AirlineSector posts
FeedPosted Feb 9th 2010 9:40AM by Tom Johansmeyer (RSS feed)
Filed under: Bed Bath and Beyond (BBBY), AMR Corp (AMR)

American Airlines (
AMR) has become about as low-rent as one could imagine. I can stomach paying to check bags and for snacks. To me, it makes sense, as they provide important revenue streams and strike me as products and services for which it's possible to charge with little disruption to the passenger experience.
But, as of May 1, 2010,
the airline will be charging $8 for a blanket and inflatable neck pillow on flights lasting more than two hours – including flights to Hawaii, Canada, Mexico, the Caribbean and Central America. But, for your trouble, American will toss in a $10 coupon towards a purchase of more than $30 from Bed Bath & Beyond (
BBBY).
Of course, on flights lasting less than two hours, American's policy is BYO.
If you want to stay warm, cram your own blanket into your carry-on.
Continue reading AMR Finds New Way to Nickel and Dime You
Posted Jan 5th 2010 9:40AM by Tom Johansmeyer (RSS feed)
Filed under: Good news, Employees, Contl Airlines'B' (CAL)
No profit no bonus -- hell, make that no salary. The new CEO of Continental Airlines (CAL), Jeffery Smisek, says he won't take any salary or annual bonus until he brings the airline to profitability.
Smisek took the top job at Continental after the previous CEO, Lawrence Kellner, left the gig to go to a private equity firm. Last year, the firm lost $367 million in the first three quarters. A Thomson Reuters survey of analysts expects a fourth quarter loss of at least $38 million, though they're looking for a profit of at least $190 million for this year. So, Wall Street has already set Smisek's goal for him.
Continue reading Continental CEO Not Taking a Dime Until Profit Comes
Posted Oct 21st 2009 10:00AM by Tom Johansmeyer (RSS feed)
Filed under: Earnings Reports, UAL Corp (UAUA)

The skies are starting to look a little friendlier to
United Airlines (NASDAQ:
UAUA).
The airline reported a quarterly loss that was lower than expected. Third quarter traffic was off only 2.9%, but because United used discounts to fill seats, revenue fell 20.3% (to $4.43 billion). The key to a recovery will be getting passengers to shell out for more expensive seats. According to United's president, John Tague, "There's no opportunity here for a full revenue recovery until we get premium cabin pricing back." He doesn't know how long this is going to take, but does say that he's seen progress over the past few months.
Nonetheless, it's important not to confuse "not so bad" with "making money." UAL lost $57 million (39 cents a share) last quarter. If it hadn't had some good news on fuel hedges and accounting issues, the loss would have been 43 cents a share. Again, this is better than analysts polled by Thomson Reuters expected: they were forecasting a loss of 94 cents per share. And, the third quarter loss was much better than last year's $792 million for the third quarter.
But, it all comes down to the bottom line, and a loss is a loss is a loss.
Continue reading UAL has almost good news for third quarter
Posted Oct 9th 2009 2:30PM by Tom Johansmeyer (RSS feed)
Filed under: Delta Air Lines (DAL)
Business travelers still aren't coming back to the good seats, despite airlines' best efforts. FareCompare.com reports that many business class tickets to Europe are going to be 33% to 66% cheaper this fall relative to last year. Companies are being careful with their cash – which means stacking people in coach rather than giving them a little leg room on overseas flights. With back-of-the-plane tickets going for a quarter of the price (or less) than their business class equivalents, this isn't exactly shocking.
On Wednesday, Delta's (NYSE: DAL) cheapest NYC-to-London's cheapest roundtrip coach fare was $716 (for an October 23 departure and October 30 return), according to a report in USA Today. To take the same trip in business class, you were looking at a hefty $4,634. So, even though prices are down year-over-year, it doesn't mean that business travelers are being allowed to enjoy the opportunity.
Continue reading Cheaper business class not helping airlines
Posted Sep 29th 2009 9:50AM by Mark Fightmaster (RSS feed)
Filed under: Delta Air Lines (DAL)

Late Monday,
Delta Air Lines (NYSE:
DAL) announced it
raised $600 million in cash and refinanced $1.5 billion in debt in order to help strengthen its liquidity position in 2010. DAL now believes its unrestricted cash balance will be $5.6 billion at the end of the quarter, adding that its refinancing has now addressed more than 40% of next year's loan maturities. The airliner stated that its refinancing has now addressed more than 40% of next year's loan maturities.
Strengthening liquidity is a smart move as it can help the airline conquer some of its technical hurdles. DAL is enjoying a bit of a rally thus far in the calendar year (after starting 2009 with a sharp drop), but I am a bit concerned about its current battle with the $10 level. This round-number level has acted as resistance during the past two weeks, and it could continue in this role. The shares could overcome this resistance with some help from its 10-week and 10-day moving averages.
Continue reading Delta raises cash and refinances debt to strengthen liquidity
Posted Jul 20th 2009 10:40AM by Tom Johansmeyer (RSS feed)
Filed under: International Markets, Earnings Reports, Bad News, Recession
Staff cuts are coming for Singapore Airlines (OTC: SINGF) with calendar Q2 "almost certain" to be a money-loser. This won't be a first for the carrier, but it's definitely rare. Since going public in 1985, SINGF has only had one quarterly loss until now. It took the SARS epidemic to put this company into the red for three months, back in 2003. According to four of the five analysts polled, there was little the company could do to avert the situation.
In a respectable move, the staff cuts are following that of the executive team, which has had 10% to 20% sliced from its salaries. An operating loss of $50 million or more for Q2 will cause staff paychecks to fall by at least 2.5%. SINGF is on the hook to cut 25% of the "monthly variable component" (MVC) that's included in staff salaries if the airline's loss pierces the $50 million threshold. MVC disappears in its entirety if the loss passes the $200 million mark. Currently, MVC accounts for only 10% of employees' total compensation.
Employees have already been chipping in to reduce the airline's costs. Pilots, for example, have sacrificed 65% of a day's pay every month, and employees in general are working shorter weeks.
But, this hasn't been enough.
Continue reading Singapore Airlines loss 'almost certain'
Posted May 26th 2009 3:00PM by Tom Johansmeyer (RSS feed)
Filed under: Good news, Industry, Competitive Strategy, Economic Data
How can exports not rebound? Last year ended on a sour note after posting record results, and 2009 is by all accounts likely to be ugly. The tourism and travel industry is expected to shed more than 200,000 jobs this year. Fortunately, there's a light at the end of the tunnel. The U.S. Department of Commerce expects international visits to the United States to come back in 2010 – after its first forecasted year of decline (i.e., 2009) since 2003.
This year, international travel to the United States is expected to fall 8%. The following year, however, U.S. travel exports are expected to gain 5%, with 5% annual increases through the end of 2013. We'll come out ahead in all this, but it's going to take some time.
Will the influx of foreign visitors over the next four years be enough to turn the travel industry in the United States around? It's too soon to tell right now, and much will depend on the contributions made by domestic routes. Needless to say, even this glimmer of hope must be welcome to investors committed to the airline and hotel sectors.
Posted May 25th 2009 6:00PM by Tom Johansmeyer (RSS feed)
Filed under: Earnings Reports, Bad News, Industry
British Airways (LSE: BA) lost ₤375 million ($595 million) in the 12 months ending March 31, 2009. This is down from a profit of ₤712 million ($1.1 billion) the year before. The airline, which was privatized in 1987, has never sustained a loss this great. As a result, British Airways will not pay any dividends to shareholders -- or bonuses to the management team.
Weaker demand and spikes in fuel costs are cited as the reasons for the year-over-year record loss. Revenue was up 2.9% (₤8.99 billion) year-over-year, but this was not enough to offset a 45% increase in fuel costs -- to ₤2.97 billion. Demand problems struck in the fourth quarter, with revenue dropping 8.4% to ₤1.9 billion.
Its previous record loss was ₤200 million for the year ending in 2002.
Posted Jan 29th 2009 1:00PM by Jamie Dlugosch (RSS feed)
Filed under: Bad News, Boeing Co (BA), UAL Corp (UAUA), Delta Air Lines (DAL), Stocks to Sell, Recession
A consequence of a weakening airline sector is the pain it will cause plane-maker Boeing (NYSE: BA). With capacity tightening, the need for aircrafts is diminishing.
Imagine planes just sitting idle in the desert. That vision is becoming a reality.
Fortunately for investors, that vision will take time to play out. In the meantime, Boeing gets a free pass as they work through years of order backlog that built up during the last business cycle.
If you take a look at Boeing during the last few months, it is clear that investors have yet to catch on to a world of lower revenues going forward.
Continue reading Boeing: Another airline loser
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