Tag Archives: airlines

PlaneBusiness Banter Now Posted!

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Hello all. This week’s issue of PlaneBusiness Banter is now posted. As I write this, I am literally throwing things into my bag, on my way to Phoenix for this year’s Media Day event at US Airways, so I am going to be a bit shorter than usual with our weekly summary.

This week I wrap up coverage of the recent JP Morgan Transportation Conference with a look at the presentations from JetBlue and Alaska Air Group. Did you realize that Alaska does not finance its Boeing 737 aircraft? It pays cash for them. And hey, we aren’t talking about cheap MD-90s like Allegiant buys either.

Of course we talk a lot this week about the latest “hole in the roof” problem that Southwest Airlines experienced last week. Thankfully, after a one foot by five foot gash opened up in the roof of one of its flights, the pilots were able to land the airplane safely in Yuma, AZ.

While the airline was quick to say the issue was not related to the problem the airline identified as a result of the last fuselage skin rupture, it does now appear that the two aircraft do have something in common. They are both “older process” 737-300s that also happen to have more than 30,000 cycles.

That “older process” is the interesting part, because apparently Boeing changed the way the airplanes were built at some point along the line — and specifically in regard to a part of the aircraft’s structure that is now in the spotlight.

On the financial side, this week I had a chance to talk to Paul Jacobson, SVP of Finance, Treasurer, at Delta Air Lines. I appreciated him taking the time to talk to me. The subject of our discussion? How Delta Air Lines manages its cash. Inexpensively. Last week we posted a graph that looked at revenues/cash on hand at the end of the year, and Delta looked a bit, well, weak in that particular comparison. We knew the airline’s revenues were not what they should be, and that was part of the problem. But what else was going on?

Now we know. And we also know that Delta uses a cash management strategy that only one other airline uses. Know what it is? We do. And we share that with subscribers this week.

We talk a bit about British Airways this week. The airline’s flight attendants look like they are going to strike the airline again, former CEO Willie Walsh received a nice bonus prior to moving into his new digs as head of IAG, and the airline is considering an equity investment in JAL.

April Fools Day was Friday and a slew of airlines jumped into the foolish fray. Which airline’s efforts were genuinely funny and which were, well, just plane lame?

We also have our review of the first quarter airline stock performance. Short and sweet? Pretty ugly reading.

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

Bye!

Big AMR Deal in the Works? Not Hardly

We dashed off a quick tweet about this hot topic last night, which I thought conveyed my sentiments regarding this hoopla surrounding a potential “deal” for AMR, parent of American Airlines. I made the point that I questioned any “offer” that was addressed to one “Gerald” Arpey. Not “Gerard” Arpey.

In a nutshell — I was implying that you should go back to whatever you were doing before you got sidetracked with news of this nonsense.

But, because I’ve received so many emails in the last 12 hours about it, I figured a blog post might help to quell any remaining hysteria.

So, my updated take? Same as last night.

For those of you who are in the dark, yesterday some outfit called Sterling Global Holdings sent out a number of letters to media types in which it said it was offering $9.75 a share for AMR. That amount represented about a 50% premium over AMR’s closing price on Tuesday.

The person who actually sent the letter is someone by the name of Al Weintraub. He claims he is an AMR shareholder. While we still don’t know if that is true or not, he does seem to be a man with a checkered past, as this post at stockpatrol.com details. It seems the SEC is not one of his fans.

No need to duplicate the excellent detective work by Dallas Morning News reporter and AirlineBiz blogger Terry Maxon, who has been all over this from the very beginning. You can read his various missives on this subject at his blog, particularly here.

My final comment? For those of you who remember these kinds of things, this reminds me of the “mystery” buyers with the money that was tied up in various banks who were going to do a deal for TWA.

Uh-huh. Right.

Okay, everyone can now go back to whatever it is you were doing before all of this hit the fan.

Meanwhile those of us who find this kind of stuff entertaining will try to figure out if this guy was trying to get the stock to move, was simply bored, is crazy, or just likes to stir people up for the fun of it.

PlaneBusiness Banter Now Posted!

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Hello everyone. This week’s issue of PlaneBusiness Banter is now posted. This week we talk a lot about what all the folks from the airlines were talking about last week as they made their way up to New York and the JP Morgan Transportation Conference.

All the usual suspects were there, including United/Continental, US Airways, JetBlue, American Airlines, Delta Air Lines, Alaska Airlines and Southwest Airlines.

It was a little preview of sorts of first quarter earnings, which are, in case you haven’t kept up, are right around the corner. In fact, the first quarter ends Thursday.

I know. Where did it go?

It was fun to listen to Jeff Smisek talk about the “new” United. As I tell subscribers, the more he talked, the more it simply sounded like the “old” Continental to me. But that is not necessarily a bad thing.

Gary Kelly talked a lot about what Southwest has been trying to do for the last five years, and what it hopes to accomplish in the next two years. He also uttered that positively horrible phrase when talking about the AirTran deal. Yes…he talked about “harvesting those synergies.”

Aaaaaccccck!

Meanwhile the folks at Delta Air Lines were reassuring investors that yes the revenues have been a little on the low side (speaking of those elusive synergies) but that the airline was going to concentrate this year on improving them.

As for American, the airline didn’t announce any further capacity cuts at the conference — an omission that had one Wall Street analyst fuming last week.

Then there was US Airways’ President Scott Kirby. He said in New York that he saw revenue strength during the first quarter that was stronger than he has ever seen during his career.

That’s saying something.

Aside from the presentations in New York, we take a good look this week at the cash/revenues ratio for the major US airlines we track on a regular basis. It’s interesting to see who ends up above the average line and who ends up below. And what is more remarkable is the wide variance between the airline with the worst cash/revenue performance and the airline that posted the best for 2010.

Airline stocks also had a pretty good week last week. Except for shares of Air Canada, which took the Goat of the Week award.

In other news we talk about the FAA reauthorization bill that is now set for a House vote this week, and the latest critical analysis that looks at the DOT’s three-hour rule and why it isn’t what it’s cracked up to be.

Alaska Airlines suffered a nasty computer outage Saturday. That was not good. But as we discuss at length, the airline dealt with the problem in a superb manner. Kudos to the airline for a great job in terms of keeping customers informed and in the loop.

As usual, there is all this and more in this week’s issue of PlaneBusiness Banter. Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Hello to all on what is a rare dark and rainy night here in what is usually the Valley of the Sun.

Yes, yours truly is back in Phoenix this week, having come out for the 28th Annual ISTAT Conference last week which was held at the Westin Kierland in Scottsdale.

No surprise then that this week we are talking a lot about airlines, airplanes, how to finance those airplanes, the people who finance those airplanes, the people who sell the airplanes, and the people who lease airplanes.

You want a primer on airline EETCs and why they are one of the best investments on the planet? We sit down and talk to JP Morgan’s Mark Streeter — who gives us the skinny on why airline EETCs deserve more respect. (Especially from rating agencies.)

But we also update you on the industry impact from the situation in Japan. There has been a lot of news since last time we updated subscribers, including updated impact statistics from IATA.

No surprise either that with all that was going on last week, jet fuel prices continued to rise.

In the midst of Japanese angst and aircraft design drama, Phil Trenary, CEO of Pinnacle Airlines, announced his departure from the airline last week — effective the end of this week. Hello?

In this week’s Market Review, we update you on the short interest situation with the airline stocks. We give you a snapshot look as well as a trailing 12 month view. Doesn’t matter how you slice and dice it though, one airline stock continues to get hammered by the shorts.

Know which one it is?

As many of you know, the level of stock shorting is what we call a “sentiment indicator.” While it’s nothing official, an airline CFO or CEO certainly doesn’t like it when the investor community begins to increase their short positions in your stock. Kind of like being tracked by the grim reaper. “Who are these guys and what do they know?”

As I said, we’ll update you on all that in this week’s issue as well as a whole lot more.

Subscribers can access this week’s issue here.

PlaneBusiness Banter Now Posted!

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Hello to all on this rather sunny Sunday here at the Worldwide Headquarters.

PlaneBusiness Banter is posted a bit early this week, as yours truly is headed West to the Valley of the Sun later today. It’s time for the 28th Annual ISTAT Conference and this year it is being held in Scottsdale, AZ. What is ISTAT you ask? It is the trade association for those who make their living leasing, buying, and selling airplanes. You know, those metal things we voluntarily put ourselves into from time to time.

I heard last week that there were already 1600+ attendees registered for the event this year. Amazing. I remember when I was on a panel discussion at the event in 1998 and they thought it was good when they had about 400 folks show up in Boca Raton.

It’s always one of our favorite industry events to attend. I’m looking forward to it.

Yes, there was an earthquake that hit Japan last week. We talk this week a bit about how that has affected not only the Japanese airline industry, but how major international airlines who fly to Japan have been affected as well.

We’re also talking about the latest DOT Air Travel Consumer numbers. January was a very good month for the airlines — and their passengers. Except for one glaring category. Guess which one that was. And yes, it’s directly related to the DOT’s Three-Hour Rule.

Airline stocks had a very good week last week, as investors shrugged off concerns over higher fuel prices — but yet another fare increase that American Airlines tried to put into place failed as the week ended.

Spirit Airlines is up to no good again — as the airline rolled out a “Charlie Sheen” inspired ad. Meanwhile Allegiant Air is proposing a “variable rate” fare which would be finalized on the day of departure — based on that day’s fuel cost.

We talk a lot about airplanes and Wi-Fi this week. Will Boeing announce a new twin-aisle narrow body at the Paris Air Show this year? Is Wi-Fi making some Honeywell instruments go haywire in Boeing 737s? Did Aircell just blow up Row 44’s chance at long-term survival?

Never a dull moment around here.

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

PlaneBusiness Banter Now Posted!

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Hello earthlings. This week in PlaneBusiness Banter we are, of course, talking fuel prices. Jet fuel prices to be exact. New York Harbor Jet closed today at $3.22/gallon. Have you filled up your Boeing 737-800 lately? Yes, well, if you have — you can understand why the airline industry is having its own equivalent of an anxiety attack.

Today American Airlines became the second major US carrier to announce a reduction in its capacity forecast for the year. (JP Morgan analyst Jamie Baker has to be sooo happy with this news — after the hard time he gave the airline about their capacity plans in the airline’s fourth quarter earnings call.) Delta already reduced its numbers in February.

Who will be next?

We also have our in-depth earnings call review this week for both SkyWest and Republic Holdings — our last two US airline industry earnings calls for the fourth quarter.

Calls for both airlines were quite interesting, but I have to say, I did not realize that ….well, I’ll keep what I was surprised about in the SkyWest call a surprise. You’ll just have to read.

We also talk about the fourth quarter numbers that a number of Asian carriers posted last week including Air Asia, Malaysia, and Tiger Airways.

We also take a look at US industry revenues for the fourth quarter this week. If you want a graphical look at how revenues in this industry are consolidating — your search has ended with this week’s issue.

Also — do you know the difference between a “weighted average” and normal average? If you frequently look at summaries about various industry metrics, it might be a good idea if you knew what the difference was. There — that’s our small effort at financial education for the week.

Airline stocks? Can we change the subject please? With crude oil prices up more than 13% on the week and jet fuel up 8% — it was a horrible week for the sector. Shares of Air Canada posted the biggest loss of the double-digit loser group.

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

Subscribers can access this week’s issue here.

PlaneBusiness Banter Is Now Posted!

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Good afternoon earthlings. How is everyone today?

As of right now, things here at the Worldwide Headquarters are hunky-dory. However, as you can see by this lovely graphic, that is about to change. Sigh. Enough already.

This is how the weather map looks now.

This is what is forecast for tomorrow morning.

However, before the ice and snow arrives once again and we have to perhaps endure more rolling blackouts, it’s time to talk about this week’s issue of …PlaneBusiness Banter! Subscribers can access this week’s issue here.

This week we take our usual in-depth look at the recent earnings calls and results from both Hawaiian Airlines and Allegiant Travel Co. Our overall assessment of both carrier’s results? Both airlines are in “transition” modes. Translation? I wouldn’t jump into either stock right now. Too many costs on the horizon.

We also talk about the Raymond James Growth Airline Conference, which was held last week in New York. The conference welcomed two newcomers to the fray — Delta Air Lines and Alaska Air Group.

As most of you know by now, Delta Air Lines took the opportunity to talk about its decision to reduce its capacity — a decision that was universally cheered by the Wall Street community.

However, as of today, we have not heard any news from any other airlines in regard to them doing the same — a situation that one airline analyst finds quite frustrating. So much so that he slashed his estimates on most of the legacy airlines last week as a result.

As Jamie Baker, analyst with JP Morgan wrote, given the rise in the price of fuel and the apparent “push back” that airlines may now be feeling as a result of a fare increase that fell apart last week, reductions in capacity are the answer. Sooner rather than later.

Speaking of those fare increases, while the across the board fare increase attempt sputtered last week, this morning United/Continental decided to stop abusing the leisure class, and instead they announced fare increases for both first class and business class passengers. The increases were matched almost immediately by competitors American and Delta Air Lines.

This fare increase has a much better chance of “sticking” because Southwest does not compete with the first class and business class fare buckets — so unlike last week when Southwest proved to be the spoiler, this increase will probably hold.

In other news, Senator John McCain (R-Ariz) tacked on an amendment to the FAA reauthorization bill last week that would effectively kill the Essential Air Services program. Was this just a political play for headlines? Or is he serious?

On another front, the American Eagle ALPA MEC Chairman, Tony Gutierrez, issued a letter last week outlining where the regional carrier is in terms of its relationship to AMR. We had a number of AE-related emails this week and this is why. We talk about this a bit this week, and oh yes, public kudos to Tony. This letter that he wrote to the AE pilots was one of the most thorough letters of its type I’ve ever read from a union leader to his troops.

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

PlaneBusiness Banter Now Posted!

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Hello everyone.

This week’s 100-plus page issue of PlaneBusiness Banter is now posted. Subscribers can access it here.

This week we take a very detailed look at the earnings calls and earnings reports from US Airways, Alaska Air Group, United/Continental and JetBlue.

And yes, as far as we can tell, PBB is the only place, aside from the usual top end financial websites that charge $50-$75 a shot, that you can find earnings call transcripts for both Alaska AIr Group and United/Continental.

Not only that, but you get selected analyst comments on each airline and our take as well.

So what was our take on the results? I’ll give you just a taste. I think the Five-Year plan at Alaska Air Group has been a huge success as the airline posted an outstanding quarter and a great year. US Airways also posted an excellent quarter and year — and remember US Airways is the only major airline that does not hedge its fuel purchases. I think this is phenomenal. But when you listen to the airline’s President Scott Kirby explain the decision, and how expensive it is to hedge fuel these days, and you look at the money the airline made last year and last quarter, well — hey, I like it.

UAL/Continental had a good quarter, and guidance for January was outstanding. We expect continued revenue improvement here as the Continental folks begin to optimize the airline’s network and its aircraft. But as we all know, this is now the latest industry rehabilitation and improvement project. Just as we did with Delta and Northwest, it will be awhile before we know just how those “synergies” are going to shake out.

Then there was JetBlue. Yes, the airline did not have a great fourth quarter. But I don’t see this as a major indicator of any overriding problem. However, because so much of the airline’s business is based out of Boston and New York — the more snow and weather events that hit the East Coast in the first quarter — the more the airline will be tagged.

But we have lots more to talk about than U.S. airline earnings. We also talk about Singapore’s numbers which were released last week, as well as LAN Airlines‘ quarterly results.

Oh, and subscribers can also enter our “Retro Quote” Contest this week. Tell me what industry person said the quote and in what year they said it — and a geeky airline-related present will wing its way to you.

For those of you in the Chicago area, please be careful out there tonight and tomorrow. We are getting subscriber reports tonight that sound rather ominous.

For us in the DFW Metroplex, ice, sleet, and snow welcomed us this morning. Tonight? We’re headed to 7 degrees.

So much for all those swanky Superbowl events that have been scheduled for the outdoors. A number of the large “party tents” that various groups had put up to house events were brought down by ice and snow today, and I think the guys here for ESPN are going to go out and buy electric handwarmers, long johns and ear muffs before they go back outside to their glorifed “tent” environs in downtown Ft. Worth tomorrow.

Flight cancellations? Last check says that more than 8000 flights have now been canceled on Monday, Tuesday, and Wednesday across the U.S. But that number is going to go up tomorrow.

Yee haw. Where’s that damn groundhog?

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.