Sky Talk

Mess at O'Hare

Be glad you're not flying out of Chicago's O'Hare Airport on a United flight today, because their planes are not going anywhere.

The carrier is blaming a computer glitch that is preventing it from checking customers in and getting final flight information to cockpits.

Unfortunately, Star-Telegram managing editor Lois Norder, is one of those unlucky passengers trying to get from Chicago to Dallas this morning.

Here's Norder's comments in an Associated Press article:

Passengers reported long lines in the O'Hare terminal, and planes lined up on the airport's tarmac as new flights arrived and departing flights were unable to leave.

Lois Norder told the Chicago Tribune that the pilot on her flight to Dallas announced that they couldn't take off because the computer problems were keeping crews from refueling the plane.

"The employees are really stumped," Norder said. "They're trying to figure out what to do."

Read the rest of the article here.

-Andrea Ahles

Continental first out of the gate with June numbers

Continental Airlines had fuller planes in June but made less money on those flights.

The Houston-based carrier said its load factor was 84.8 percent last month, up from 83.7 percent in the same month last year. But revenues per seat mile dropped 6 percent to 8.1 billion.

Available seat miles, or capacity, fell 7.8 percent to 9.5 billion.

Continental's announcement can be found here.

-Andrea Ahles

American is "about average", study says

American Airlines is "about average" when it comes to customer satisfaction, according to a new J.D. Power study released on Tuesday.

Several carriers ranked higher than the Fort Worth-based airline with Alaska Airline taking the top spot in the rankings.

Airline travelers are increasingly dissatisfied with in-flight service as the study finds that overall customer satisfaction has dropped for the third consecutive year to a four-year low.

"Despite the economic stresses that airlines are under, they are recognizing the value of passengers' time and trying to make air travel more expedient and efficient," said Dale Haines, senior director of the travel practice at J.D. Power. "Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cutbacks on in-flight services, increases in fees and issues with the helpfulness and courtesy of flight crews."

In the low-cost carrier segment, JetBlue Airways ranked the highest with Dallas-based Southwest Airlines and WestJet tied for second.

-Andrea Ahles

Tuesday a.m. headlines

Surfing the net this morning there are quite a few airline headlines to check out...

American Airlines will sell $520 million in debt to finance 737 airlines. (I got swamped and didn't have a chance to post this yesterday.

http://www.star-telegram.com/804/story/1460805.html

Airfares may go up after midnight tonight as major fare sales expire today, according to Tom Parsons at Bestfares.com. I talked with Tom yesterday and he says if load factors are good for July and August, you may not see any fare sales for late summer travel. But the good news is there are some great deals out there for fall and Christmas holiday travel. Check them out here.

And then my favorite morning news article, courtesy of the NYTimes. Naked airline employees in a safety video on Air New Zealand. The article is here. The video which will make you do a double take is here.

-Andrea Ahles

AMR gets amendment to its $433 million loan

AMR's lenders have agreed to ease the terms of a $433 million loan, according to an SEC filing on Thursday.

Lenders waived a debt-to income ratio requirement for the parent company of American Airlines in exchange for a higher interest rate.

Under the new terms of the agreement, the interest rate will increase to 4 percentage points above Libor, a daily reference rate. There is also a Libor minimum of 2.5 percent compared to the previous 0.6 percent specified in the loan.

-Andrea Ahles

American Eagle will launch new DFW-Tallahassee flight on Aug. 1

American Eagle announced this morning that it will add a second flight to its DFW-Tallahassee route starting August 1.

"This new schedule allows Tallahassee customers the ability to fly into Dallas to conduct business meetings and be home that same day," said Peter Bowler, chief executive of American Eagle.

The flight added includes a 7:15 a.m. departure from Tallahassee and then a return trip leaving DFW at 5:55 p.m.

-Andrea Ahles

International air traffic down 9.3% for May

Fewer people traveled by airplane this May as international air traffic dropped 9.3 percent in May, the International Air Transport Association said today.

But despite the almost double-digit decline, IATA said it appears that demand for international air travel has stabilized.

"We may have hit bottom, but we are a long way from recovery," said Giovanni Bisignani, IATA's chief executive. "After a 20 percent fall in international passenger revenue in the first quarter, we estimate that the drop accelerated to as much as 30 percent in May. This crisis is the worst we have ever seen."

The effect of the swine flu hurt airlines, particularly those in the Latin America markets. Mexican carriers saw their traffic fall almost 40 percent in May, IATA said.

Passenger load factors were 71.2 percent, down from 74.5 percent in May 2008. International cargo demand also dropped 17.4 percent, which is up from the 21.7 percent decline recorded in April.

-Andrea Ahles

APA has a different view of American's alliance with BA

Yesterday, it was the ground workers speaking out in support of American Airlines' application for anti-trust immunity.

Today, it was the pilots turn to say what they thought about the Fort Worth carrier's alliance with British Airways and several other international carriers. And clearly, the Allied Pilots Association, which represents 11,500 pilots for American, are concerned that anti-trust immunity will cost pilots' jobs.

"If more airlines receive anti-trust immunity, the result will be fewer choices and higher ticket prices for travelers," APA president Captain Lloyd Hill said. "When companies cooperate and consolidate, some jobs inevitably become redundant."

Read APA's letter here. http://www.alliedpilots.org/Public/PublicRelations/PressReleases/press_releases.asp

-Andrea Ahles

TWU supports American's joint venture with BA

The Transport Workers Union says it's in favor of American Airlines'alliance with British Airways, sending a letter to Transportation secretary Ray Lahood, voicing their support.

The union, which represents 26,000 ground workers at American and American Eagle, said it is in the best interest of the airlines' workers for the U.S. government should grant anti-trust immunity to the alliance.

"International agreements, antitrust exemptions and airline regulations should not be used to give one airline or airline alliance an advantage over another," the letter said. "In the fragile, unforgiving and highly competitive U.S. airline industry we should strive to maintain an even playing field not only to balance fairness between corporate players, but as a means of protecting the livelihoods of the workers, the families and communities dependent on their incomes."

American is hoping to gain anti-trust immunity for its OneWorld Alliance which includes British Airways and several other international carriers. The Department of Justice is expected to issue a ruling this fall.

Read the full letter here. http://www.twu.org/downloads/Divisions/Airline/LAHOOD 6-18-09.pdf

-Andrea Ahles

APFA president: "save a job of a fellow member"

Fewer flights means fewer flight attendants.

Of the 1,600 job cuts that American announced on Thursday related to cuts in its fall flight schedule, 1,200 of those will be flight attendants.

And late Thursday night, Association of Professional Flight Attendants' president Laura Glading issued a memo to its union members, saying she is not sure how many of the potential furloughs can be avoided in this round of cuts.

Glading also encouraged those who are on leave or thinking about retirement to help save the jobs of others.

"Your leadership has pressed and will continue to press the company to provide maximum opportunity to those members who wish to reduce their flying - through leaves, partnerships or retirement - in order to preserve the jobs of as many members as possible," the letter said. "We have achieved special incentives in the past and will continue to seek creative ways to confront excess manning."

Read Glading's note in its entirety here: http://www.apfa.org/content/category/9/17/46/

-Andrea Ahles

More new planes but fewer fall flights, AMR chief says

AMR Corp. chief executive Gerard Arpey said Thursday that American Airlines plans to order an additional 8 Boeing 737-800 jets.

With the additions, the Fort Worth-based airline expects to have 84 new planes coming into service in 2009 through 2011. The average age of its airline fleet is about 15 years, Arpey said.

The company also expects to get its first 787 jets from Boeing in 2013.

Speaking at the Bank of America/Merrill Lynch 2009 Global Transportation conference, Arpey announced the company will also cut additional flights out of its fall schedule.

"The cuts we implemented last year were helpful. As a result, we did not make changes to our summer schedule, but looking ahead we think changes to our fall schedule is warranted," Arpey said.

-Andrea Ahles

AMR chief Gerard Arpey talks at 11 a.m. and El Salvador maintenance for Southwest

We've heard Southwest's CEO Gary Kelly address investors already this morning. At noon, it's AMR's chief Gerard Arpey's turn.

Arpey is scheduled to give the luncheon address at the Bank of America/Merrill Lynch 2009 Global Transportation conference in New York today.

Rumor is that Arpey is scheduled to make news during the presentation. But will he give the same gloomy forecast as Kelly did this morning?

Also, this Wednesday headline out of our local NBC station. It appears that Southwest will go south of the border for maintenance on some of its planes.

In July, the first Southwest plane will head to El Salvador for maintenance. Southwest mechanics union previously agreed to allow some work to be outsourced to a foreign company last year.

http://www.nbcdfw.com/news/local/Southwest-Airlines-Will-Send-Planes-to-El-Salvador-For-Maintanence.html

-Andrea Ahles

Southwest CEO says so far, June is not any better than May

Despite low fare sales, Southwest chief executive Gary Kelly says demand has not improved as the summer travel season begins.

"The first part of June doesn't show any improvement at all," Kelly told investors and analysts at the Bank of America/Merrill Lynch Global Transportation Conference in New York, Thursday morning.

He added that June's unit revenues for the Dallas-based airline will be down more than what Southwest saw in May. Last week, the carrier said unit revenues dropped about 9 percent in May compared to the same month in 2008.

"I don't think there is any real reason to argue that things are going to get better," Kelly said referring to the economy and weak business travel demand.

Other highlights from Kelly's presentation include:

-Southwest will delay its international code sharing agreement with Canadian low cost carrier, WestJet, until next year.

-fuel costs for the second quarter will be in the range of about $1.80 per gallon.

-the airline has had a "pretty significant response" to its voluntary early out program as it tries to reduce staff. The last day to sign up for the program is June 18.

-Andrea Ahles

American schedules "green" trans-Atlantic flight on Thursday

Passengers on American Airlines Flight 63 from Paris to Miami will be flying green on Thursday.

 

The Fort Worth-based airline will be using that flight to demonstrate several fuel conservation measures that it hopes will show how the airline can use existing airplane technology to cut carbon emissions.

 

“We’re really hoping with demonstrations like this to motivate the regulators,” said Brian Will, B777/737 program manager for American Airlines.

 

The airline received approval from the Federal Aviation Administration and the European Commission to fly an optimized route over the Atlantic as well as tailoring its arrival into Miami that keeps the plane at a higher altitude prior to descent.

 

Will said American Airlines has already invested $350 to $400 million in upgrading its fleet with GPS navigation and communication systems that enable a plane to fly more efficiently.

 

“I think we are going to save several thousand pounds of fuel on this one flight,” Will said.

 

And that could mean more cost savings to American which spent $9 billion on jet fuel in 2008.

         

 -Andrea Ahles

Southwest Airlines says pets can fly as carry-ons

Are you ready to be stuck in an airplane cabin with a lot of dogs and cats?

If you were flying Southwest Airlines, you didn't have that option. But the Dallas-based airline has decided to join other airlines in allowing small pets in cages aboard flights as carry-on luggage.

The airline does not allow pets to travel in its cargo bins so, other than service dogs, Southwest passengers with pets were out of luck until now.

The announcement was among several made by the Dallas-based airline this week.

AMR and Southwest annual meetings

Both Southwest Airlines and American Airlines' parent company, AMR, are having annual meetings on Wednesday and we want to know from you, what's on your mind. What do you think the Star-Telegram should ask executives at these two meetings?

Either post a comment in this thread or send me an e-mail at aahles@star-telegram.com

-Andrea Ahles

AA adds Boston Market sandwiches, salads, to its food-for-sale program

American Airlines is adding several $10 Boston Market sandwiches and salads its its onboard lineup on certain long-haul flights. Click on the link for the full release.

- Scott Nishimura

Arriving

From Trebor's previous post, Sky Talk readers are aware that the Star-Telegram's airlines reporter has left the newspaper for bluer skies. Well I am here to announce that I, Andrea Ahles, willl be the new airlines beat reporter starting this summer.

For a little bit of background, I have been a business reporter at the Star-Telegram since 1999 when I started off on the technology beat. (For those of you at Sabre, Travelocity, Expedia etc....Hello again!) After a five-year stint writing about Nokia, Texas Instruments and all other North Texas tech firms, I moved on to cover economic development and workplace issues. Most recently, I have spent the past four years reporting on Six Flags, the local tourism industry, Tom Hicks' sports businesses, the 2011 Super Bowl and the construction of the new Dallas Cowboys stadium.

It is the completion of the new stadium that is keeping me from picking up the airlines beat immediately after Trebor's departure. I will be still working on the stadium until it opens on June 6 with its George Strait concert but after that it will be all airlines, all the time. Star-Telegram editor Scott Nishimura will be keeping up with the daily goings on with the airline industry until I am ready to pick up the beat full-time.

In the meantime, you can contact me at 817-390-7631 or aahles@star-telegram.com if you have any tips for the new airline reporter.

I hope to get to know all of you soon.

-Andrea Ahles

Departing

I’ve been writing about the airline industry for the Star-Telegram since early 2002, and it’s been quite a ride. Since starting the job, some of the stories we’ve covered included:

• The battle over the Wright Amendment and the subsequent agreement between American and Southwest to phase it out.

• The 2003 concessions that saved American Airlines from bankruptcy.
• The ouster of American’s CEO, Don Carty, who left amid an employee uproar over executive bonuses and pension perks.
• The closing of Delta’s hub at Dallas/Fort Worth Airport.
• Major changes to Southwest’s business model, which included moves into major markets like Philadelphia, Denver and New York, and a revamp of its “cattle call” boarding system.
• The rise of Gary Kelly and Gerard Arpey as CEOs of Southwest and American, respectively.
• The annual stock bonuses at American that have come under enormous criticism from labor groups.
• The election of a new slate of officers at the Allied Pilots Association, who have taken an aggressive stance against American management (including the infamous “blood money” letter to Arpey).
• The industry’s return to profitability in 2006 and 2007, and its plunge back to losses last year.
• Jet fuel prices that played havoc with airline finances as they rose, and then caused major headaches with fuel hedges when prices sharply dropped late last year.
• The industry’s move to “unbundling” its products with a slate of fees on everything from checked bags to aisle seats.

I could go on and on. Needless to say, it’s been busy – and incredibly fun. I’ve also enjoyed blogging about the industry here at Sky Talk, which has been going strong for two years now.

But as the old proverb states, “all good things must come to an end.” Today is my last day at the Star-Telegram. But the paper will continue to aggressively cover the airline industry, so keep reading – the story is far from over. Best wishes to all.

- Trebor Banstetter

D/FW officials take Madrid

We had a chance to talk this morning with Jeff Fegan and Joe Lopano from D/FW Airport from Madrid, where they're participating in a trade mission tied to the new nonstop American Airlines route between the cities. Fegan said they attended a business summit that drew 75 Spanish business representatives, who met with the 35 North Texans on the trip.

"There are already lots of connections between the business communities in Madrid and North Texas," Fegan said. "And the new service is going to help that even more."

He said the first flight, which departed on Friday, was full, and that American is seeing heavy passenger loads already.

- Trebor Banstetter

Analyst: Continental revenue better than expected

A bit of bright news on Continental this morning from airline analyst Michael Derchin from FTN Equity:

Continental  Airlines  reported that  its  April mainline  RASM  declined 10.5-11.5% and its consolidated unit revenue decreased 12.5-13.5%. We were projecting  that  its mainline and consolidated RASM would drop  13-15%.  The  better  than  anticipated  unit  revenue  results reflected  stronger  than  projected  yields  while mainline  load  factors rose  3.5  points  roughly  in  line  with  expectations.  A  late  Easter boosted April RASM by an estimated 2-3 points. 

- Trebor Banstetter

New coffee on Southwest

Good news for caffeine-addicted travelers like myself: Southwest announced today that it's serving a new coffee onboard called "Lift." They describe it as "a rich, dark-roasted, 100-percent Arabica blend of South and Central American coffees." It will be served in new larger, eight-ounce eco-friendly paper cups instead of the old styrofoam cups. And, cream will be individual Coffee-Mates, instead of powdered cream.

The airline posted a video about the new coffee here.

- Trebor Banstetter

Travel execs: Enough with the scary swine flu talk

Roger Dow, president of the U.S. Travel Association, wants public officials to dial back some of their statements regarding the swine flu virus and travel. He issued this statement this morning:

"Americans should heed the advice of medical experts when determining how best to manage health concerns during the ongoing swine flu outbreak.  According to the United States Centers for Disease Control and Prevention (CDC) and countless other experts, swine flu should not discourage people from traveling to or within the United States.
"Elected officials must strike a delicate balance of accurately and adequately informing citizens of health concerns without unduly discouraging travel and other important economic activity.

"According to President Obama, swine flu is a cause for concern, but not panic.  President Obama's measured and responsible comments are appropriate and should provide useful guidance to other elected officials."

- Trebor Banstetter

Joyner departing American Airlines

Henry Joyner, who oversaw planning at American Airlines as a senior vice president, announced his retirement today. He'll be replaced by Virasb Vahidi, a former American executive who left the airline in 2002 to work for AT&T.

Joyner has been an integral part of American's operations for three decades. He was involved in the creation of the AAdvantage frequent flier program and has a hand in nearly every piece of American's ongoing strategy, including scheduling, fleet operations, revenue management, real estate and airline alliances.

American has his efforts to thank for its first service to China, a nonstop flight from O'Hare to Shanghai that began in 2006. I covered the inaugural flight for that route, and remember how Henry astonished a roomful of Chinese officials at an event in Shanghai by giving a portion of his speech in fluent Mandarin.

He's also been a driving force behind the anti-trust alliance with British Airways currently being considered by the DOT. That proposal entered a new phase today, with the opening of a comment period and the beginning of a six-month timeframe for regulators to make their decision.

His retirement is effective June 1.

- Trebor Banstetter

Delta to begin service at Dallas Love Field

American Airlines recently announced it's ending - at least temporarily - service at Dallas Love Field. Now, Delta Air Lines is jumping in to fill the void, with new nonstop service to its hub in Memphis. The flights are scheduled to begin July 6, and from Memphis passengers can connect to any Delta destination worldwide.

It seems to be a bid to win some business travelers who prefer Love's proximity to downtown Dallas. We're told that Delta's operation at D/FW won't be affected. (Delta has 36 D/FW departures daily to its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York JFK and Salt Lake City.)

Delta last had Love service from 2000 to 2003, when Atlantic Southeast Airlines operated a Delta Connection flight to Atlanta.

Yes, we know the terms of the Wright Amendment prohibit nonstops to Tennessee. But the Wright restrictions only apply to aircraft with 56 seats or more. Delta's flights will be on 50-seat Bombardier CRJ200 regional jets, operated by Pinnacle Airlines under the Delta Connection name.

Those who followed the twists and turns of the most recent Wright Amendment battle (it was like a season of 24 drawn out over two years) may recall that Pinnacle showed some interest in buying the Legend Airlines terminal. The plan at that time was to provide regional service for Northwest to that airline's hubs in Minneapolis/St. Paul, Memphis and Detroit. Northwest even went on the record opposing the Wright agreement which required that the Legend terminal be permanently closed.

Now that Northwest is part of Delta, it looks like Pinnacle will get its chance to take off from Love after all.

- Trebor Banstetter

AirTran to Cuba?

That Atlanta-Havana flight could happen if AirTran CEO Bob Fornaro has his way. He said that if travel restrictions to Cuba are eased, he'd like AirTran to be in that market.

"It’s a very pretty country and the curiosity level as well as the ethnic flying back and forth is going to be substantial,” Fornaro told the Atlanta Journal-Constitution. "I think it’s going to be a very, very strong leisure destination. We’d like to be one of the first ones for scheduled flights, and certainly that would include Atlanta and probably other points in Florida as well. I think a lot of airlines are going to have a lot of interest.”

- Trebor Banstetter

Still more baggage fees emerging

Delta announced recently that it would begin charging $50 to check a bag on international flights - a perk that used to be free. Now US Airways says it will charge an extra $5 per bag to pay luggage fees at the airport during check-in rather than in advance online.

US Airways already charges $15 to check the first bag, and $25 for the second.

- Trebor Banstetter

Profit at JetBlue, improvement at US Airways

JetBlue became the second airline to post a profit for the first quarter (after AirTran) with earnings of $12 million for the first three months of the year. US Airways, meanwhile, narrowed its quarterly loss to $103 million compared with $237 million a year ago.

With most of the results in, here's a rundown on the quarterly earnings so far:

• AMR, ($375 million)
• Delta, ($794 million)
• United, ($382 million)
• Continental, ($136 million)
• Southwest, ($91 million)
• AirTran, $29 million
• JetBlue, $12 million

- Trebor  Banstetter

More bag fees at Delta

Delta announced this morning that it will begin charging $50 to check a second bag on international flights. Airline officials estimate it will raise about $100 million annually. Delta is the first airline to charge a fee for a second international bag, which had previously been free. It will go into effect on July 1.

Most of the major carriers, except for Southwest, began charging checked baggage fees on domestic flights last year. Don't be surprised if other airlines jump on board with their fee for those bags.

- Trebor Banstetter

Airline stocks jump on Delta, United earnings

Delta reported a first-quarter loss of $794 million, and United said it lost $382 million, but airline stocks nonetheless jumped in early trading. The losses for both airlines were smaller than the first quarter of 2008, and there was some hope that revenue declines have stabilized.

"We’ve seen some signs of stabilization as the revenue environment appears to have bottomed out," Delta CEO Richard Anderson said during the airline's conference call this morning. "But it's still too early to call, and we expect to face headwinds throughout the reset of the year."

At about 9:30 CST, Delta shares were up about 13 percent; United shares up 7 percent; AMR shares rose 6 percent and Southwest stock was up 3 percent.

- Trebor Banstetter

Crandall grounds Pogo

Former American Airlines CEO Bob Crandall has pulled the plug on Pogo, his upstart air taxi service that was going to use very light jets to transport passengers. He's returning the seed money to investors.

"Two things did us in," Crandall told Aviation Week. "First, the airplane never got built, and in fact the company went bankrupt. The aircraft still can't operate in icing conditions. So the airplane failed. And while we could conceivably use alternate airplanes, that wouldn't have provided as great a price advantage versus existing alternatives. And secondly, you can't finance anything new these days, especially in aviation."

- Trebor Banstetter

Fare hike fizzles

Rick Seaney at FareCompare.com is reporting that last week's attempt by the airline to raise fares failed after American and Continental began to roll back their price increases Sunday. It was the second big attempt to hike prices this year, and the second failure.

As is always the case with these things, that's good for consumers, and bad for the airlines. Despite the collapse of the price increase, Seaney thinks fares the airlines will keep trying.

"I wouldn’t be surprised to see a success in the near future with legacy airlines ticking up the base airline ticket price points by a relatively small amount," he said.

- Trebor Banstetter

AMR officers haven't sold bonus stock

In past years, the top executives with AMR Corp. have sold off the stock they received under the annual performance bonus plan at pretty much the first opportunity. This year, they've held off from dumping those shares, at least for now.

Documents filed with the SEC this afternoon record shares that were disposed of for tax liability purposes, but indicate that CEO Gerard Arpey and the four other offices are holding onto the rest of the AMR stock they received this week.

They can still sell it off at any time, of course. But the decision to keep the stock rather than immediately convert it to cash suggests that they're hopeful the value will rise. And so far, they're right - AMR shares closed at $5.25, up from $5.01 when the shares were distributed on April 15. That's a 5 percent profit already.

- Trebor Banstetter

Southwest execs earned $5.3 million last year

Southwest has also filed its annual proxy statement with executive compensation figures. Here's our calculation of the total value of those packages:

• Gary Kelly, chief executive officer, $1.6 million
• Laura Wright, chief financial officer, $795,182
• Ron Ricks, executive vice president of corporate services, $1 million
• Michael Van de Ven, chief operating officer, $966,759
• Robert Jordan, executive vice president of strategy, $897,664

The total Southwest compensation package had an estimated value of about $5.3 million. Keep in mind that a portion of that comes from stock awards granted during 2008 that won't pay out until future years, so the ultimate value could vary widely depending on the performance of Southwest stock.

Southwest earned a profit of $179 million last year, and was the only large airline that was profitable.

- Trebor Banstetter

AMR paid $13.4 million to top execs in '08

The top five executives at AMR Corp., the parent company of American Airlines, received a compensation package valued at $13.4 million in 2008, a year when the airline lost more than $2 billion. That's about 19 percent lower than their 2007 compensation.

The details were disclosed in an SEC filing Friday afternoon. Keep reading for more info.

- Trebor Banstetter

Continental, AA, US Airways hike fares

For just the second time this year, several airlines have attempted a broad domestic fare hike, according to Rick Seaney of FareCompare.com. Continental increased leisure prices this morning on about 3,000 city pairs. American and U.S. Airways matched the hike, and also raised prices on business fares.

"The size of this hike is smaller than across the board hikes we saw last year during the run-up in fuel prices but does touch the bulk of their respective route systems," Seaney said.

Last week, U.S. Airways attempted a similar hike, which was matched by United, but no other airlines played along, and the increase was rolled back.

"With both Continental and American in the mix on this attempt it is likely this hike will stick," Seaney said.

The increase suggests that the airlines may finally be seeing the bottom of the drop in travel demand, and don't feel as much pressure to keep prices low to fill seats. We'll see if the increase lasts through the weekend.

- Trebor Banstetter

AA unions tout turnaround, blast 'money grab'

Union leaders at American Airlines have been highly critical of company's direction in recent years, but today they have some hopeful things to say about the future. Blasts from the Allied Pilots Association and the Association of Professional Flight Attendants both highlighted AMR Corp.'s better-than-expected first-quarter financial performance, and noted that analysts have expressed optimism for the rest of the year.

"Mmost analysts now foresee a industry turnaround throughout the remainder of the year as the high travel season progresses, capacity cuts come closer to matching passenger demand and the economy overall begins to show its long-hoped-for improvement," the APFA wrote to members.

And the APA wrote that "industry analysts agree that the end of the quarter could signal the beginning of a long-awaited turnaround and most are upgrading their 2009 earning projections for AMR and the industry."

It should be noted, of course, that the unions are in contract negotiations, and a return to profitability would bolster their argument that AMR can afford to give employees raises and improved benefits and work rules. Still, any positive talk from AA labor is worth some attention.

And lest one think it's suddenly all roses and sunshine from the unions, both groups slammed executives for their annual stock bonuses, which were paid out this week. Pilots said the payouts were "just another example of how detached AMR management is from their employees," while flight attendants said they were the "2009 version of the AMR spring money grab."

- Trebor Banstetter

S&P puts Southwest on ratings watch

Credit ratings agency Standard & Poor’s has warned that it will consider lowering Southwest’s long-term corporate credit rating, citing the weaker-than-expected revenue and earnings outlook.

Southwest is the only large airline with an investment-grade credit rating. A reduction in the rating could make it more expensive for the airline to raise money and maintain its debt.

- Trebor Banstetter

Can Southwest avoid layoffs?

That's what analyst Jamie Baker of J.P. Morgan is wondering. Here's what he said in a note issued this morning:

Voluntary Early-out A Start, But How Practical In This Market? Southwest efficiency, defined by aircraft trips per day and employees per departure, continued to deteriorate in the quarter, begging the question as to how long Southwest's aversion to furloughs ought to last. Southwest did announce a voluntary early-out program with decisions required by June, as well as hiring and salary freeze for officers and senior management. While potentially a step in the right direction, we do not anticipate a deluge of takers given current domestic hiring alternatives.

- Trebor Banstetter

Optimism for American Airlines

Even as Southwest Airlines reports a larger-than-expected loss for the first quarter, one analyst is expressing some optimism about the other big North Texas carrier, American Airlines. Michael Derchin of FTN Equity Capital increased his 2009 estimate from a profit of 57 cents per share to 92 cents per share.

He cites American's better-than-expected first quarter revenues, and opined that bookings "appear to have stabilized."

- Trebor Banstetter

Southwest reports big loss, buyouts

Southwest Airlines CEO warned in January that the airline might have to downsize its work force if the economy continued to slide. Today, he announced plans to do just that, via voluntary buyouts that will be offered to nearly every employee at Southwest.

He made the announcement as Southwest reported losses of $91 million in the first quarter. Southwest's shares plunged on the news, and at the moment (9:30 a.m. CT) are trading down about 12 percent.

We've got a report on the earnings here at Star-Telegram.com. CEO Gary Kelly will speak to analysts and reporters on a conference call this morning, and we'll update the story and Sky Talk with what he has to say.

- Trebor Banstetter

AA bonus numbers, for execs and employees

Based on today's closing price of $5.01 per share, it looks like the top five American Airlines executives will receive stock bonuses worth about $1.1 million under the "performance share plan" that has been attacked by the unions. (It should be noted that the airline's board may still alter the final payout based on various performance measures.)

Here's the breakdown:

• Gerard Arpey, Chief Executive Officer: $357,000
• Dan Garton, Executive Vice President, Marketing: $229,000
• Tom Horton, Chief Financial Officer:  $229,000
• Gary Kennedy, General Counsel:  $132,000
• Bob Reding, Executive Vice President, Operations: $132,000

The Allied Pilots Association is estimating that a total of $6.5 million in bonuses will be paid out to about 1,000 top executives and managers under the plan. That's down from $38 million a year ago.

Employee will be getting some bonus money as well under an incentive plan - as much as $15 million, thanks to improved performance during the first quarter. Those individual payouts will be much smaller than management bonuses, of course.

Meanwhile American's flight attendants, represented by the Association of Professional Flight Attendants, have issued their own criticism of the management bonuses in an online video.

- Trebor Banstetter   

Arpey's 'gut' on the economy

American Airlines CEO Gerard Arpey said during today's earnings conference call that he agrees with recent comments from Fed Chairman Ben Bernanke regarding the U.S. economy.

"I read with interest Bernanke’s comments from earlier this week, and what he said resonated with me, and it kind of confirms what I feel in my gut," Arpey said.

He then repeated Bernanke's statement: "I am fundamentally optimistic about our economy. Today’s economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience and persistence."

"That’s kind of consistent about what my gut tells me about the U.S. economy," Arpey said. "It mirrors my thinking about where our company sits today."

- Trebor Banstetter

AA pilots blast exec bonuses

The bonus plan for about 1,000 top American Airlines executives and managers will be paid out tomorrow, based on the closing price of AMR stock today. The unions have been critical of this plan for years, and 2009 is no different.

We wrote in today's Star-Telegram about a Tuesday protest conducted by the Transport Workers Union. And the Allied Pilots has just issued a news release criticizing the bonuses.

“To say we are disappointed that American Airlines’ executives continue enriching themselves at the expense of front-line workers would be a definite understatement," union officials said. "We are likewise concerned that management has taken steps to make these stock-based bonuses more lucrative by significantly increasing the number of shares that will be awarded in future years."

Keep reading for the full release from the APA.

- Trebor Banstetter

AMR reports $375 million loss

AMR just reported a loss of $375 million for the first quarter, compared with $341 million a year ago. Per share, the loss was $1.35, significantly better than expected by most Wall Street analysts, who were predicting a loss of $1.68 per share.

Some highlights:

• Fuel costs declined by 30 percent during the quarter, compared to a year ago
• Unit revenues were down by 8.7 percent
• Yields, or average fares, dropped by 4.5 percent - the first decline since the fourth quarter of 2004
• AMR secured a $100 million loan during the quarter backed by aircraft
• Capital expenditures were cut by $100 million during the quarter
• New financing is in place for two of the new Boeing 737-800 jets AMR is purchasing
• Revenues from new baggage fees, sales of food on board and other sources outside of fares rose by nearly 7 percent to $558 million.
• American is still planning a 6.5 percent reduction in its passenger capacity this year
• AMR ended the quarter with $2.8 billion in unrestricted cash in its coffers
• The airline has at least $3.6 billion in assets it can tap for liquidity if needed, including airplanes, airport slots and its frequent flier program. And another $1 billion in assets should become available this year.

Keep reading for the full report from AMR.

- Trebor Banstetter

Layoffs avoided for AA airport agents

It looks like American Airlines won't be cutting airport gate and terminal agents despite a surplus of employees, thanks to a brighter-than-expected outlook for the summer.

The airline had warned workers that cuts could be coming, but a letter sent this morning from Tom Del Valle, who heads domestic airport services, says that American instead will "work to mitigate the overage through other means – reducing overtime, developing more efficient work schedules, shortening part-time shifts, soliciting timecard leave, conducting training on scheduled shifts, etc."

Keep reading for the full letter from Del Valle.

- Trebor Banstetter

Small plane keeps cracking up

The National Transportation Safety Board is warning pilots to stay away from the Zodiac CH-601XL, which it calls a "a low-wing, fixed-gear, single- engine, two-seat general aviation airplane" which is manufactured by Zenair Inc. Apparently the aircraft has broken up in flight in six separate incidents in the U.S. and Europe.

The board suspects "aerodynamic flutter," a "phenomenon in which the control surfaces of the airplane can suddenly vibrate, and if unmitigated, can lead to catastrophic structural failure" in all six cases. The NTSB is urging the FAA to ground the plane for safety reasons.

Interestingly, the plane was classified as a "special light sports aircraft," which means it did not require FAA approval of its design.

You can find some photos of the plane here at JetPhotos.net.

- Trebor Banstetter

Jet fuel costs down 28 percent in February

The Bureau of Transportation Statistics reports this morning that the cost of a gallon of jet fuel for commercial airlines averaged $1.85 in February, a 28 percent drop from its price of $2.58 in February 2008. Those numbers do not include any impact from hedging contracts, which has pushed up the price of fuel purchases for some airlines.

The savings were welcome, but costs had crept up a bit from January, when a gallon of fuel averaged $1.75.

- Trebor Banstetter

Union protests American today

The Transport Workers Union is staging a protest near American Airlines headquarters today to criticize the slate of bonuses scheduled to pay out to top executives and management this week. Here's what union chief Jim Little had to say in a news release:

"The company likes to talk about shared sacrifice and sharing pain and sharing gain, but what about equal sacrifice? This is nothing more than corporate greed. Our members have boosted productivity and brought in outside revenue with little reward while execs take more and more. Times have changed and this type of corporate excess will no longer be tolerated."

While pilots and flight attendants have also criticized American's bonuses, the TWU has been the loudest voice on the issue so far this year. The union, which represents ground workers, launched a nationwide advertising and Internet campaign mocking American executives and blasting the company for its "corporate greed."

We'll be at the rally, and report what happens here at Sky Talk and in the Star-Telegram.

- Trebor Banstetter

Fares still dropping

We've written a lot lately at Sky Talk and in the pages of the Star-Telegram about how fares have dropped significantly this year. The trend isn't showing any signs of letting up. Rick Seaney from FareCompare.com just sent us a note on the latest price declines he's spotted, which involve US Airways and United. Keep reading for his full update.

- Trebor Banstetter