AMR (NYSE: AMR) may have skipped key inspections of some of its planes to keep them in service. According to The Wall Street Journal, "American made the procedural changes and revised its maintenance manual in an effort to prevent planes from being pulled out of service." The inspections were meant to look over planes that may have been hit by lightning.

American's defense for skipping the procedures is that, if a pilot reported that his plane was hit by lightning, mechanics will look into it. What if the pilot is napping? Further, the airline says no plane has crashed from a lightning strike in over 30 years. How convenient.

The airlines have one, weak reason for cutting back on inspections. They cannot afford them. The federal government has to deal with the fact that some carriers are near bankruptcy because of high fuel prices. The FAA may have to supply financial support for extra work by mechanics, or watch the industry fall apart.

Douglas A. McIntyre is an editor at 247wallst.com and the editor of Ten Stocks Under $10.

Airbus has again delayed delivery of selected A380 superjumbo jets, saying the company's transition to automated production is behind schedule.

Airbus now expects to deliver 12 A380 planes in 2008, down from 13, and 21 planes in 2009, down from 25, the company announced Tuesday.

Promoted as the world's most economical, large aircraft, the A380 is about two years behind schedule. The A380 will seat 525 passengers in a normal configuration, at least 50-120 seats more than its chief competition, Boeing's (NYSE: BA) 747, the wide-body industry standard.

In Europe, shares of Airbus's parent EADS were virtually unchanged on the news, down just 2 euro cents to 12.72 euros in afternoon trading. Boeing's shares gained five cents to $84.87.

The Boeing (NYSE: BA) 787 Dreamliner has been delayed three times, mostly because of problems with suppliers.The situation has gotten so bad that some of the company's customers, large airlines, say they will ask Boeing for compensation. That could cost Boeing a lot of money.

Boeing management has promised that there will be no more delays and that everyone who wants a plane will get one, on time. But, the best laid plans...

The company's large unions may stage work slowdowns. They argue that the work given to suppliers should have gone to them. They claim that delays could have been cut. Of course, now they want to delay the program further all on their own.

"Unions have the upper hand now,'' said Richard Aboulafia, an analyst with Teal Group, an aviation consulting firm in Fairfax, Virginia, told Bloomberg. "They're determined to get their share of the good times."

Boeing management now faces more criticism because its own labor force can't be held in line. The company's stock has already dropped due to the delays. First suppliers, now its own people.

The news shows that incompetent management usually stays incompetent. Boeing did not control its supply chain, and did not know it had component problems until too late. Now it will be accused of not even keeping tabs on its own unions.

Douglas A. McIntyre is an editor at 247wallst.com.

In reaction to surging fuel costs, several major airlines announced today that they were raising their fares in order to recoup some of their rapidly increasing flying costs.

The increase this time around is $20 and effects passengers traveling on UAL Corporation (NASDAQ: UAUA), Delta Air Lines, Inc. (NYSE: DAL), and AMR Corporation (NYSE: AMR)'s American Airlines. The $20 jump in prices will be added to the airline's fuel surcharges, and consequently, these charges are now running at $130 round trip on most flights that you will book through the airlines.

The current rate hike was first initiated by Delta, and marks the second time in just over a week that the airline has been forced to raise fares in order to combat record high fuel costs. Times are definitely tough for airlines, and they are doing everything they can to combat fuel prices, but regardless of the rate increases most analysts are still expecting to see huge losses this year from most, if not all, airline carriers.

Reading the paper everyday means seeing a headline that another airline merger is in the offing. The most recent wave of articles is on a United Airlines (NASDAQ: UAUA) merger with US Air (NYSE: LCC). It is yet another example of two carriers hoping that they can get together and save costs, without alienating customers in the process.

According to The Wall Street Journal, "The companies have identified more than $1.5 billion in potential cost savings and revenue enhancements from joining forces." The word "potential" is the key.

Airline employees who are in unions have a good chance of shutting down a merged airline if they think they will loss a ton of jobs. Pilots, flight attendants, and mechanics all have plenty of leverage. A combination of United and US Air would have almost $10 billion in revenue a quarter. It would not take a very long strike to eat through $1.5 billion of that.

The number of pending mergers is also almost certain to get some of them canceled by The Justice Department. Members of Congress who have employees on airline payrolls are also likely to take a position. Today, the US has at least five major carriers. If Delta (NYSE: DAL) and Northwest (NYSE: NWA) get married, that cuts consumer choice down by a lot.

Don't count on a United hook up with US Air. It is not likely to happen.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

The Wall Street Journal is reporting about the novel theory that this recession may have fewer job cuts than those in the past. The paper says that "in past recessions, job losses have eventually gotten much more severe, marked by nationwide cuts reaching 300,000 or more per month. This time -- and these are dangerous words -- maybe it is different."

The argument here is based on the fact that job growth has been slow recently meaning there is not "a lot of fat" to cut.

It is a specious argument which may make some people feel better for a few weeks. With car sales off 14% last month and home prices down by as much as 25% in some markets, this recession is beginning to look like a deep one. Huge layoffs have already begun at financial services companies. Retailers may be the next to dump employees, especially if sales are weak in April and May.

The next large round of layoffs is likely to happen in the airline industry. High fuel prices are causing tremendous losses. If several airlines merge, there will be cuts. If fuel prices stay high, there will be cuts.

As the recession deepens, it will consume industry after industry. Like dominoes dropping, the layoffs are sure to come.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Eos was an improbably candidate for success in the airline industry. It flew one route, from New York's JFK to London. It was an all-business-class carrier.

Now, Eos is bankrupt. Having only one route, added to the rising price of jet fuel, cut the carrier down.

According to the AP, "The company, based in Purchase, N.Y., said it intended to eliminate most of its work force."

The news raises the question, once again, whether small and large airlines alike can make it though the current increase in fuel prices and a recession without having to file for Chapter 11. It was only four years ago that most U.S. carriers had to seek protection in the courts. AMR (NYSE: AMR) was one exception. That hurts it now because it did not use bankruptcy to cut its debt and the costs of its workforce. That may make it the most likely candidate of any American carrier to hit the air pocket of insolvency.

The oil price crisis my be so bad that, coupled with falling passenger revenue in a sharp and prolonged downturn, even mergers like the one planned by Delta (NYSE: DAL) and Northwest (NYSE: NWA) will not save them.

That will leave the banks, who hold most of the debt on airline balance sheets, holding the bag.

Douglas A. McIntyre is an editor at 247wallst.com.

Just when you think that the airlines have run out of ways to bleed red ink, along comes Delta Airlines Inc. (NYSE: DAL) and Northwest Airlines Corp. (NYSE: NWA).

The Atlanta-based carrier reporting a staggering loss of $6.14 billion, or $16.15 per share. Excluding a bankruptcy-related charge, Delta would have earned lost $274 million, or 69 cents per share, as fuel costs soared by $585 million compared with a year earlier. Revenue rose to $4.77 billion. Analysts had expected a loss of 51 cents on revenue of $4.6 billion, according to Thomson Financial.

"Our need to respond to the pressures of dramatically rising fuel costs and a softening U.S. economy drove us to take a closer look at all options to protect Delta's future," said Chief Executive Officer Richard Anderson in the earnings release. "The merger with Northwest will create an airline with the size, scale and global presence to weather economic downturns and compete long-term in the global marketplace."

In reaction to current record high oil prices, United Air Lines, Inc. (NASDAQ: UAUA) has announced that their passengers are going to have start paying a little extra to cover the airlines rising fuel costs.

Domestic travelers are going to see a fuel surcharge increase of between $10 and $20 for round trip tickets. Prior to this increase, passengers were already paying up to a $35 surcharge on their tickets. Depending on what market you would be traveling in, the increase will vary. For example, in markets where United is in head to head battle with low cost airlines, there was previously no surcharge at all, and those markets will now see a $5 charge each way.

This is the second time this month that United passengers were hit with fee increases. Earlier this month the carrier announced that it would be lifting its rates on its round trip tickets between $4 and $30 in response to the current high fuel costs.

American Airlines, a subsidiary of AMR Corp. (NYSE: AMR), has announced that it received the green light from aviation officials to return all of its 300 grounded jets to service. The jets were temporarily grounded as the Federal Aviation Administration surprised the airlines as officials thought the required repairs had been made weeks ago . Officials said that "the wiring still was not secured and stowed properly in wheel wells."

American, the U.S.'s largest airlines, resumed flying the MD-80s today after canceling more than 3,000 flights this week. The AP story linked to above quoted an S&P analyst who reckoned the cancellations cost the struggling airlines at least $30 million.

There is quite a row going on at SeekingAlpha (warning: foul language) where top media blogger, Jeff Jarvis, has recently turned his sights on the airline industry as a whole. Jarvis, well-known for his views on the death of old media, Jarvis augers that without change the whole industry is in a death-spiral.

Says Jarvis, "I think the essence of their future is: They [the airlines] have to explore new value by having a decent relationship with us, using that new value to improve the experience so they can have a decent relationship. Screwing your customers is the least sustainable business model."

Them's fightin' words...

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

As you know, American Airlines -- AMR Corp (NYSE: AMR) has been having a tough week. The company started running a new round of inspections on Tuesday which has led to large cancellations for the past 4fourdays.

Today, once again there were more cancellations, with another 595 flights being grounded. It can be very frustrating to find out your flight has been canceled, but some airports are upping their efforts to accommodate the unlucky passengers. All combined, the airliner has been forced to cancel in excess of 3,000 flights this week, impacting some quarter of a million travelers.

We have all had to deal with canceled, or delayed flights... and one thing is for sure, it is never a pleasant feeling, so you can just imagine the mood in airports all across America in reaction to this week's mess. Well, according to a story from MSNBC, some airports are taking extra steps to help make American passengers as comfortable as possible.

American Airlines -- AMR Corp (NYSE: AMR) -- is once again canceling massive amounts of flights in order to inspect the bundling of wires in some of its airplanes. You may recall, that this is the same situation that led to around 400 cancellations last month, and this current inspection is estimated to affect even more flights, with up to 500 flights being canceled.

The current round of cancellations, which represents about 20% of total American flights, started late Tuesday afternoon, and was expected to last Tuesday night and into Wednesday, and possibly even beyond.

Passengers that were scheduled to fly the canceled American flights have been switched over to alternative American flights, or placed on other airlines that service the selected routes.

Anyone planning a vacation this summer should remember two words: AirTran and Jet Blue Airways Corp. (NASDAQ: JBLU).

Those were the two airlines that came out on top of a national survey of airline quality released today that underscored the sorry state of the industry. Anyone who has flown since 9-11 knows that getting your teeth pulled is more fun. Planes are filled to the brim and are often late. Luggage often goes on magical mystery tours that bypass your destination.

Last year was more of the same, according the Associated Press

"There were more lost bags, more bumped passengers, more consumer complaints and fewer on-time flights than in the previous year," the story says. "The rate of consumer complaints was up 60 percent. US Airways (NYSE: LCC) had the most complaints last year. Southwest (NYSE: LUV) had the fewest."

Bad airlines are bad for the environment because it encourages more casual fliers to drive to their destinations. Even with soaring gas prices, flying isn't worth the trouble. I may have to fly this summer and I'm already dreading it.

--Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.


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It has definitely been a tough week for airlines, and yesterday Skybus became the third airline to stop operating.

Once again, the main culprits are rising fuel costs and the slowing economy, making it almost impossible for small, low-cost airline companies to compete in the current market. Skybus decided that it would be shutting down all operations as of yesterday, and plans to file for bankruptcy over the course of the next week.

Skybus has not been around for too long. The company started up about a year ago and operated around 75 flights a day. The company had 350 employees working out of Columbus, Ohio, and 100 in Greensboro, N.C.

Two years after coming out of bankruptcy, ATA airlines has once again been forced to file for chapter 11. The airline canceled all flights, and has advised travelers to start to look for alternative travel arrangements.

The airline operated roughly 50 flights a day, and had more than 2,200 employees working. On its website, ATA has issued a formal statement and blamed the final straw for its collapse on the loss of a key military contract. In 2006, the company had won a $335 million dollar contract from the U.S. Air Force for international airlift services.

In its statement, ATA has advised passengers to contact their credit card company, or travel agent to discuss the options to get refunded for their unused tickets.