Monthly Archives: February 2014

PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello earthlings. How was your week this week? It was a fairly comfortable one here in the Metromess weather-wise, although Verizon FIOS pushed me to the limits of my patience until late Wednesday, after a Verizon networking failure prevented me from accessing a lot of sites — including! 

I just love IT failures.

Anyway, enough of my chit-chat.

This week we have a good issue. First, we take an in-depth look at the earnings reported last week by Spirit Airlines. Short and sweet? The airline posted great numbers, and 2014 is looking mighty fine. Wall Street obviously agreed, as shares of the airline that everyone claims to hate, picked up a nice double-digit gain last week.

Republic Holdings reported earnings this week. We give you the basics from their earnings report, while next week we’ll do our usual in-depth dive into the earnings call.

With that, the U.S. airline industry earnings season will officially be over.

This week we talk a lot about three hot topics — the pilot situation here in the U.S., Delta’s announcement about its new frequent flyer program that is based on amount spent, not miles; and United Airlines’ guidance bombshell the airline dropped after the close of trading Thursday.

Needless to say, we’ll give you our take on all three.

In other news, we give you a sneak peek at the fabulous new ad campaign for American Airlines’ new transcon service. We like it. A lot. As a retro fan that believes a company’s heritage and how it got to where it is is incredibly valuable — from a marketing standpoint — I think the blend of old and new used in the campaign is brilliant. It almost, ALMOST, makes me not hate the tail so much.

It was a good week for airline stocks last week, but this week is not going to end on such a positive note. As we talk about in this week’s issue, it remains to be seen how much of United’s bigger-than-expected revenue drop in January was due solely to weather, or if the airline is still having revenue management issues. We’ll begin to put the pieces together as other airlines begin to give better guidance for the quarter in the next two weeks.

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


PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone. This week’s edition of PlaneBusiness Banter is now posted!

This week we talk again about the regional/major airline business model and why it’s broken. Meanwhile, after the American Eagle pilots said no to the proposed TA with American Airlines, pilots at Republic Holdings finally came to terms on a tentative agreement.  A coincidence? We think not.

Then there is SkyWest. We talk at length this week about the airline’s recent 4Q13 earnings release and analyze the airline’s earnings call. Long and short? I think the excuses for the  ExpressJet operation have run their course. As analyst Helane Becker suggested last week, perhaps it is finally time to pull the plug on the ExpressJet operation which has never been profitable since SkyWest acquired it.

We take a long in-depth look at the 4Q13 results from Air Canada this week as well. What a mess those were. We didn’t see the improvements in CASM and RASM the airline promised last quarter, and the margin performance we saw in 3Q13 evaporated in 4Q13. Meanwhile, WestJet, as we talked about last week, continues to make what we believe are strategically beneficial tweaks to their original LCC model.

Meanwhile, the Real Men of Genius are back. Yep. The union that represents the fractured group of pilots at US Airways, USAPA, is back and up to stupid tricks again. We get you up to speed on their latest antics this week — although our patience for such things has about run its course.

It was a decent week for airline stocks last week, although shares of both Air Canada and Bombardier fell off the cliff. Meanwhile, we share the latest “Question of the Week” results from Morgan Stanley’s latest institutional investor poll concerning United Airlines. 

A little bit of this. A little bit of that. And more. All in this week’s issue of PlaneBusiness Banter. 


PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone. This week’s issue of PlaneBusiness Banter is now posted.

This week we take a deep dive in the recent earnings calls at both WestJet and Hawaiian Airlines. We also give you earnings summaries for SkyWest and Air Canada. More on them in next week’s issue.

But clearly the big story this week concerns pilots. Regional airline pilots. Mainline airline pilots.

With the roll out of the new FAR 117 regs the duty regs are not the problem — it is the minimum 1500 hours needed in hand before a regional can hire a pilot that is the problem. The impact of a change in regs that was intended to improve the safety of regional airline flying has cast a very ominous light on a system that has been broken for years.

Layered over this is the news this week that the American Eagle ALPA MEC has refused to accept the tentative agreement put forth by American Airlines. The deal will not go to the general membership for a vote.

What’s next at Eagle and American? We talk about that more this week.

The company had already warned that a turn down of the deal would lead to American cutting back on the flying at the airline to the extent that American Eagle would become “Comair II.”

The American Eagle MEC pilots have drawn the line in the sand, saying they are not going to make any more concessions, and there are other jobs to be found in the industry.

Pulling back up to the 35,000 foot level, as I said previously, could the FAR 117 regs end up finally bringing massive change to a business model that never has been based on sound business practices, i.e., the regional airlines provide feeder service to the mainline airlines at low cost?

It’s a serious problem.

In other news, the airline sector enjoyed a pretty good week last week, Morgan Stanley analyst John Godyn ponders whether airlines need to hedge fuel or not (subscribers know where I stand on this) and Norwegian Air just obtained its operating license for its international operation in Ireland.

Then there are the December DOT numbers. As we alerted PBB subscribers to last month, Southwest Airlines suffered a systemwide operational meltdown in December. The DOT report for December merely affirmed this. Meanwhile, Delta Air Lines continued to lead the big boys pretty much across the four major DOT metrics in December, as well as for 2013.

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



PlaneBusiness Banter Now Posted!

home-typewriter copy 1Hello everyone. It’s that time. This week’s issue of PlaneBusiness Banter is now posted.

This week we have a 51-page analysis of the recent American Airlines earnings call. Read it. You’ll learn a lot about how to do a merger in this industry.

We also talk about the recent 4Q13 earnings numbers from JetBlue and Allegiant. 

Short and sweet? While I love to fly on JetBlue, as an investment the airline leaves a lot to be desired. CAPEX and costs are both looking to put intense pressure on margins in 2014.

In addition, pilots at the airline, who just received a 20% pay raise, filed authorization cards Monday with the NMB for a representational election with ALPA.  (But you’ll hear nothing about this in the earnings call!)

As for Allegiant, there’s no wonder that shares of the airline dropped sharply after the airline’s call. It was, as one analyst put it, “horrible.” We’ll give you the details.

Last week was not a particularly good one for the airline sector, as most stocks we track lost ground. But one stock picked up a double-digit gain. That stock was American Airlines, AAL. It was up 10% for the week.

United Airlines announced over the weekend that it was shutting down its Cleveland hub. While most of the mainline service will remain, all the regional flights will be eliminated. Not surprised. United only had to keep the hub in operation for two years after the merger before it could make the decision that it was not financially viable.  I doubt the hub ever hit any of the pre-agreed upon  financial goals.

This move, according to Imperial Capital analyst Bob McAdoo will not only be good for United, but for American and Delta as well. We explain why.

Some of us AvGeeks also had fun Thursday afternoon. Led by Leslie Scott at Delta Air Lines and John Walton at Route Happy, a group of aviation nutcases began a Twitter conversation that started out as an airline geek version of Upworthy or Buzz Feed headlines. Hashtag is #buzzfeedthesky. Hopefully we can keep this going. It was a lot of fun. Especially when we morphed into AvGeek pick up lines. Unfortunately I was in final edits for PBB, so I didn’t get to contribute that much this afternoon.

All of this and much, much more in this mega-earnings edition of PlaneBusiness Banter.