Continue reading AMR Finds New Way to Nickel and Dime You

AMR Finds New Way to Nickel and Dime You originally appeared on BloggingStocks on Tue, 09 Feb 2010 09:40:00 EST. Please see our terms for use of feeds.

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

Continental CEO Not Taking a Dime Until Profit Comes originally appeared on BloggingStocks on Tue, 05 Jan 2010 09:40:00 EST. Please see our terms for use of feeds.

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

UAL has almost good news for third quarter originally appeared on BloggingStocks on Wed, 21 Oct 2009 10:00:00 EST. Please see our terms for use of feeds.

If you think all those new airline fees were a temporary measure to help these beleaguered companies through an economic crisis, you're out of your mind. Now that they've had a taste of how much they can make by charging you for an extra bag or a little more leg room, they're hooked. More important, the fees are making up a meaningful portion of airline revenues and profits, so investors aren't likely to be satisfied with a return to normal - well, they can't. Extra fees are the new "normal."

Continue reading Extra airline fees to become the new 'normal'

Extra airline fees to become the new 'normal' originally appeared on BloggingStocks on Fri, 16 Oct 2009 15:40:00 EST. Please see our terms for use of feeds.

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

Cheaper business class not helping airlines originally appeared on BloggingStocks on Fri, 09 Oct 2009 14:30:00 EST. Please see our terms for use of feeds.

Continue reading Delta raises cash and refinances debt to strengthen liquidity

Delta raises cash and refinances debt to strengthen liquidity originally appeared on BloggingStocks on Tue, 29 Sep 2009 09:50:00 EST. Please see our terms for use of feeds.

Continue reading AMR Corp. to sell 30 million shares

AMR Corp. to sell 30 million shares originally appeared on BloggingStocks on Tue, 22 Sep 2009 09:00:00 EST. Please see our terms for use of feeds.

Earlier this morning, Continental Airlines (NYSE: CAL) announced that it will cut 1,700 jobs, along with raising fees for checking luggage. CAL tagged this news along with its quarterly earnings report, in which it reported a loss of $1.72 per share. In the same quarter a year ago CAL lost a nickel per share. Excluding one-time items, CAL lost $1.36 per share compared to estimates for a loss of $1.35 per share. Quarterly revenue slipped 22.7% to $3.13 billion in the quarter, just shy of the consensus estimate.

Continue reading Continental releases earnings, announces job cuts

Continental releases earnings, announces job cuts originally appeared on BloggingStocks on Tue, 21 Jul 2009 15:30:00 EST. Please see our terms for use of feeds.

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'

Singapore Airlines loss 'almost certain' originally appeared on BloggingStocks on Mon, 20 Jul 2009 10:40:00 EST. Please see our terms for use of feeds.

AMR Corporation (NYSE: AMR) got spanked in the second quarter, as frequent fliers kept their feet on the ground. The American Airlines parent posted a $390 million loss in a quarter that historically has been kind to travel companies. AMR rationalizes the results with the thought that the loss would have been only $319 million ($1.14 per share) if charges related to selling and grounding planes were excluded. This would have put the airline ahead of analyst expectations of a $1.28 per share loss. AMR's Q2 revenue fell 21% to $4.89 billion.

And, it's far better than the airline's performance in the second quarter of 2008.

Continue reading AMR loses in Q2, however you measure it

AMR loses in Q2, however you measure it originally appeared on BloggingStocks on Wed, 15 Jul 2009 16:40:00 EST. Please see our terms for use of feeds.

Continental Airlines (NYSE: CAL) just got the relief it needs to compete. Despite resistance from the Department of Justice (which can only recommend), the Department of Transportation has granted the airline immunity from antitrust laws. This clears the way for Continental to work with United Airlines (NASDAQ: UAUA) -- and other carriers -- on international routes. Now, the airline can join Star Alliance, which already has antitrust immunity.

At the same time, DOT approved a joint venture among Continental, United, Lufthansa (OTC: DLAKY) and Air Canada. This new relationship would involve trans-Atlantic routes.

Continue reading DOT overrides Justice, Continental Airlines wins antitrust relief

DOT overrides Justice, Continental Airlines wins antitrust relief originally appeared on BloggingStocks on Mon, 13 Jul 2009 14:20:00 EST. Please see our terms for use of feeds.

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.

U.S. travel exports to rebound in 2010 originally appeared on BloggingStocks on Tue, 26 May 2009 15:00:00 EST. Please see our terms for use of feeds.

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.

British Airways: worst loss in 20+ years originally appeared on BloggingStocks on Mon, 25 May 2009 18:00:00 EST. Please see our terms for use of feeds.

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

Boeing: Another airline loser originally appeared on BloggingStocks on Thu, 29 Jan 2009 13:00:00 EST. Please see our terms for use of feeds.

The airline industry is a mess and shares of the major airlines are to be avoided at all costs. With an economy that is ailing and fuel hedges gone awry, the sector is once again facing the prospect of steep losses.

Tuesday, we learned how bad it can get for the group. Delta Air Lines (NYSE: DAL) reported a quarterly loss of $1.4 billion, or a whopping $2.11 per share. The company blamed merger costs and bad fuel hedges for the big loss.

Continue reading Don't even think about investing in airline stocks

Don't even think about investing in airline stocks originally appeared on BloggingStocks on Wed, 28 Jan 2009 19:50:00 EST. Please see our terms for use of feeds.

As an investor, I really despise the airline sector at the moment. These companies are notorious for being poorly run cash-losing machines.

Now, in the midst of a deep recession and too many airplanes flying too few customers, airline stocks can be expected to be poor performers in the short run and maybe longer.

I made the sector part of my Top 10 Stocks to Avoid in 2009. The main thesis, aside from the obvious recessionary issues, was that oil prices would resume their climb at some point in 2009.

Specifically, I suggested investors avoid Delta Airlines (NYSE: DAL) and United Airlines (NASDAQ: UAUA).

Higher oil prices directly impact the bottom line of the air carriers. The higher oil goes, the more difficult it is for the airlines to make a profit. This summer, with oil prices hitting $150 per barrel, the future of the group was in peril.

That said, the reality of higher prices caused the group to make some necessary changes that included mergers, reduced capacity and important surcharges. The operating environment had the potential to bring much needed discipline to the carriers.

Unfortunately, higher fuel prices did not last long enough to bring enduring change to the group. As prices fell, airline stocks rallied. It was looking good until the economy tanked.

With the recession, oil prices suddenly mattered less. Instead, the focus was on the consumer and business traveler cutting expenses during a contraction.

The airline sector loses if the economy rallies, as such a state brings higher oil prices and lower profit. If the economy stalls, the sector loses customers and revenues fall to unsustainable levels.

The point is that it is no-win situation for the group.

Continue reading Stay far, far away from airline stocks

Stay far, far away from airline stocks originally appeared on BloggingStocks on Thu, 22 Jan 2009 09:15:00 EST. Please see our terms for use of feeds.

Public seen receptive to Wi-Fi fee

Stock analyst and frequent flier C. Leonard Bauer says Internet fees would be "a lucrative revenue stream" for the airlines, and ironically one that will probably be popular with the public.

Continue reading A saving grace for airlines: Wi-Fi in the sky

A saving grace for airlines: Wi-Fi in the sky originally appeared on BloggingStocks on Wed, 06 Aug 2008 14:55:00 EST. Please see our terms for use of feeds.

Continue reading Delta, Northwest may merge to create world's biggest airline

Delta, Northwest may merge to create world's biggest airline originally appeared on BloggingStocks on Mon, 11 Feb 2008 15:47:00 EST. Please see our terms for use of feeds.