Tag Archives: Southwest Airlines

Southwest Airlines Kicks Off Third Quarter Earnings Parade

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This morning Southwest Airlines kicked off the third quarter earnings parade for the things with wings.

The bulk of the sector reports earnings next week.

Excluding items, the airline reported a profit of 3 cents a share. This was a bit better than the street consensus, which had forecast the airline would post a profit, excluding items of two cents.

On the revenue side, the airline saw passenger revenue per available seat mile (PRASM) down 2.2%. This was much better than the airline’s PRASM drop of 6% it recorded in the second quarter. However, yields were down 12% to 12.94 cents/mile.

On the cost side, the airline saw CASM jump 6.6%, excluding fuel and special items. Last quarter, CASM was up 5.9%.

Operating margin came in at 4.8%. This was a tad lower than last year, when the airline posted a 5.1% operating margin. Not necessarily that good a thing when you consider where the price of fuel was for much of the third quarter last year.

The basics reported today were: Net loss for the quarter was $16 million or $0.02 a share. This compared to last year when the airline posted a loss of $120 million or $0.16 per share.

The results included the following special items: A charge of $27 million related to the airline’s early-out program they offered employees and a loss of $12 million related to non-cash mark-to-market items related to the airline’s fuel hedging program.

Excluding the special items, the airline posted a profit of $23 million or $0.03. This compared to last year when the airline posted a profit of $69 million or $0.09.

And TheBeat Goes On…

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Hello earthlings. How is everyone today?

I myself am just peachy. I returned yesterday from a nice two day jaunt to Austin, TX., where I was honored to have been asked to give the luncheon keynote presentation at TheBeat Live Conference.

If you are involved in corporate travel, if you need to interact with a GDS system on a regular basis, if corporate airline contracts make you dizzy with frustration, if the thought of migrating your airline’s computer system to a new version keeps you up at night — or any combination of the above — TheBeat should be required reading for you. (This link takes you to their blog, the publication is subscription only, just like PlaneBusiness Banter.

TheBeat was begun several years ago by Jay Campbell, who was a reporter for years with Business Travel News. Jay and I go way back. Waaaaay back.

The cool thing about Jay and David Jonas and Mary Ann McNulty and the rest of the gang who now work under the Promedia umbrella is that they have the same irreverent attitude towards this lovely and oh-so-entertaining industry as I do.

As a result, a gathering of Beat subscribers is very much like what a gathering of the PlaneBusiness Banter subscriber base would be. Lots of opinions, lots of in-your-face discussions, and a really worthwhile way to spend a couple of days.

So — what was the topic of my presentation this year? “Liquidity, Leverage and Labor.” I think that is pretty much self-explanatory.

What is one thing that I learned from attending this year’s conference? Amadeus is not sparing any expense as they greatly expand their presence in the United States. On a number of different levels.

Needless to say, the question of whether the GDS systems are worth it, are becoming irrelevant, or need to change into something completely different was a major topic both officially and unofficially.

The state of corporate contracts with airlines — a hot topic. The issue of just who is going to pay for the ever-escalating cost of “look to book” ratios in terms of accessing travel information online — a hot topic. The effect of individuals now being able to control their entire travel experience in the palm of their hand, thanks to the iPhone and more than 2000 travel-related applications available for that iPhone?

The general consensus is that we really haven’t even scratched the surface on how this is going to massively change the way travel is both managed and consumed.

Oh yes, which leads to another big area of change — control of travel and its expenses from a corporation perspective. Who has it, who is losing it, and who is taking it.

Oh and the procurement method of purchasing travel? If your company is still doing it — you need a new CFO. And if your CFO is the one in charge of authorizing travel, you need a new CEO.

More in this week’s PlaneBusiness Banter on the conference.

PlaneBusiness Banter Now Posted

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

What are we talking about this week?

Obviously we’re talking about the huge financial deal that American Airlines announced last week. We have all the details of the liquidity boost — but in my column this week I ask the question — why did the airline wait so long to go public with the deal? I think the answer is obvious — union/management politics.

And that is not a good thing for shareholders.

Southwest CEO Gary Kelly said Friday that it now looks like Southwest may post a profit for the year. 60 days ago that was not the case.

Oh, and all those headlines last week about Southwest targeting international destinations? Take a deep breath and a huge dose of reality.

Airline stocks had another good week last week, led by AMR, which picked up almost 30% on its liquidity news.

On the not-so-good news front, jet fuel prices were up last week as the crack spread jumped up almost 70%. Yikes.

Spirit got whacked by a record-breaking DOT fine last week. Just exactly did the airline do? Or not do?

And the der Fuhrer is back! This week’s Hitler YouTube parody takes on American Airlines’ management. Who’s next? United?

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

Southwest and SWAPA Have Another Tentative Agreement in Hand

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Hey, I could be talking about the push to get a passenger rights bill passed.

No, I really didn’t plan for today to be the Southwest AIrlines news day.

But this afternoon SWAPA, the pilot’s union at Southwest, announced a new tentative agreement with the company. This will be the second attempt by both sides at getting a new contract ratified.

Highlights of the contract behind door number two are:

The current number of Lance Captains, as of the ratification date, will be grandfathered for the term of the agreement. (This was a big reason the attempt to ratify the last last TA failed.)

ELITT restrictions will drop from previous TA and is now contractual.

The new Open Time system as explained in the previous TA will now have a test period (circuit breaker) in which SWAPA can opt out.

In terms of compensation, the new agreement includes raises and full retro pay.

There is an increase in 401(k) matching by the company.

And on the subject of codesharing, the TA lowers the previously negotiated near-international ASM cap, and it removes Frontier-specific RJ exemption language.

Payment Processing Issues With New Southwest Airlines Website

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Oops.

Maybe this was not a good time for Southwest Airlines to throw a big $49 sale.

I am traveling to Austin the week after next where I will be giving the luncheon keynote address at this year’s  The BeatLIVE Conference.  More on the conference this week.

Anyway, I have to get there. So I just went to make a reservation on Southwest’s brand new website.

I tried three times.

Very odd payment processing problems. After two attempts to pay by credit card failed, I tried to pay by PayPal.

When I did that, things really got strange, as the card information that was brought up was OLD PayPal account and card information. I mean, I’ve changed this information in the last two months. I’ve used PayPal in the last week and it had all the new information keyed in with the right account and address information.

So where did the old information come from?

Was this actually stored on some server at Southwest? Dunno. But it was kind of unsettling.

Against my better judgment, I then re-entered and changed all the information, although the whole process didn’t seem right to me.

Didn’t matter. When I tried to purchase the ticket, I got the same error message.

Guess I’ll just have to call the number they gave me to call and do it the old fashioned way.

Anyone else having problems with the new site?

Vacation Coming To An End….Sigh

Thanks to all of you who have been attempting to get me to comment this week on any number of goings-on in the airline industry.

But, I am happy to say — I resisted.

Until today.

No, I said, I am on vacation, and damn it, I am going to stay offline. Until Tuesday.

Until today.

And what got me to finally break my silence? Something wickedly funny. Of course.

Most of you probably saw the recent YouTube effort in which some enterprising Boeing employee ( I would bet) did a take off on Boeing’s continued delays with the 787. The video used? A now-familiar clip from a recent Hitler made-for-television movie that seems tailor-made for such antics. In fact, there are scores of these parodies now on YouTube, including one dealing with Brett Favre’s sign-up with the Vikings. I know. Just one of those things that seems to be tailor-made for mischief.

This week das Fuhrer has made yet another appearance.

But this time it appears that a Southwest Airlines’ pilot is the one responsible for the sub-titles. And Southwest’s CEO Gary Kelly is the one barking out German invectives to his underlings.

I’ve had more than a handful of you inquire as to whether moi had anything to do with this. I think the reason is because there are some very “inside” management barbs in this new satire. So I guess the assumption is that this was something right up my alley.

But I am here to say — I am completely innocent.

That is not to say that I didn’t chuckle out loud more than once when I watched it, though. (Yeah, you know Business Select takes a hit in here, along with…..”It’s ON!”) But I think I may have laughed the loudest at the “deck party” comment.

Not sure some folks over on Denton Drive are going to be too amused, however. This one hits just a little too close to home. On more than one front.

Serious stuff? Oh of course there has been a lot of serious stuff going on in the industry this past week — including headline-grabbing FAA interventions with both American Airlines and Southwest Airlines. I mean, if this continues, the FAA should just move their headquarters to Dallas, don’t you think?

And yes, Southwest, when not feverishly repairing aircraft this week, also announced a new “fee” for passengers. I’ll be talking about this news this next week, along with a whole lot more. When my vacation finally ends on Tuesday.

Sigh.

Enjoy your Labor Day weekend everyone. Tennis in the greatest city in the world, college football at a stadium near you, and cooler temps almost everywhere.

Life simply doesn’t get any better than this. Get out there and enjoy it.

Southwest Airlines’ Bid Not Accepted for Frontier Airlines

“We said all along that we would only move forward on this deal if it proved to be the right decision for our Employees and financially prudent for our Company,” said Gary Kelly, Southwest’s Chairman of the Board, President, and CEO. “We have a mission to preserve and protect our Culture and the best interests of our Employees, Customers, and Shareholders. This was a great opportunity that required us to act fast. A lot of people worked very hard with every intention of making this work. We were fortunate to be in a position to examine the acquisition to see if it was the right decision for Southwest Airlines. We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected. Our congratulations to Republic Airways and Frontier Airlines.”


There you go.

Go talk amongst yourselves about this turn of events. I’m going to go read some of your email pelts.

Latest SWAPA Update on Pilot Negotiations Regarding Southwest Airlines Bid for Frontier Airlines

Here’s the latest missive from the Southwest Airlines’ pilot group, SWAPA, to its members. FAPA is the Frontier Airlines Pilot Association, the union that represents the Frontier Airlines’ pilots.

“It has been a whirlwind week for your M&A Committee. We have been in meetings with our M&A counsel in Washington Monday and Tuesday and quickly returned to Dallas on Wednesday for a pressing meeting with FAPA. We would like to bring you up to date on the Frontier transaction.

Weeks ago, the Company approached SWAPA for ideas on how to complete the Frontier transaction with our pilots’ support. We expressed our concerns about new federal legislation on the books (McCaskill/Bond) and its potential effect on pilot seniority at Southwest. The Company, at SWAPA’s request, included a “labor contingency clause” requiring labor agreements in place prior to the closing of the Frontier acquisition. This action took the possibility of binding arbitration out of play and protected our pilots from a harmful arbitrated seniority integration.

As the Company was developing their formal binding proposal to acquire Frontier out of bankruptcy, Southwest bankruptcy counsel expressed concern that the Southwest bid could be excluded from the auction process because Frontier legal counsel deemed the proposal “not qualified” for the auction process due to the labor contingency clause. However, the labor contingency clause would be deemed acceptable and the bid deemed qualified if SWAPA and FAPA reached an Agreement in Principle for seniority integration. That triggered negotiations Thursday between SWAPA and FAPA.

SWAPA’s concerns throughout this process have been to protect our seniority list and our Collective Bargaining Agreement (CBA). The only way to adequately protect our entire pilot group was to place the FAPA pilots below the SWAPA pilots on our new Master Seniority List.

FAPA’s concerns are:

  • Job Protection
  • Seat Protection
  • Pay Protection
  • Domicile Protection

FAPA’s position was for relative seniority with a “variable” for the ratio for integration. Clearly, meeting all of FAPA’s concerns would be an enormous windfall for Frontier pilots at the expense of Southwest pilots.”

Oh boy. Here we go. All of these concepts sound very familiar don’t they? Relative seniority. “Stapling” the Frontier pilots to the bottom of the list.

And this is supposed to be finalized with both groups signing off on it today??

Right.

Well, there you have it. Either there is an agreement in principle with both pilot groups as to the question of seniority, or it appears that the bid by Southwest will not be considered to be a “qualified” bid.

Do you suppose that Southwest knew this all along, and this is merely an anticipated ‘squeeze play’ made by the company, assuming that the “urgency” of the situation would prod both groups to an agreement before the clock strikes twelve? Or was this a surprise at the last minute to all parties concerned?

Stay tuned.