaneBusiness Banter, I am going to say it again today — very clearly and very publicly.

If you are a pilot for American Airlines — you have to put aside the emotional firestorm that has erupted over the last several days, a result of an email that was circulated within the pilot group concerning “conversations” and “comments” involving both the airline’s Chief Pilot John Hale and SVP of Operations Jim Ream.

You have to stop thinking that there is a “deal” that is going to happen between JetBlue and American. It isn’t going to happen. Period.

You have to stop thinking that a “yes” vote is a vote in favor of the current management.

You have to stop thinking that leaving your fate to a bankruptcy judge is preferable to the contract that is now up for grabs.

You have to remember that you cannot expect a contract that is part of a bankruptcy process to begin to come close to the contract that the Delta pilots recently ratified, or the contract that the United pilots now have on the table before them. Trying to compare these two contracts to the situation that you are now looking at with American is a case of “magical thinking.”

As Ivan Rivera, Aliied Pilots Association Domicile Chairman put it so well in an email he sent out today,

Setting aside for a moment the “cannon shots” and the I Pads, it is clear that AA management has been in a horrible “state of confusion” to add to their incompetence. Confused and incompetent are not the qualities we need from our management, and this is why our primary goal should be to fight to replace them. Without new management, with vision and competence there will be no long-term future for this airline, regardless of what our CBA’s look like. I know we all want this; we just may disagree on the best way to get it done. We have two options going forward to try to achieve that goal, and each carries it’s own set of advantages and risks. The YES vote endorses APA’s strategy of “strategic and financial” leverage thru the 13.5% claim. The NO vote endorses a more traditional “labor” leverage that, depending on many factors, may result in a “financial” leverage as well. As you know, following all our advisor’s recommendations, I have endorsed the YES vote but I have also presented our options with a NO vote at our MIA Domicile meeting. I’ve also shared with you that I believe APA’s strategy following a YES vote will be the same as for a NO vote: We will continue to oppose the “stand alone” business plan-we will continue to oppose this management- we will continue seek the best path for all pilots and other AMR stakeholders, except our current management of course. However, there are two very significant risks with a NO vote: First is the loss of the economic value and power of the 13.5% claim; and second is the risk of doing irreparable damage to our SCOPE thru the outsourcing of the ERJ190-195 (DC-9 size A/C capable of decimating the bottom of our seniority list).

I agree.

I think the recent actions of management at the airline should only convince pilots even more that the current management team at the airline needs to go.

After all, there is a reason that the pilots at both Delta Air Lines and United Airlines are now looking at contracts that are much richer than the one you are now looking at. It’s called — management teams at those airlines realized years ago what had to be done in order to grow their businesses effectively. They realized that “heft” was necessary in order to be competitive on a global scale.

But voting “no” is not the way to get this management team out of the picture. Nor is it a way to tell the current management team to go F*$% themselves.

In fact, I would argue that a “no” vote makes the situation much more advantageous for the current management team.

I know it sounds contrary. I know it sounds confusing.

But the pilot group will not “win” if the current contract is abrogated.

Finally, if you are foolish enough to think management will come back and “sweeten” the deal if the contract is abrogated– while creditors are breathing down their neck to get as much money as possible out of the airline’s coffers — think again.

But this time think rationally. Not emotionally.

PlaneBusiness Banter Now Posted!

home-typewriter copy 1.jpgHello everyone. This week’s issue of PlaneBusiness Banter is now posted. This week we take a detailed look at the recent earnings releases from United Continental Holdings, Delta Air Lines, US Airways and JetBlue.

We also see how both Ryanair and Air France/KLM fared during the last quarter.

Meanwhile, we have PlaneBusiness Earnings Summaries posted for Republic, Spirit, Hawaiian and Allegiant. Next week we’ll get you caught up on all the airlines that have reported so far for the quarter.

In breaking news tonight, it does appear that there is a tentative agreement between United Airlines and its two pilot groups. Not a lot of details out there yet, but this is certainly good news for the airline. Clearly the deal will have to be approved by the rank and file and we have no idea what will happen at this point. All we know is that it is good news that an agreement is in place.

United was also in the news this week as the airline rolled out its new beautiful Boeing 787 out in Seattle.

While that was good news, the not-so-good news for Boeing was a test of a 787, slated to be delivered to Air India which saw debris from its engine start a grass fare at the Charleston International Airport. Unlike the Trent 1000s that ANA just had to have work done, these were GE engines.

Allegiant Travel announced this last week that is is going to be taking on Airbus A319 aircraft — some are coming from Cebu, others from easyJet. Looks like this is the first move by Allegiant to begin shifting away from the Maddogs.

Even more airplane news as Delta brings the hammer down on SkyWest (Delta CEO Richard Anderson told everyone — repeatedly– in the airline’s earnings call last week that yes, this could be done. And yes, it was done.)

Airline stocks had a so-so week last week, with shares of United getting hammered. Analysts don’t like it when airlines produce revenue results that lag everyone else.

In the AMR Bankruptcy Follies this week, we talk about Tom Horton’s latest Magical Mystery PR tour and how he sounds just a tad desperate as he attempts now to “reposition” the message. We argue he only makes things worse — both for him and the airline.

Oh, we have a lot more than this to talk about, but this gets us started.

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