Tag Archives: airline stocks

PlaneBusiness Banter Now Posted!

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Good evening everyone.

This week’s issue of PlaneBusiness Banter is now posted. Subscribers can access this week’s 80-plus page issue here.

It’s that time of year. Yep. Earnings time.

This week we have our in-depth look at the earnings calls and our PlaneBusiness Earnings Summaries for Southwest Airlines, American Airlines, and Delta Air Lines.

If you are wondering why it was that airline stocks took a header last week — it was not because of higher oil prices. It was because Wall Street was not overly impressed by the earnings posted by Delta, or Southwest — much less American Airlines.

American, once again, is slated to be the only major airline which will not post a profit for the quarter — much less the year.

In the case of Delta, analysts were disappointed by the airline’s revenues, and by the fact the airline says, at least for now, that it intends to keep its existing plans for capacity growth intact.

Southwest Airlines also warned that revenue “head winds” are going to be tough in the first quarter and a profit for that airline for the first quarter is “iffy” if you look across the sector analysts’ current estimates. The airline also forecast a rather sharp increase in costs for the first quarter.

As for American, I don’t know where to start. As I tell my subscribers in more detail, I think the AMR earnings call was an embarrassment. Add that to the fact that the airline continues to lose money and we heard nothing whatsoever in the airline’s call in regards to a specific plan to turn the airline around and …..it’s pretty ugly.

Meanwhile, on the American/GDS War frontline, American and Sabre called a truce Monday. Not unexpected. I was surprised when Sabre threw its hissy fit and pulled American’s fares from its GDS. No way Sabre’s customers were going to let this situation remain in effect.

Truce is officially until June 1 — we’ll see something negotiated between the two before then.

American also announced a new deal with Priceline, which allows Priceline to use the airline’s new “Direct Connect” product. (And yes, this deal was announced before the truce with Sabre, which leads me to believe it was done to push Sabre back to the table — which is what happened.)

US Airways also announced a new deal with another OTA, Expedia, but that deal uses the more traditional GDS method of delivery. It will allow Expedia to market “seat choice” options and other goodies though.

Meanwhile, we did our own little test today of what showed up and at what price when I Iooked up fares between Dallas and LGA on both Expedia and Priceline. That was a fun experiment.

Our new “Retro” feature this week takes us back to 1994, and British Airways. And the billion dollars plus it invested in airlines such as USAir, TAT, and Deutsche BA. That strategy really didn’t work out too well for the airline, did it?

But enough of all this fun and frivolity. This week the emphasis is on earnings. Next week, we’ll be taking a gimlet-eyed view of United/Continental, US Airways, Alaska, and JetBlue –– all of whom report this week.

Speaking of Alaska Airlines — did they not blow the doors off in the fourth quarter or what? I remain tremendously impressed with the airline. I like the decision to de-brand Horizon as well.

But that’s for next week.

Meanwhile, all the rest — and more! — in this week’s issue of PlaneBusiness Banter.

PlaneBusiness Banter Now Posted!

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Hello everyone.

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

This week we have a pretty good issue. Always takes us a week to get back in the groove after the holidays, and this week I think we have a little bit of something for everybody.

No question that the thrill of new metal hung over the industry last week as Delta Air Lines told its employees it is looking at new aircraft options. While Continental/United did not tell its employees that it too has been checking its bank balances and kicking some tires, industry sources confirm that yes, this is also the case.

Then there was that obscene order placed by IndiGo Airlines — based in India. It was, according to Airbus, the largest commercial aircraft order ever place. A whole slew of A320s, including a nice stable of the new “neo” flavor A320. You know, the ones with the more efficient engine.

But Airbus didn’t stop there. Oh no, they are clearly in their “Let’s Hammer The Boys at Boeing” mode as they also announced a new A320 order from Virgin America. One that also, conveniently, was signed at the stroke of midnight on Dec. 29. (I’m making up the part about the stroke of midnight, but I’m probably not that far off.)

The result of all this? Airbus looks to now have a nice solid start to its “neo” program, and oh yes, the Virgin order pushed Airbus past Boeing in the all-important testosterone-fueled exercise called, “Who sold more airplanes in “________.” Fill in the year.

For 2010, it looks like Airbus nosed out Boeing, 644 to 625.

Not surprisingly, given all this hoopla about new metal, Steve Hazy’s Air Lease Corp. filed its S-1 with the SEC last week. Translation: They are going to do an IPO.

Of course the American Airlines/GDS cat fight continued last week, with one very interesting new tidbit. In last week’s PlaneBusiness Banter I talked with subscribers about how I wondered if there was not more going on between American and ITA than met the eye.

Well, looks like I was right, as American announced a new deal with ITA (American is already a client) for a nice chunk of work with American’s new IT overhaul — which is being spearheaded by HP.

We update subscribers on all the latest GDS related news, and we also share a guest column this week from Montie Brewer, ex-Air Canada CEO. He gives us his take on the GDS/airline situation. (Yeah, I know. Bet you can’t guess which side of the fence he’s on.)

We also have a longish Market Review this week. We bring subscribers up to speed with the latest research reports from three analysts — Jamie Baker and Mark Streeter with JP Morgan; Glenn Engel with Bank of America and Dan McKenzie with Hudson Securities.

All three have different takes — and different things to say — and in the case of Glenn, he gives us part three of his ongoing research series in which he compares airlines on the basis of revenue and cost per plane. None of the usual RASM, CASM stuff. His first two reports last year covered revenues of the major and regional carriers. This latest report covers the costs of the major carriers.

Interesting way to look at the same numbers.

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

PlaneBusiness Banter Now Posted!

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We’re baaack!

Hello everyone. It’s that time again. Time for the first issue of PlaneBusiness Banter in 2011.

What topics are front and center for our first issue of the year?

Airline stocks.

Which airline stocks outperformed the group for 2010? I’ll say this — it was a great year for those who took the plunge and invested in the sector. We had four stocks we cover post gains of more than 100%, with one almost hitting a 200% return mark. The vast majority of stocks we track posted double-digit gains for the year. Only a handful ended up in the negative category.

We also talk about fourth quarter stock performance. Looking at the quarter, we had a somewhat different picture — as lo and behold — a US regional airline took top honors for the quarter. Which airline pulled off that feat?

But we are not just talking stocks.

No, we are talking a lot about American Airlines and its efforts to single-handedly dismantle the distribution system that the airlines have used since, well, American Airlines and its then subsidiary Sabre, developed the first GDS system. Many years ago.

Over the Christmas holidays, there were a number of happenings on this front. We’ll update you on those, and give you our take on what is eventually going to happen, and why we also think the timing of American’s push to put its Direct Connect system in place might have been, well, ill-timed.

Then again, throw in the planned merger of Google and ITA — and maybe it isn’t that badly timed.

I know. It’s confusing. That’s what makes it so interesting to talk about. There are way too many angles to consider — depending on whether you are an airline, a passenger, or a travel agent.

But make no mistake about it — airlines want more control over their inventory, they want to know who is buying its inventory, and they don’t want to pay a third party to facilitate the sale of that inventory.

American Airlines got its hand slapped last week by the NTSB, after someone in Tulsa apparently downloaded the contents of the flight recorder that was on the Boeing 757 that slid off the runway in Jackson Hole.

The NTSB was not happy.

Meanwhile, the airline and its flight attendants met last week with the NMB — in an attempt to get contract negotiations back on track. Both sides left unhappy.

I don’t think this union is going to be happy unless they go to a strike.

And then — there is the weather. Airlines are already putting out estimates of how much the rotten weather in December cost them. This week? Another winter storm is causing mayhem across the South and in the Northeast.

Oh, you know. 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 all.

Here’s hoping that all of you had a wonderful Turkey Week. I did. Although I didn’t end up with enough left-over turkey. I may have to roast another one here shortly, just so I can have leftovers to make turkey hash with.

This post-Turkey Week issue we talk about a lot of things. First, our column this week looks at Orbitz and how it got to where it is today — and why American Airlines is trying to pull its inventory from its website. I take a look at the history of the company — and how it has evolved from its humble beginnings. Ahem. You all remember those beginnings. The company was set up as the “Travelocity Terminator” — the first attempt to set up a “direct connect” OTA for the airlines that created it.

My how things change.

Of course we talk about the as-yet-to-be-announced delay for the Boeing 787, the update from Qantas on its A380 operations, and yes, we even talk about how Air France is going to once again undertake recovery operations to find the black boxes and anything else it can find from its lost Airbus in the Atlantic Ocean this coming spring.

Union talk? Of course. We follow up our issue last week with a great letter to the editor from one of our subscribers in which he touches on both the Continental/united scope “problem” and the flight attendant situation at American Airlines. In a very astute manner I might add.

Airline stocks? This week we talk about the latest from Morgan Stanley analyst Bill Greene. Mr. Greene happens to believe that there is opportunity in them there shares. Airline shares that is. Right now.

Virgin America lands in Dallas this week. Yee haw! In anticipation of Virgin’s arrival, American is offering their customers the usual heavy dose of frequent flier points on DFW flights to LA and SFO, but as I talk about this week — is this tired and true tactic still relevant?

I’m not sure. At least not in this case. The Virgin product is a nice one. And there are a whole lot of folks for whom accumulating more AAdvantage miles is not nearly as important as a nice comfy seat, cool onboard entertainment and food options, and well….that whole Virgin Vibe thing.

Oh, we talk about a lot more this week — but I need to get this posted.

Subscribers can access this week’s issue here! Now!

PlaneBusiness Banter Now Posted!

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Okay all you hungry people. This week’s issue of PlaneBusiness Banter is now posted.

Whew.

This is the last earnings issue for the quarter, and that is a good thing.

Next week we can get back to our normal format and usual publishing schedule. Right before we embark on our Turkey day extravaganza.

But — before then — this week we have our hand’s full.

First, we have an update on the Rolls-Royce Trent 900 engine failure involving the Qantas A380. All the Qantas A380s remain grounded. Rolls still isn’t saying a lot. But everyone else sure is. Engines are apparently being taken off the A380 production line, Singapore Airlines has swapped out three engines already, and, well, this is a very serious situation.

It is going to make for a very serious dent in Rolls-Royce’s net profits as well, as you can bet all these airlines are keeping tabs on their expenses incurred and Rolls is going to receive the final bill.

Not to be left out, Boeing had its own problem last week with one of its 787s — as it was forced to land after a fire broke out in an aft electrical panel.

When we’re not talking aircraft and engines, we’re talking TSA.

As someone who is now faced with the prospect of having to go through an “extended pat down” every time I fly as a result of having a big piece of titanium in my hip, I am not happy about the new “group and grab” procedures.

Funny thing though — we received a number of notes this week from airline crew members. It appears that the TSA has pulled back on insisting on either the AIT scanner or the “extended pat down” for crew members. Not in all locations though.

No, the TSA has not issued an official backdown. But I’ve received enough notes to tell me that there has been a relaxation in the previous directives.

We also wrap up third quarter earnings coverage this week with our own “extended” look at Republic and Pinnacle.

If you took a look at the stocks of either airline and how they performed for the last week — you might have some questions.

In the case of Pinnacle, shares soared.

In the case of Republic, they did just the opposite.

We’ll tell you why.

We also go over the September DOT Airline Consumer Travel Report. And the September tarmac and cancellation numbers. Very interesting “rounding” of numbers going on here. We talk about all that as well.

There was a rather bizarre Airbus A380 order announced last week, the DOT and FAA sought to assure air travelers that they are working to make sure older aircraft are safe — only problem is that the efforts won’t take effect for years — and hey, the future King of England’s wife-to-be has two parents who met while working for British Airways.

We only talk about the important things here at PlaneBusiness Banter.

Subscribers can access this week’s issue here.

PlaneBusiness Banter Posted!

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Greetings earthlings. Gotten a text message from Brett Favre lately?

Okay, I’ll behave.

Which is more than I can say for Mr. Favre.

The latest edition of PlaneBusiness Banter is now posted.

This week we take a look at, what else? The Southwest/AirTran deal. Lots of chatter going on about just why it was that AirTran decided to sell. We talk about that, and I answer a lot of email questions about my comments from last week concerning the deal as well.

American Airlines was all over the newswires this past week. We talk about all the airline’s news, the latest missive from the Allied Pilots Association, and we wonder just where the airline is going to get all the metal to fly all this new flying it is talking about.

Oh, and yes, the airline also recalled 800 employees. Wonder how many of those former TWA flight attendants will come back and fly? I’d be interested to know.

Meanwhile, over at United Airlines (under new management), the pilots on both sides there said this last week that they have decided to keep direct negotiations going for at least another two months — rather than ask the National Mediation Board to step in. Good. If they asked the NMB to step in it would be months before anything got done.

Five years from now — how will the industry look? What will be different? I do my best Karnac imitation this week. Complete with turban.

Then there is the strange tale of British Airways’ Captain Peter Burkill. Burkill was Captain of British Airways flight 38, the Boeing 777 aircraft that lost power in both Rolls-Royce engines during final approach to Heathrow. He and his co-pilot were hailed as heroes after they managed to land the plane safely just short of the runway.

But things turned awry for Burkill pretty quickly. When all was said and done, he quit the airline, was unable to find another job as a pilot, and found himself on welfare.

We talk about his journey this week, and the strange twist to it that just occurred.

We have all kinds of other goodies, including a rather nifty way to look at regional airline profitability that was published in a research note last week by Bank of America/Merrill Lynch analyst Glenn Engel, and the usual hot YouTube videos that made their appearance this week. We’ve got foul-mouthed furry puppets, more cartoon union negotiation stories and dancing flight attendants.

It’s just a never ending party.

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

PlaneBusiness Subscriber New Log-In Update

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Hello everyone. Holly here.

As of about 20 minutes ago, all of us here at the Worldwide Headquarters *believe* (important word here) that the new log-in system for PlaneBusiness Banter is now working properly.

We had a few hiccups this afternoon as we made the cutover, but I think those small annoying problems have all been taken care of.

What does this mean if you are a subscriber to PlaneBusiness Banter?

It means that your previous user name and password that you used to access PBB prior to this week no longer works. It’s done. Toast. Dead.

If you have not received an email from us yet — assigning you a new assigned user name and password, or if you have any other questions concerning the change, please contact our subscription manager.

PlaneBusiness Banter Posted!

Greetings to all on what was a very hot Memorial Day here in the Dallas-Ft.Worth Metromess.

I hope all of you had a good Memorial Day holiday and most importantly, I hope all of you took a minute between bites of your grilled hamburgers to thank those who serve this country in our Armed Forces. Or who have served.

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The latest issue of PlaneBusiness Banter is now posted. Subscribers can access the newly posted issue here.

This week I talk about the new “ugly girl” in the industry. Yep, I’m talking about American Airlines and that airline’s merger options.

But American is in the news for other things — including yet another TA with a TWU-represented employee group. However, to say the union leadership gave the deal a lukewarm endorsement would be an understatement.

British Airways saw itself in the middle of yet another strike by its cabin crew members today. This one started on Sunday and as today is a Bank Holiday in the U.K, the work slowdown will probably hit the airline a bit more than the last one. Which just ended on Friday of last week.

I know. It’s pure insanity.

This last week airline stocks had a great week with shares of US Airways leading the pack. Handily. The main reason for this sudden burst of vitality? Two bullish analyst notes. JP Morgan analyst Jamie Baker upgraded the entire sector, and had very positive things to say about US Airways in particular. His comments were then followed by a bullish American Airlines/US Airways research note issued by Bob McAdoo with Avondale Partners just a few hours later.

The combined one-two punch was clearly felt across the sector, but especially in shares of US Airways.

Is the Porter Airlines IPO in trouble? First quarter numbers sure didn’t help it much.

Virgin Blue had a surprise for its investors this week, and in our Market Review this week we talk about the resurgence of private equity support for the aircraft leasing sector.

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

PlaneBusiness Banter Now Posted!

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Hello everyone.

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

So who do we dissect this week?

Republic Holdings.

I’ll be honest. I’m still on the fence with this attempt by Bryan Bedford and the Republic management team to cobble together a new airline out of discarded parts of Midwest and Frontier Airlines.

I was hoping that this quarter we could get more visibility from the airline’s earnings results as to how the grand experiment is faring — but while Wall Street apparently liked the airline’s results (the airline’s stock led the sector this last week picking up a cool 14%), I didn’t hear anything that really won me over.

So — call me “continued skeptical.”

Had to snicker when the airline talked about how it was “harvesting synergies” of the Midwest/Frontier combo. “Harvesting synergies”…..fine example of corporate speak.

That kind of stuff makes me break out in hives.

We had one other regional airline report earnings this last week and that airline was ExpressJet. If you look only at the airline’s net profit numbers, it would appear that the airline did pretty well for the quarter. But no — the reason the airline posted a profit was because of a huge both cash and non-cash tax issue. The airline posted a $17 million operating loss — that was also a clear indicator that no, this was not that good of a quarter.

Meanwhile, the airline remains without a permanent CEO. You may recall that the airline’s CEO Jim Ream left the airline effective Jan. 1 — as he took the SVP of Maintenance and Engineering gig at American Airlines.

The weather certainly created a whole slew of new cancellations last week for many of the U.S. carriers. Adding to the pain of the New York area airspace – the longest runway at JFK International was officially shut down today — as the airport prepares to rebuild and widen it. It will be closed for four months.

I know. Let the fun begin.

On the economic front, it was another yin-yang week for economic tea leaf reading, but on the airline economic/RASM front, analysts continue to fall all over themselves about just how great year-over-year RASM numbers are going to be for the next 3-4 months.

Or as JP Morgan analyst Jamie Baker said at one point, “If it flies, buy it!” Actually Jamie acknowledged last week that he is not quite that bullish now — but tonight we should get our first glimpse of higher RASM numbers — as Continental rolls out its February traffic report.

All this and more, including Japan Air Line’s horrendous loss, Air New Zealand’s nice profit, Aircell’s win at Alaska Air Group, fighting flight attendants, a new high-end, but reasonably priced crash pad for pilots in Houston, and more in this week’s issue of PlaneBusiness Banter .

A Not-So-Quiet Holiday Season for the Airline Industry; TSA Goes After Bloggers Who Posted TSA Changes in Directives

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Hello everyone.

Alas, the holidays are almost over. Sigh. That means it’s time for yours truly to get back to work. And back here in PlaneBuzz.

You know, most holiday periods are relatively quiet in the airline industry. For the most part, Wall Street analysts are not cranking out research notes. All that fourth quarter “pre-announcement” Wall Street stuff has already been disseminated prior to Christmas. Airline CEOs are rarely squawking. It’s not usually a time for any “big time” announcements concerning mergers or other nefarious activities.

This is not the case on the front lines of any given airline’s operations, of course, where airline employees are faced with huge crowds of passengers who are sometimes not in the best of holiday spirits. Especially when flights are cancelled, packed to the gills, or weather rears its ugly head.

But I think it would be safe to say that this particular holiday season has been, well, how can I say this? Just a little bit too newsworthy.

Obviously the biggest topic on your minds, as judged by the contents of my email folder, is the continuing actions of the TSA, following the failed attempt by a passenger to detonate an explosive device on Delta Air Lines/Northwest Airlines flight 253 which operated between Amsterdam and Detroit Christmas day.

By now you all know the basics.

Umar Farouk Abdulmutallab, a 23-year old Nigerian, successfully passed through a security check at the gate in Amsterdam. This check included a hand baggage scan and a metal detector.

Officials say that Abdulmutallab then apparently assembled the explosive device, which included 80 grams of Pentrite, or PETN, in the aircraft lavatory — after which he returned to his seat where he attempted to detonate the device using a syringe of chemicals.

Passengers and aircraft crew members intervened, and the plane landed safely.

To say that things have been a bit confusing and frustrating for both airline passengers and airline employees since then would be a gross understatement.

Information being given passengers concerning what they can and cannot do while onboard aircraft has seemed to change every hour this week. In some cases it depends on just what particular flight you are on, apparently. One industry veteran we know told us that on his long-haul trans-Pacific flight home this week he was told by the Purser that no, there was no ban on passengers getting up from their seat in the last hour of the flight. This had been the case, however, when this same person flew in the opposite direction earlier in the week. According to the Purser, “All of that is up to the discretion of the Captain.”

Huh?

I somehow don’t think that is the case.

Meanwhile, our email bag is packed with emails from airline employees, many of whom are flight attendants and pilots — checking in with their take on how ridiculous the TSA has been in the last week.

But as bad, frustrating, and confusing as things have been at U.S. airports, I don’t think they are nearly as bad as they are in Canada, where TSA-mandated emergency rule changes to boarding procedures for U.S. bound flights there have made it a wonder any passengers are flying to the U.S. at all.

As of this writing, if you are in Canada and trying to fly in the U.S, you can only bring “small” purses, laptops, and a very small list of items, including some medical supplies, onboard an aircraft. That’s it.

We talked to one subscriber who works with Air Canada yesterday and he was so upset he could hardly keep the words in the email. WestJet passengers are facing the same new “rules.”

We are told that U.S. custom agents are telling U.S. bound passengers who have purses they consider to be “too large” that they cannot get on a flight unless those purses are checked.

It got so ugly this week that the Royal Canadian Mounted Police were called in to help with the process. This, after lines snaking out of Toronto’s Pearson International had passengers standing for three hours or more and hundreds of flights had to be cancelled as a part of the collateral damage.

But draconian rules regarding onboard carry-ons is not the only problem. U.S.-bound passengers out of Canada must also now pass through three levels of security: regular pre-flight passenger screening, U.S. Customs, and additional screening that can include physical pat-downs.

And if all of this wasn’t enough — and clearly this next situation hits close to home for me — TSA special agents went after travel bloggers Chris Elliott and Steve Frischling this week for writing about changes in security procedures put in place by the TSA after the bombing attempt.

Frischling writes a blog for KLM. Chris writes the blog Elliott.

According to Chris’s blog,

“We had just put the kids in the bathtub when [TSA] Special Agent Robert Flaherty knocked on my front door with a subpoena. He was very polite, and used “sir” a lot, and he said he just wanted a name: Who sent me the security directive?

I invited Flaherty to sit down in the living room and introduced him to my cats, who seemed to take a liking to him. The kids came by to say hello, too.

‘A subpoena?’ I asked the special agent. ‘Is that really necessary?’

‘Sir,’ he repeated. ‘You’ve been served.'”

Being the good blogger that he is, Chris advised him that he would call his attorney and be back in touch.

According to a New York Times article this morning,

“Frischling said he met with two TSA special agents Tuesday night at his Connecticut home for about three hours and again on Wednesday morning when he was forced to hand over his lap top computer. Frischling said the agents threatened to interfere with his contract to write a blog for KLM Royal Dutch Airlines if he didn’t cooperate and provide the name of the person who leaked the memo.

”It literally showed up in my box,” Frischling told The Associated Press. ”I do not know who it came from.” He said he provided the agents a signed statement to that effect.

I can certainly relate to that. That is exactly how it goes. Something shows up in our email box. Sometimes we know who sent it. Sometimes we don’t.
It’s then our call as to whether to go with the information or not.

Clearly these two went with the information.

But hey, you J. Edgar Hoover types with the TSA — back off. The information was “out there.”

I can state, flatly, that there were discussions of parts of the new rules included in emails to me. Not the entire documents. But let’s just put it this way — when these directives came down on the heads of the airlines — it was to be expected that the gist of them would be “out there” in no short order.

Chris and Steve did not obtain this information “illegally,” nor was the fact they posted the information going to interfere with any “security” measures contained in the documents. After all — thousands of airline employees received the same information. Or are all airline employees who received the information required to sign confidentiality statements? I don’t think so.

Ridiculous. Just friggin’ ridiculous.

Just like most everything else we’ve seen and heard from the TSA over the last week as the government tries, once again, to cover its rear as once again, the futility of taking our shoes off and removing our clothes every time we fly is exposed, once again, to be the transparent exercise in futility that it has always been.

Yes, there’s clearly a lot more to be said about all this.

But for now — I’ll close today with a short and sweet admonition.

Happy New Year everyone!