We have all been there before, standing beside the luggage conveyor belt after a long flight, quietly praying for our luggage to magically pop out of that little window and slide our way. When our luggage finally shows up, it typically means the end of a long day that generally has the potential to stress out most travelers.
For me at least, as long as I get my luggage I am satisfied with my trip. But for a lot of us, there are several factors we use to grade the airlines, and a recent survey shows that customer dissatisfaction is running at near record level lows. These factors include anything from planes leaving and arriving on time, to the service inside the plane from fight attendants, to just how easily mishaps get handled by the agents at the ticketing desks.
Having lived in Europe the past few years, I have been no stranger to the long distance flight back and forth to the States. I suppose I have traveled roughly 100,000 miles on airlines over the past couple of years, and I have to say that for the most part I have had very pleasant experiences. My girlfriend was unfortunate enough to have lost some luggage for a week over this past Christmas, but other than that, I have been pretty lucky.
Analysts surveyed by Thomson Financial expect Southwest Airlines Co. (NYSE: LUV) and Pfizer Inc. (NYSE: PFE) to post smaller profits in the first quarter. Both companies are scheduled to report results on Wednesday.
Southwest is expected to essentially break even as far as earnings are concerned, which is down from the same period in 2007 when it earned four cents per share. The company has beat quarterly estimates recently. It only just beat the consensus third-quarter 2007 estimate, but beat the fourth-quarter estimate by 21.2%.
Dallas-based Southwest's low-cost, no-frills approach has made it one of the leading U.S. airlines. In the past year, the company's revenues were $9.8 billion and its net income totaled $645 million. Its EPS growth forecast for the year is -28.7%, worse than the industry average but better than that of rival JetBlue Airways (NASDAQ: JBLU). The consensus recommendation of analysts remains to buy Southwest.
The stock has fallen 18.5% in the past year and trades at a P/E of 14.7. Shares closed Tuesday at $12.35.
Sometimes in a period of uncertainty, a look back can provide some perspective. So here are a few highlights from BloggingStocks on March 16, 2007,a year ago today.
The stock market was up earlier today on hopes of a continue follow-on from yesterday's monster gains, but closed weak at the end of the day. The good news is that we didn't give back most of yesterday's gains. The bad news is that bears can claim there isn't enough positive mojo to keep the market surging a second day. That's what makes a ballgame. Seeing oil hit $110 per barrel probably didn't help matters for those hoping for an ease in gas prices and a break for retail. Below are the unofficial market closing levels:
Southwest Air (NYSE: LUV) was one of the standout stocks with a 7% price drop down to $11.49 after it grounded 41 planes and canceled flights. The airline will recover from this incident, but what is odd is that if you look it up and down it isn't rewarding shareholders even when it cheats.
Humana Inc. (NYSE: HUM) was the news disaster of the day for large cap stocks with a 13.7% drop to $40.88 after noting higher pharmacy charges were going to nearly chop first quarter earnings in half. The stock put in another 52-week low under the $42.85 prior low despite a Merrill Lynch upgrade late in the day defending the stock.
A biotech called Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) acted as the biotech implosion of the day with a monster drop of 63% to $5.31 (close to perceived cash balance) after its bowel drug failed in Phase II tests. It looks like the placebo was even better.
Thornburg Mortgage (NYSE: TMA) was the monster gainer today with shares up 82% to $2.86, after its coverage was raised to Peer Perform at Bear Stearns. KLA-Tencor (NASDAQ: KLAC) saw shares fall more than 9% to $37.80 on a downgrade today. (Top 10 pre-market calls).
Tomorrow we have the weekly jobless claims, and while weekly numbers are less watched they may be more front and center as everyone is hoping the job market doesn't head as far south as the economy. We also have February import prices, so we'll get to see more evidence of the inflation we know is there.
In the airline industry, it seems that any deal will do. Northwest Airlines Corp. (NYSE: NWA) is already fairly far along in discussions about merging with Delta Air Lines Inc. (NYSE: DAL). Now UAL Corp.'s (NASDAQ: UAUA) United Airlines is talking with Continental Airlines Inc. (NYSE: CAL). But one set of negotiations in not enough for Continental. It is also talking to AMR Corp.'s (NYSE: AMR) American Airlines, according to The Wall Street Journal (subscription required). The paper reports "the talks were exploratory, and it isn't clear they will go further."
Airlines are seeking mergers under the premise that combining companies saves costs. While that is true to some extent, the marriages also hurt customer service -- badly. Putting together incompatible reservations and service operations can take years and be extremely complex, which can make it hell for consumers who just want to take an airplane ride from here to there. Bad customer service is a sure way to drive off fliers, and that is not good for revenue.
The savings in a merger also might not be as great as imagined. Fuel costs stay the same. The number of pilots and crews may drop some, but that can also cause labor disputes and strikes that interrupt service. The number of people needed to handle customer support and processing of reservations probably cannot be cut by much, especially if retaining revenue with unhappy fliers is important.
In an industry where mergers and Chapter 11 filings have been part of the landscape for decades, combining airlines may be no panacea. It is good to remember that the two most successful carriers in the United States, American and Southwest Airlines Corp. (NYSE: LUV) have never been much enamored of merging.
Douglas A. McIntyre is an editor at 247wallst.com.
If you're a woman of a certain age (that age at which you decide you never wish to pose for Playboy), you may be at the altar of All That Is Good and True praying that Kyla Ebbert's 15 minutes of fame would be up already!
If you're anyone else, you're probably clicking over to Playboy.com right now to see her sexy lingerie-clad shots (there's also a video of Kyla wearing nothing but a barely-long-enough cowl-neck shirt walking down a hotel hallway). You are probably thinking one of two things: (1) this is the first time that terrible fashion sense actually paid; or (2) Southwest Airlines (NYSE: LUV) is very, very smart.
This is the first time I can remember that some awful PR for an airline ended up paying off for both the airline and the wronged passenger, prolonging not only Kyla Ebbert's 15 minutes but also Southwest's own.
When Ebbert first was escorted off a Southwest plane for her skimpy attire (and, after begging and adjusting her tank top and skirt, allowed back on), she said she was humiliated. It was a few months later before she decided to tell someone about it; probably urged by her boyfriend, hoping to go from ordinary schlep to Boyfriend of Playboy Model. Suddenly: everyone was buzzing. It looked bad for Southwest -- very bad.
But like the Teflon Don of airlines, Southwest bounced back, apologizing to Kyla and offering a skimpy fare sale in her honor. Southwest did not get her permission to use her name in its advertising. It did not affect Southwest's prospects in the slightest.
Now Southwest is memorialized as the launchpad for the fake-blonde-who-could turn 15 minutes into too long; and it's not lost a bit of its edgy, sexy cache. Bravo, Southwest, for turning mud into smutty gold.
The airline sector is seeing nice gains today after positive earnings reports from JetBlue (NASDAQ: JBLU) andUAL Corp (NASDAQ: UAUA), and the declining oil futures are helping, too. US Airways (NYSE: LCC) is scheduled to report its third quarter earnings before the market opens on Thursday.
In light of major fuel price increases, US Airways has cut its capacity and is considering increasing fares in the next quarter. The airline had better-than-expected traffic over the past few months, and a Goldman Sachs analyst noted that LCC should benefit from fare hikes at low-cost carriers like Southwest (NYSE: LUV), as some customers are likely to defect to US Airways.
On average, analysts are expecting earnings of $1.75 per share, down from $2.74 last quarter, but up from from $1.09 in the year ago period. LCC has beat Wall Street expectations each of the last eight quarters. Though fuel prices have pressured the airlines as oil climbs well into the $80s, the solid earnings from others in the industry this quarter should bode well for the company. If you expect LCC to also report a positive quarter, then now could be a good time to take a look at a bullish hedged trade on the stock.
MOST NOTEWORTHY: Southwest Airlines, AMR Corp, ConocoPhillips, Comcast and Time Warner Cable were today's noteworthy downgrades:
Citigroup downgraded shares on both Southwest Airlines (NYSE: LUV) and AMR Corp (NYSE: AMR) to Hold from Buy to reflect elevated risks from continued high fuel prices and relative valuations.
Deutsche Bank lowered shares of ConocoPhillips (NYSE: COP) to Sell from Hold on valuation noting that 13 out of the past 15 years, integrated oils have underperformed during the period October 1st to December 5th. They also believe the company's 3rd October trading statement could raise concerns over Q4. on valuation noting that 13 out of the past 15 years, integrated oils have underperformed during the period October 1st to December 5th. They also believe the company's 3rd October trading statement could raise concerns over Q4.
Soleil downgraded shares of Comcast Corporation (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) to Hold from Buy due to concerns about the company's prospects in a weakening economy.
It is no surprise that we at BloggingStocks are no less prone to grab a headline with sexual provocation to increase our hit rate. That we did when we posted a story on Southwest Airlines (NYSE: LUV) and their unhappiness with a young women's attire, our most popular story of the week. Having such success, like every other tabloid in the country, we could not resist a story (or two or three) about a young Disney (NYSE: DIS) starlet having some obscure personal photos, including a nude, pandered on the web.
News is news and there is no hiding from the headlines. However, I write this story almost in a self-referential manner with self conscious feelings, as well because I can't write it without being accused of the same malady, so I feel some confusion about the issue. For this reason I decided not to refer to any of the other stories and not to link to any photos, sorry to disappoint some of you -- search elsewhere.
Picture this: You arrive for your Southwest Airlines (NYSE: LUV) flight early. You manage to avoid packing excessive amounts of liquids in your carry-on baggage. You remember your ID, you wait until your seat is called, you stow your bags properly. You're even prepared to turn off your electronic devices and stow your tray table and put your seat in its upright and locked position when ... you're asked to leave the plane because you're showing a little too much leg.
Haha! What is this, 1951? Nope. It's 2007, and a few months ago waitress Kyla Ebbert (who works at Hooters, where scantily-clad is a good thing) was escorted off a Southwest Airlines flight from San Diego to Tucson because her outfit -- a miniskirt, tank top, and cropped sweater -- was too revealing (I don't see any cleavage and she was wearing a bra). She put up a fuss and was eventually let back on the plane after a lecture on her dress, or lack thereof.
Update: After apologizing to Ebbert, Southwest Airlines held a fare sale in honor of miniskirts -- it was fabulously popular with customers, but Kyla wasn't so pleased. To spite them -- or perhaps to take advantage of her 15 minutes of fame before it went away, leaving her still-penniless -- Kyla agreed to pose nude for Playboy.
Southwest Airlines has a history of questionable fashion judgment -- see here:
Gallery: Southwest Airlines: Wardrobe of the Past
I'm all for appropriate clothing, but personally saw nothing in Ebbert's outfit that was cringe-worthy. And if it was?
USA Today's Ben Mutzabaugh had an interesting Q&A session with Richard Branson, founder of the Virgin Group and Virgin Atlantic Airways, on last week's inaugural flight from New York JFK Airport to San Francisco. Reading Branson's description of the new Virgin flights made me want to book a flight to San Fran immediately.
What interested me from the start of the interview was one of things that Branson said would set Virgin America apart from the other U.S. carriers, something he planned to introduce called "premium economy class." He described this as seating that would be "for people who want more legroom but can't afford first class." Mind you that the most expensive first-class tickets Virgin America has right now are approximately $650, but who wants to pay that for a flight when you can have "premium economy class?"
A quick check on Virgin Atlantic's website, because Virgin America has yet to initiate this service, and they show me that premium economy seating has 38 inches of leg room, compared to the standard 33 inches in economy seating, and a seat width of 21 inches. This is has to be a dream! Once this "premium economy class" comes to Virgin America, I'm certainly going to think of using them for my next flight. More space for less money, it's an amazing concept. I just hope they can last that long in the States with Northwest Airlines (NYSE: NWA), AirTran (NYSE: AAI), Southwest Airlines (NYSE: LUV), US Airways (NYSE: LCC), JetBlue Airways (NASDAQ: JBLU), United Airlines (NASDAQ: UAUA) and all the other U.S. carriers competing for the same ticket.
As of today, there's a new airline in the skies: Virgin America. That's right folks: British Billionaire Richard Branson has expanded his Virgin Atlantic fleet across the pond. The new San Francisco-based start-up will use a fleet of Airbus A320's to fly two routes: San Francisco to J.F.K in New York and San Francisco to Los Angeles International.
While Virgin America will only open with those two routes, they plan on ramping its schedule fast. In the next three months, Virgin will add Las Vegas and Washington Dulles to the schedule and move up to a total 10 U.S. destinations a year from now. The fleet plans to service 30 destinations within the next five years.
Two weeks ago, Southwest Airlines Co. (NYSE: LUV) CEO Gary Kelly said that Southwest may miss its earnings targets due to fuel costs and weak revenue growth.
Yesterday, Kelly promised a number of changes to help improve upon the company's 34 straight years of profitability. He said that to compete, Southwest needs to make changes to create $1 billion in additional revenues over the next several years.
Among the changes are:
• Seating: Southwest will more than likely drop their legendary open seating system. The company has been experimenting with assigned seating during recent months, and will announce its new boarding plan before the end of the year. The company may increase the price of aisle seats like some competitors previously have.
We have all been there before, standing beside the luggage conveyor belt after a long flight, quietly praying for our luggage to magically pop out of that little window and slide our way. When our luggage finally shows up, it typically means the end of a long day that generally has the potential to stress out most travelers.
Analysts surveyed by Thomson Financial expect 
If you're a woman of a certain age (that age at which you decide you never wish to pose for Playboy), you may be at the altar of All That Is Good and True praying that Kyla Ebbert's 15 minutes of fame would be up already!
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Picture this: You arrive for your 
USA Today's Ben Mutzabaugh had an 
As of today, there's a new airline in the skies: 
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