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AMR Finds New Way to Nickel and Dime You

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

Continental: A U.S. Airline Sector Survivor

It goes without saying that investors should tread carefully on the U.S. airline sector, given its uncertainties and hurdles. But one carrier that should survive the scrutiny is Continental Airlines Inc. (CAL). Note: Continental is high-risk stock not suitable for moderate-risk or low-risk investors.

Look for Continental's revenue to increase 6% to 8% in 2010, on higher capacity and improved seat pricing power. Further, CAL should post higher revenue per available seat mile than its competitors in 2010. Also, new fees should add to the top line without resulting in significant passenger attrition.

Continue reading Continental: A U.S. Airline Sector Survivor

United Airlines Sees Flat Traffic in December

Monday, United Airlines (UAUA) announced that its December traffic matched last year's traffic, but that planes were more crowded. Confused? UAUA had fewer flights this year compared to a year ago, so matching traffic from last year meant that the planes had more passengers.

The air carrier announced that paying passengers flew 9.21 billion miles last month and capacity shrank to 11.24 billion available seat miles from 11.60 billion in December 2008. All this totaled up to average occupancy of 81.9%, up from 79.4% a year earlier. Average occupancy for the year increased to 81.2% from 80.4%. Taking regional operations out of the equation, average occupancy on UAUA flights came in at 83%, up from 79.9% in the prior year.

Continue reading United Airlines Sees Flat Traffic in December

Continental CEO Not Taking a Dime Until Profit Comes

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

Ray of light: Airlines say travel slump has ended

This constitutes multiple 'rays of light:' United Airlines (UAUA) Tuesday announced that it would acquire 50 new planes. Twenty five are The Boeing Company (BA) 787 Dreamliners and twenty five Airbus A350 XWBs -- widebody planes with a list price of $9 billion, CNNMoney.com reported.

And Wednesday Delta Air Lines Inc. (DAL) and United indicated that business travel is improving and that the worst of the travel demand slump was over, Bloomberg News reported.

Continue reading Ray of light: Airlines say travel slump has ended

Under the radar: Airlines' no longer deferring deliveries is bullish sign for global economy

Under the radar: Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip 'under the radar.'

Case in point: In another sign of an improving global economy, Airbus' Chief Operating Officer John Leahy has indicated that the market for commercial aircraft deliveries has improved, Bloomberg News reported.

"Six months, nine months ago, people were talking about delaying aircraft, Leahy told Bloomberg News at briefing at the Dubai air show. "I'm not hearing anything like that today."

Continue reading Under the radar: Airlines' no longer deferring deliveries is bullish sign for global economy

Boeing receives yet another big plane order

Late Tuesday, aerospace firm Boeing (BA) announced its first major deal at the Dubai Airshow. While this is good news for BA, the bad news is that the majority of the $2 billion of deals available at the show went to rival Airbus. BA revealed nearly $900 million of deals with Algerian airlines, while Airbus announced $1.25 billion of confirmed orders.

These orders bring the total dollar amount of orders at the Airshow to $5.67 billion for 42 aircraft. This total is a mere pittance compared to the $155.5 billion worth of deals scored in 2007. BA's Randy Tinseth noted, "it's a completely different market from two years ago," sentiment agreed upon by Airbus's CEO Tom Enders.

Continue reading Boeing receives yet another big plane order

Low cost carriers own 30% of domestic airline biz, growing fast

For years, it's been evident that smaller airlines have had an operating advantage, particularly when they use less expensive airports. They've been able to post better numbers as a result, and in the current travel slump, they've outperformed the larger carriers. Well, they've also picked up a considerable amount of market share.

According to a report by USA Today, low cost carriers now have 30% of the market in the United States. Price-sensitive consumers are turning to cheaper alternatives, even if it means (for fliers with elite status) giving up the perks they've earned through years of customer loyalty.

Continue reading Low cost carriers own 30% of domestic airline biz, growing fast

Social media at work: not just a yes/no question any more

Company attitudes toward social media sites vary. Some swing the doors wide open, allowing employees to tend to their Facebook farms and update Twitter statuses throughout the day. Others lock 'em down, keeping non-business site access to a minimum.

A recent study found that, in the United States, 77% of employees with Facebook accounts check in with the community from the office. And, the amount of time they're spending in this part of the online world is growing. In the United Kingdom, another study found that 57% log in regularly from work, costing their employers 40 minutes a day.

Philip Wicks, a consultant at Morse PLC, a technology research firm in London, "It isn't just something you can do for half an hour during a lunch break but all through the day and because of that, it has a huge impact because people aren't necessarily concentrating on what they should be doing during the day." He estimates that this translates to lost productivity of $2.25 billion a year.

It seems like the obvious move would be to block the sites, but William Beers of PricewaterhouseCoopers disagrees. "Instead of trying to shut it down, I think we should try to embrace these technologies, put in a nice policy that governs it and explain to users the risks related to it, provide some training and then see what business benefits we can have from it," he said.

Continue reading Social media at work: not just a yes/no question any more

Regional airlines find some upside in a tough market

Across the country, big jets are disappearing -- nudged shoved aside by the little guys, which are cheaper to operate and don't require as many butts to fill seats.

The number of empty seats falls, and revenue per available seat-mile (RASM) goes up. It's pretty straightforward. But, for crowded flights, this could leave a few people stuck without their preferred routes. The alternative, of course, is an unsustainable status quo, in which a few passengers remain happy ... until the airline folds.

Continue reading Regional airlines find some upside in a tough market

Airline stocks lifted by upbeat international passenger data

AMR logoAmerican Airlines (NYSE: AMR - option chain) shares are rising today along with most other major airlines this morning after the International Air Transport Association said international passenger demand rose 0.3% year-over-year in September, the first month of growth in the past year. AMR, Delta (NYSE: DAL), Continental (NYSE: CAL) and United (NASDAQ: UAUA) are all in the green between 2% and 3% so far today. If you think that AMR won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on the stock.

AMR opened this morning at $5.68. So far today the stock has hit a low of $5.55 and a high of $5.70. As of 11:50, AMR is trading at $5.57 up 13 cents(2.4%). The chart for AMR looks neutral and S&P gives AMR a neutral 3 STARS (out of 5) hold ranking.

Continue reading Airline stocks lifted by upbeat international passenger data

AMR: Q3 could have been worse; AirTran solid

American Airlines had yet another difficult quarter, not unexpected in what has become an incredibly deep travel slump. The carrier's parent company, AMR Corp. (NYSE: AMR), reported a third quarter loss of $359 million, largely because there aren't as many business travelers taking to the skies. Corporate travel budgets in all industries are having an effect on all airlines, including AMR.

Revenue plunged 20.2% year-over-year for the third quarter for the nation's second airline. The loss comes after a $31 million gain last year. This quarter's losses would have been slightly better if write-downs for sold or grounded aircraft were excluded -- the loss would have been $265 million (93 cents a share) on revenue of $5.09 billion. With the write-downs, revenue clocked in at $5.13 billion. Cheaper fuel made the quarter a little easier for AMR to bear, as well, with this expense down 47% year-over-year.

Continue reading AMR: Q3 could have been worse; AirTran solid

UAL has almost good news for third quarter

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

Extra airline fees to become the new 'normal'

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'

American Airlines: A play with promise, but also with high risk

There is that old international economics joke that goes, 'And in the end, there will be 3 banks.'

Actually, up ahead there may only be just 3 U.S. airlines, and AMR Corp. (NYSE: AMR), parent of American Airlines, will likely be one, which is why I'm reiterating my Buy rating for AMR, first recommended on June 25, 2009 at a price of $4.28. If you bought AMR then, you're up an impressive 79%.

Continue reading American Airlines: A play with promise, but also with high risk

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DJIA+150.2510,058.64
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Last updated: February 10, 2010: 05:41 AM

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