The US Airways (NYSE: LCC) ticker symbol says it all: LCC = Low Cost Carrier. With its latest announcement, the airline may want to change it to LEC -- Low Expense Carrier. In an attempt to keep pace with the plunging travel market, US Airways is cutting 1,000 jobs next year, shoving almost all its flying to its three hubs (Philadelphia, Phoenix and Charlotte) and Washington. Several international routes are being cut.
The airline reports that routes from its hubs have been profitable. Currently, US Airways pushes 93% of its flights through these airports, a rate it seeks to push up to 99% in 2010.
Affiliated Computer (NYSE: ACS) will be acquired by Xerox (NYSE: XRX) for $63.11 per share in cash and XRX stock. ACS shareholders will receive $18.60 per share in cash plus 4.935 XRX shares for each ACS share they own. ACS closed at $47.25. ACS October option implied volatility is at 27, November is at 28; below its 26-week average of 31 according to Track Data, suggesting decreasing price movement.
US Airways (NYSE: LCC) closed of $4.96. WTI Crude futures are recently down .48% to $65.70 according to Bloomberg. LCC October option implied volatility is at 93, December is at 107; below its 26-week average of 120 according to Track Data, suggesting decreasing price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
As Baker was walking the bear into the airline industry, United was starting to celebrate its change in direction. The carrier has improved its on-time rate, according to a USA Today report, and its operations are coming around. Despite the fact that the airline industry has been brutalized by the global recession, the airline has made some progress. Through August, the company's share price doubled, and its ascent has continued in September. So, the company is locked in an ongoing struggle to manage its identity, cope with its past and shape how the world sees it today.
The operational "makeover" has resulted in a reduction of its fleet from 601 jets in 2000 to 386 as of the summer of 2009. In terms of passenger traffic, it's in the #4 spot in the United States – trailing Delta (NYSE: DAL), Southwest (NYSE: LUV) and American. With Q2 revenues off 25.2% year-over-year, however, drastic measures are still necessary.
US Airways (NYSE: LCC) is trimming 600 ground jobs and closing other services in an effort to cut costs. The airline had hoped not to cut this many positions, anticipating that resignations and departures would do the hard work for it. But employee attrition fell sharply from last year – probably because this isn't exactly the best market for job hunting. Unfortunately, the same reasons that cause employees to stay force US Airways to cut them loose.
At nine airports, US Airways is moving to outside contractors for ramp work. The Las Vegas US Airways Club will close and its staff cut. Also, the walk-up ticket counter at the airline's Tempe, AZ headquarters is on the chopping block.
JetBlue Airways Corp. (NASDAQ: JBLU) is looking to sell 20 million shares of common stock and $150 million in convertible debt. Miserable conditions for the airline industry have led the low-cost carrier to turn to financial markets for the infusion that operations can't seem to deliver.
The debt, which is convertible into common stock, will be sold in two $75 million series. And the 20 million common shares would raise another $101 million (at yesterday's closing price of $5.03). If there's enough demand for the debt and equity securities, JetBlue may sell another 3 million shares of common stock and another $11.25 million in debt.
JetBlue isn't alone in raising capital. US Airways Group Inc. (NYSE: LCC) is planning to ask its shareholders to approve a measure that would double the amount of common shares it could issue to 400 million. The answer will come at the company's annual meeting on June 10, 2009.
After the airline went through bankruptcy twice, turnaround expert George Putnam now sees improving long-term prospects for US Airways (NYSE: LCC).
In his The Turnaround Letter, the advisor suggests, "When travel does begin to pick up again, US Air with its lean cost structure should profit handsomely." Here's his review.
"US Airways began in 1939 as All-American Airways delivering mail to Western Pennsylvania and the Ohio Valley; from there it grew through acquisitions to be a major national airline.
As viewers across the nation watched the remarkable events surrounding U.S. Airways Flight 1549 Thursday -- one in which the experience, skills, and calm of the pilot and crew saved many lives, it occurred to a colleague that the moment was a summary of the nation in these historic times, in a snapshot.
"Between that super pilot and Bernard Madoff we had a picture of the best of America and the worst of America, all within a few blocks of each other," said Stock Analyst C. Leonard Bauer, also a frequent flier whose logged hundreds of commercial flights.
Madoff, for those who are unaware, was arrested in New York on one count of securities fraud on December 11, 2008 for allegedly running a massive Ponzi scheme while managing $50 billion. If he's proven guilty, it will be safe to say Madoff didn't use his talent constructively.
Hudson Hero, American Hero
But US Airways Captain Chesley B. 'Sully' Sullenberger III did. In a case study federal/state aviation officials and analysts will probably highlight for years if not decades, Sullenberger, 57, masterfully guided the 155-person airplane he was flying to a safe landing on the Hudson River bordering Manhattan when the plane lost thrust in both of its engines after birds (possibly a flock of geese) hit the plane shortly after takeoff, apparently clogging the engines. All 155 people (150 passengers, 5 crew members) on board Flight 1549 survived. It's safe to say Sullenberger used his talent constructively.
US Airways (NYSE: LCC) is recently up 59 cents to $7.98. LCC Airbus A320 plane went down in the Hudson River off of 50th Street in NYC. WTI Crude futures are recently down 6.33% to $34.92 according to Bloomberg. LCC call option volume of 5,703 contracts compares to put volume of 2,905 contracts. LCC February option implied volatility of 131 is below its 26-week average of 142 according to Track Data, suggesting decreasing price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
US Airways flight number 1549 from Laguardia to Charlotte went down around 3:30 p.m., crashing in the Hudson River near 57th Street in New York City. The plane is floating and rescuers are on the scene; it looks as if most of the 148 passengers and crew are being rescued via life rafts. On the news, US Airways (NYSE: LCC) stock was (surprisingly) up 16 cents to $7.55.
Updates:According to an FAA spokesperson, the plane may have been hit by birds. And reports are that everyone survived the crash (which was in shallow water); passengers didn't even get wet.
Minyanville Professor Minyan Peter dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
As many people have heard before, there are only two times a company issues common stock: When it absolutely has to or when it is stupid not to.
Well yesterday's issuance by US Airways (NYSE: LCC) may represent that once in a lifetime opportunity to see those seemingly contradictory principles in action at the same time. Having seen its stock trade at $1.45 not a month ago, $8.50 must seem pretty sweet to US Airways management, particularly with strong technical resistance at $10.00 providing a pretty strong ceiling above.
With airline stocks trading as the most leveraged play on the price declines in oil, I can understand why US Airways management took advantage of the window being open to issue stock. But just because the issuance window is open, doesn't mean investors should jump.
You've been enjoying yourself too flying US Airways flights, haven't you? No more frivolity. The US Airways experience will make the Chinatown bus look lush. US Airways Group (NASDAQ: LCC) announced these latest passenger torture methods: no movies, no curbside check-in at 34 airports -- and that's on top of recent plans to charge $2 for cokes or coffee. You'll pay extra to use some of your frequent flier rewards, an additional $15 for checked bags and $25 to book on the phone. And if you want a window or aisle seat in the front of coach -- 16% of coach -- it'll cost you $5 to $30 more per segment.
The stock is down about 5% today on these grim announcements and word that the airline is cutting 2,500 jobs (and perhaps on oil prices). It had already planned on cutting capacity, though it had positive news yesterday, with good scores for being on time. US Airways says the current new fees will bring in $250 to $300 to $400 million. I don't think price-conscious passengers are going to remain oblivious to the idea that an airline ticket is not the real price anymore. It'll be like renting a car -- you know that it's really going to cost you twice as much as the rate.
US Airways says it is cutting movie service because the 500-pound machines cost them $10 million in fuel and other costs. It'll keep the movies on flights to Hawaii and overseas. The real problem with the big airplane screens is that nobody is renting the headphones anymore. I don't remember the last time I watched a movie -- or even one of those schlocky sitcoms the airlines seem to love -- on a big airplane screen. We all want our own entertainment -- and bring it in the form of MP3 or DVD players. In an effort to appeal to the broadest audience, the industry has bored everyone. Reuters says that a cut in inflight movies -- if it goes further -- could hurt the entertainment industry, which makes roughly $240 million a year from airlines.
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how airlines are cutting back on long flights in order to save a little on fuel consumption.
It is a pretty nasty cycle we are seeing with the airlines. The higher fuel costs have led to higher tickets prices and extra fees. These higher prices have led to less air traffic, and that has led to an even greater need to find more ways to cover rising costs. Definitely a tough situation.
The new way they are starting to combat the high costs of flying is by cutting back, or postponing long international flights, in particular flights that are in excess of 12 hours.
The Charleston Gazette reported that Chesapeake Energy Corporation (NYSE: CHK) has decided not to build its Eastern Division headquarters in Charleston, West Virginia in the wake of a West Virginia Supreme Court ruling on May 22.
WEB SITES:
AppleInsider reported that Apple Inc (NASDAQ: AAPL) is expected to announce a back-to-school deal soon that will encourage students to buy new Macs by offering some of the largest incentives in the history of the company.
H.J. Heinz Co. (NYSE: HNZ) is today expected to increase its sales and profit projections for the next two years, as it reports results of its fiscal year ended April 30. The Wall Street Journal reported that sales are to grow 6% or higher from 4%, while earnings per share growth for the next two years is projected to grow between 8% and 11% from the earlier projection of 7% to 9%.
It appears that Vistaprint Limited (NASDAQ: VPRT), a graphic design services and printed products company, counts on referral fees from pop up rewards programs on it website for a certain amount of its revenue and profit and also relies on the referral of its customers to outside firms offering rewards programs, which turns out to be a monthly fee for services such as discounts on movies and amusement parks, according to the Wall Street Journal's "Heard on the Street". Some believe the stock, whose shares have plummeted over concerns of slowing revenue and slimmer gross margins, may be trading too high for its own good.
According to people familiar with their plans, the Financial Times reported that the CEOs of UAL Corporation's (NASDAQ: UAUA) United Airlines and US Airways Group (NYSE: LCC) will today meet to discuss the carriers' potential merger agreement.
OTHER PAPERS:
The Independent reported that for the second time this month, Barclays Plc (NYSE: BCS) revised lower its calculation of analysts' consensus for its full-year profit, cutting its 2008 figure by nearly 8% to GBP5.876B pre-tax; Barclays cut the calculation 15% two weeks ago.
Oppenheimer downgraded shares of Chelsea Therapeutics (NASDAQ:CHTP) to Perform from Outperform after their survey suggested physicians believe currently available generic treatments are adequate in neurogenic orthostatic hypotension, which could impact the company's lead drug Droxidopa.
Clearwire (NASDAQ:CLWR) was cut to Sell from Hold at Citigroup on valuation, as they estimate fair value at $13.
OTHER DOWNGRADES:
Goldman downgraded Kellogg (NYSE:K) to Neutral from Buy and Hershey Foods (NYSE:HSY) to Sell from Neutral.
The US Airways (NYSE: LCC) ticker symbol says it all: LCC = Low Cost Carrier. With its latest announcement, the airline may want to change it to LEC -- Low Expense Carrier. In an attempt to keep pace with the plunging travel market, US Airways is cutting 1,000 jobs next year, shoving almost all its flying to its three hubs (Philadelphia, Phoenix and Charlotte) and Washington. Several international routes are being cut. 
Affiliated Computer
US Airways
Minyanville Professor Minyan Peter dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit 
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how .gif){kind=logo}
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