NEWS: Aloha Airlines Completes a Tri-Fecta

Aloha Airlines is having a good week announcing its flight attendants have ratified a new contract and that it has reached an agreement on contract terms with its pilots. Completing the tri-fecta is the announcement that the bankruptcy court has cleared them for exit from bankruptcy as soon as December 15th. That puts their bankruptcy turn-time at less than one year...lightning fast in airline terms.

NEWS: A380 Customers tell LAX to get Crackin'

LAX lags in accommodating the A380 Los Angeles International airport, LAX to you and me, is being leaned on to pick up the pace on modifications needed to accomodate the massive A380. Both Singapore Airlines and Virgin Atlantic are telling LAX to get things moving or they may look to other airports. The improvements needed are major and local efforts aimed at slowing or even halting growth at LAX have turned out to be more formidable than anticipated. In the end LAX hopes to handle around 2 dozen A380's a day in 2010...approximately 15000 passengers...a DAY.

NEWS: Frontier Airlines Caught by Bad Timing?

UPDATE 1-Frontier Air could face serious cash crunch Dang! Timing is everything and Frontier Airlines may have gotten caught a little over extended. Frontier has been trying, unsuccessfully, to secure financing to cover purchase commitments on 4 shiny new Airbus A319's at the same time as Southwest Airlines is prepping to launch a frontal assault on Frontier's home turf, Denver International Airport, in January. When you couple new competition from Southwest with continued competition from a bankruptcy protected United Airlines it looks like you get a situation that makes potential investors want to sit back and...ummm...observe. Click Read More!

According to the article Frontier is warning that no financing may mean no new jets which could hinder their growth plans. Growth may be key for long term liquidity. No new jets for Frontier means no direct path to add new capacity into the mix and would force them to re-think current routes and plans.

Fares will almost certainly drop as Southwest dumps in new capacity to Phoenix, Chicago and Las Vegas. This will likely be made worse by United who may decide to dump in their own capacity in an attempt to minimize Southwest's success in Denver. On the other hand, United is still pretty cranky about their inability to run Frontier out of Denver, a traditional United stronghold. So they might end up using Southwest's entrance into Denver as an opportunity to take another shot at Frontier's well-being.

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NEWS: More on Delta's Financial State

Delta warns of possible pilots strikeMSNBC has a nice wrap up on the information Delta released today regarding its financial state. Predictably its bad...really bad. I say predictably not just because the airline is in bankruptcy but because this is an airline seeking $325 million in concessions from its pilots. It is trademark cookie cutter airline bankruptcy stuff to release this info in parallel with any big negotiation. Click Read More!

Also threatened is the pension plan which Delta estimates needs about $3.4 billion, (b-illion, with a b) in funding to cover 2006-2008. Wow, suddenly $325 million from the pilots doesn't seem like nearly enough. Hello...Pension Benefit Guaranty Corporation?...This is Delta Airlines calling...

NEWS: Regional Airline Heads for the Islands

So what's an regional airline to do after doubling its fiscal year profits? Start an island hopper in Hawaii of course. Odd? Maybe, especially when you hear that its got nothing to do with island dominating Hawaiian or Aloha Airlines. Regional operator Mesa Airlines did indeed double its profits and is planning to use that success to back a new venture to operate six 50-seat jets purely between the islands. Regionals normally partner with a larger airline to provide short haul service and thus feed the larger airline's operation. But Mesa will start a completely independent operation and go head to head with Hawaiian and Aloha. Click Read More!

Inter-island flights have been a big money maker for Hawaiian and Aloha airlines. According to some it is this operation that helps the two airlines support their flights to the mainland that have traditionally been financial losers. In other words, I don't expect Hawaiian and Aloha to just lay down on this. I would expect them to compete fiercely to keep this business. To do so will knock down profit margins on these flights but I think the dynamic duo will see that as a necessary evil.

OPINION: Death Rattles at Delta?

Delta Airline's pilots are not particularly pleased with the airline's proposal to get another $325 million on top of the billion (yes seriously they had a BILLION to give up) in concessions given up voluntarily by the union. First of all, how out of line are things when you can slash a billion dollars in wages and concessions. Regardless, the pilot's union has rumbled that they may strike if the court grants Delta's wish. Unlike the mechanic's strike that Northwest Airlines has shrugged off Delta truly could get crushed if their pilots went on strike. Replacing pilots is a whole different issue and much tougher to do. It can't be done quickly despite all the surplus in pilots right now. Are the Delta pilots really prepared to pull that trigger?

NEWS: Southwest Airlines wants more in Philly

Southwest to Lease More Gates in Philly
Pssst...US Airways...somebody is trying to sneak into Philadelphia and steal your stuff. That somebody would be Southwest Airlines who are hoping to double its schedule by grabbing some gates being given up by United and Delta. Southwest jumped into Philly in 2004 when they smelled blood in the water with US Airways scaling back ops there. Apparently things have been good because Southwest would like a bigger bite. The article above indicates that the "Southwest effect" has hit one way fares hard in PHL, dropping them 26% in 2004. This just in...Southwest is neither south or west anymore...discuss amongst yourselves.

NEWS: Court Smacks MAC Upside the Head

MAC Loss to AMFA in Picketing Case Points to Wider Pattern of MAC's ''Willful Refusal to Perform Its Legal Duties'': Financial News - Yahoo! Finance OK, so the MAC got busted for not allowing AMFA to picket where it wants. Man I'm just not sure which way to jump first. On one hand you've got the Metropolitan Airport Commission, often accused of being a wee bit too favorable to Minneapolis-Saint Paul International bully Northwest Airlines. Just ask anyone who has ever tried to get a favorable gate assignment at MSP. On the other hand you have AMFA who continue to flail away at side issues like where to picket. Just a guess but I am thinking that AMFA members would like to know just how this helps them get back to work. Sigh.

NEWS: Virgin America on Final Approach?

Virgin America is finally near launch
After months of wrangling to find the right group of investors perhaps Branson has finally got it all sorted. Laws preventing foreign ownership have really put a crimp in Branson style. With the investors forming up Branson can move on to the next step, airline certification. But wait...whats this...a short cut? Perhaps the recent bankruptcy of Independence Air could offer another route? Click Read More!

So here's the deal. Independence Air has already gone through the pain (and, trust me, it is a pain) of getting its certificate and even though its in bankruptcy that certificate is still valid. So what's a bankrupt airline need? Yes...you in the back...CORRECT, the answer is money. Now connect the dots. Who is amassing enough financing to launch a new airline...BINGO...Richard Branson. So whats the probability that the Branson coalition redirects their efforts to sweep in and "rescue" Independence Air. I even thought he might make a run at United but admittedly Independence Air is a much better target for this type of manuever. So hide and watch kids...lets see what happens because I'm not the only one thinking it

NEWS: American Airlines and Unions Determined to Find a Way

So here's an article that offers up a stark counterpoint to the path chosen by AMFA vs Northwest. American Airlines and the unions that represent their mechanics had some brutal negotiation battles in the 90's before 9/11, each one leading to some pretty sweet pay structures for the mechanics. However, in today's brutal market the two sides apparently feel that cooperation is the road to survival for the airline as a whole. In a show of faith that management is out to save the airline and not screw the unions one mechanic said of his fellow workers, "They know if they want their job, they've got to be more efficient and help American make money". And that my friends is how business gets done.

NEWS: AMFA Cries Foul

AMFA Asks Mac to Probe Violation of Strikebreaker Ordinance by Northwest Replacement Workers: Financial News - Yahoo! Finance...
The attempt by the AMFA represented mechanics to force Northwest Airlines management into a bargaining corner by going on strike was largely ineffective. Northwest was prepared for the move and reacted by having qualified management and replacement workers ready to go. Now AMFA thinks they have some dirt. AMFA has asked the Metropolitan Airports Commission (MAC) to investigate "flagrant violations" of strikebreaker laws allegedly occurring during the massive re-hire process by Northwest. Click Read More!

Per an AMFA press release a strikebreaker ""any person who repeatedly secures or seeks to secure employment by offering to...replace any employee absent from his position because of a labor dispute."

Now all of this could be true...Northwest may have brought on some folks that fit this rule. But what does pursuing this accomplish for the remaining AMFA members from Northwest who are watching the airline carry on without them. How is this a means to an end...is it worth the effort? Northwest has replaced all of them and now has bankruptcy to leverage its power to set the terms of any future labor agreement. Its just seems like the last act of a desperate organization.

OPINION: Northwest Airlines Competitive Bankruptcy

Northwest Airlines filing for bankruptcy is old news but I think the reasons offered mask the underlying goal. The airline tells a tale of soaring fuel prices, unmanageable overhead and increased competition from low fare competitors as the reason for the bankruptcy...you know, that old chestnut (thanks Dr. Evil). To be sure, these are certainly contributors but buried in that story is what I believe to be a larger truth. Northwest covets the massive cost cutting, debt restructuring and pension dumping done by United and US Airways in their bankruptcy thrashings. Furthermore, Northwest feels they are left at a competitive disadvantage with these airlines since they cannot, via normal business process, create the same opportunities for themselves. Thus is born the idea of a "competitive bankruptcy". Click Read More!

A competitive bankruptcy is a cold calculated entry into bankruptcy for the sole purpose of extracting that which they could not create themselves. It is not pretty. Bankruptcy sends out a shockwave that impacts employees and sends sister companies into a tailspin (ahem...Mesaba Airlines any one). Bankruptcy invokes a load of overhead in the form of control processes administrated by the legal system. But the potential pay off for Northwest is just too great not to make the move. Massive reductions in wages and benefit costs. Major debt restructuring and relief from immediate debt burden. Fleet house cleaning via forced returns of leased aircraft and equipment. On paper a successfully executed competitive bankruptcy will have Northwest exiting a renewed airline with the ability to compete with low cost airlines.

But this gambit walks heavily on the shoulders of those who toil in the pits to make the Northwest machine run. In human terms, I wonder if those left behind, the horsepower of the airline (you know...not upper management), have the heart to start all over again building this new-old airline.

NEWS: Wright Amendment...Where's the Love?

Senate Commerce panel to weigh repeal of Wright amendment
The firestorm over the Wright Amendment continues with Dallas-Fort Worth(DFW) airport officials, city representatives, Southwest Airlines, American Airlines all offering opinions on the matter. Now the debate moves to Congress but a couple of intriguing twist in the plot have occurred

It goes without saying that DFW airport officials are going to whine about the damaging a repeal of the Wright Amendment would be to their operation. Initially Dallas Mayor Laura Miller agreed but she has changed her mind and suggests a compromise may be the right thing.

And now American Airlines has been talking with the good folks at Love Field. It seems the two met last week just to talk, you know, no big deal. Now, I'm not suggesting that American is jumping sides by simply meeting with officials from Love Field. More likely this is a probe to get a feel for the situation at Love. American must recognize that if the Wright Amendment gets tossed out then they are going to need some sort of a presence there. They have been absent since pulling out after 9/11.

Southwest continues to push for nothing short of a total repeal but its tough sledding. There are a fair number of powerful folks that oppose this including some folks in Congress.

NEWS: Airbus A380 Delays

BBC NEWS | Business | Airbus jet delay costs 'millions'
The twelve readers who looked at my blog all know that I have been openly critical of the A380 on more than one occasion. I'll admit that I never expected the test flight to occur on schedule and yes...I was wrong about that. But fear not, oh single remaining reader. You see, flight testing has commenced on the A380 after which the scheduled delivery date to the launch customer was seen screaming over the horizon never to be heard from again. Ands its a spendy delay at that
Current news puts the delivery date about 4-6 months behind schedule which is putting a pinch on some big players like Qantas, Singapore Airlines and Malaysia Airlines. While no specifics are available the costs to Airbus are likely in the millions.

NEWS: Southwest presses its Chicago-Midway advantage via ATA

Southwest may nab four Midway gates
OK...math time so pay attention. Chicago-Midway has 43 gates. Southwest acquired 6 of 14 gates controlled by ATA last Dec when it loaned ATA $47 million bringing its total to 25 gates. A new proposal introduced as part of ATA's bankruptcy re-org plan would move another 4 ATA controlled gates to Southwest's sweaty little palms giving them 29 gates. ATA would keep 1 gate and the City of Chicago would get the remaining gates under this latest proposal. AirTran, who tried to purchase all 14 gates back in Dec, is likely wondering how they missed out not once but twice on these gates. Even worse for AirTran, this deal will push them out of two gates they are currently using (pssst, AirTran...call the City of Chicago...I hear they have a line on some gates). How much is all this worth to Southwest? Apparently $5 million per gate since the deal would forgive $20 million of the original $47 million loan to ATA (and I did that all in my head...woohoo).

UPDATE: Airline Bankruptcy Update

Unless you have been living under a rock you already know that we have three more airline bankruptcies to add to the mix: Northwest, Delta, and Independence Air. I'll have more on each in future posts but here's a quick primer. Two of these bankruptcies are what I would call "competitive bankruptcies" while one is a bankruptcy in the purest most desperate sense. I'll leave you to figure out which is which while I try to figure out how to post more than once every 6 months.

NEWS: Boeing Rides the Wave

Chicago Tribune | Big weekend boosts Boeing sales, stock
Another airshow...another round in the latest "who can announce more deals" battle royale between Boeing and Airbus. Boeing comes away the clear winner in Dubai closing some major deals with ILFC, Emirates and China to the tune of 112 new jet orders. Boeing has been on quite the streak lately and its stock price shows it by rising to its highest level since Sept 2001. Best quote award goes to, surprisingly, Airbus's chief salesman, John Leahy, "We'll end the year 50-50". Hey...way to step up there John.

NEWS: Buy an Airline...uummm...Thanks but no thanks

Mexico is desperately trying to run away from the dueling state run albatrosses that are Mexicana and Aeromexico to no avail. Shares of Cintra, the state run airline "company" are sinking fast after Iberia and Icelandair decided to withdraw from bidding on the airline. Here's a note to the few bidders left...best way to make a million with an airline? Start with a billion.