Sky Talk

New Bell model is Relentless

Well it appears that the big new commercial helicopter Bell Helicopter plans to introduce at the industry trade show next month, the product of the company's bold and ambitious Magellan product, has a bold new name too.

Bell has applied for a trademark for the name: 525 Relentless. There you have it, Relentless. Must have something to do with being able to fly a long time without stopping for gas? And check this little teaser on the company's web site. Cool logo. Although it looks like something I've seen before? Help me out hear you folks with better memories.

As we reported a couple of weeks ago, Bell has also applied for trademarks for the number 525 (Bell code for a five-bladed rotor aircraft), Magellan and Super Medium Transport.

The company has scheduled a "new product unveiling" for Sunday, Feb. 12 at 11:30 a.m. where they presumably take the wraps off the "Relentless" for the world to see.

- Bob Cox

Seattle company that invented winglets fights court battle with super jumbo Airbus

Interesting story from the Seattle Times on a legal dispute between European aircraft manufacturing super heavyweight Airbus Industries and a Seattle aviation shop that apparently invented the winglets used on modern jets to boost fuel economy.

Aviation Partners filed a patent in 1994 on winglets, which it proceeded to convince the likes of Gulfstream, Hawker and Boeing would make their planes more economical to fly. Seems the upswept wingtips cut down on drag. Boeing now uses winglets on its newer 737 models.

It turns out that after years of investigating the concept with Aviation Partners, the Times reports, Airbus went with its own design "sharklets" and got an European patent. then it filed suit in Austin, of all places, seeking to invalidate Aviation Partners patent. Aviation Partners has now responded, asking the court to dismiss the case or at least move it back to Seattle.

- Bob Cox

 

PPG puts shine on Osprey for museum

When the Marine Corps offered a V-22 Osprey aircraft to the American Helicopter Museum and Educational Center to display the center jumped at the opportunity.

Now one of the earliest Osprey test aircraft, No. 3, is restored and at the museum with a little help from PPG Industries, which provided the coatings to get it back up to snuff and Federal Aviation Administration requirements.

- Bob Cox

 

Tribute to fallen Nimitz aircraft handler

An interesting and sad post I just came across on the Time magazine Battleland blog edited by former Star-Telegram reporter Mark Thompson.

“We are sad to report that Lt. Cmdr. Regina Mills, Nimitz‘ Handler, died Jan. 23 following a multi-vehicle accident on State Route 16 in Kitsap County, Wash….Regina was a great leader and officer. She was a leader and mentor not only to the Sailors and officers in the Air Department, but throughout the ship. It would be difficult to find anyone aboard Nimitz whose life or career here wasn’t positively influenced by her. Our thoughts and prayers are with her family. Regina will be sorely missed.”

– Captain Paul. O. Monger, USS Nimitz, commanding officer.

Cool video on the post of Mills and colleagues in action aboard the Nimitz and links to stories about the accident that had taken her life. She had stopped to aid a stranded motorcyclist on slick roads.

- Bob Cox

Retired Marine general: Not much pain in budget cuts

Loved the following comment from retired Marine Corps General James Cartwright, the previous vice chairman of the Joint Chiefs of Staff, on the degree of difficulty the Pentagon had in coming up with enough spending reductions to meet the 2013 defense budget cap"

Despite the expected cutbacks in personnel and programs, analysts said the Pentagon had been able to achieve the spending reductions without sacrificing its most cherished programs.

“Achieving the US$487-billion in cuts was sufficiently doable that it didn’t require really hard decisions … Unless you force them into it, those hard decisions just don’t get made. Everybody buys everything they want,” said retired General James Cartwright, former vice chairman of the Joint Chiefs of Staff.

The joys of an almost unlimited credit card.

- Bob Cox

 

Marine questions value of STOVL jets, Harrier and F-35B

Occasionally someone in the active duty military has the courage to go off the script and say what they really think about their service's dogma and pet projects.

Here's a piece by a Marine aviator questioning the value and purpose of the Marine Corps love and commitment to the STOVL fighter-attack airplane, the Harrier and now the costly and complex F-35B.

Other analysts and experts have said it before, probably some Marines too, but in his blog "Boats Against the Current," Peter J. Munson, an active duty officer and KC-130 commander, lays out much of the case against the F-35B. Marine generals love to argue it gives them the capability to go fight close to the front lines, without air bases, but never bother to add how many truckloads of fuel and supplies and men and defense weaponry will have to be hauled over land to that forward base, and at what cost and vulnerability to enemy attack.

Munson writes:

The Harrier has surely been a large part of Marine aviation since 9/11, but its STOVL characteristics were rarely, if ever, critical to the conduct of operations.  If anything, the capability was a liability when it came to the requirement for long on-station times, multiple ordnance options, and tedious scanning of compounds and cities with targeting pods in support of troops on the ground.

While Harriers have conducted some forward rearming and refueling at shorter strips, these were more driven by the Harrier's limitations and the desire to validate its expeditionary capability than a value added to the fight.  That is, while a Harrier was rearming and refueling, a Hornet would be overhead, sensor still on target, refueling from a KC-130, more weapons still on the wing.  

So, when the program hits a rough spot again, which I think it will, and when the budget adjusters come knocking, the Marine Corps needs to be honest about how much STOVL capability it really needs to maintain its close air support capability aboard amphibious shipping, how soon unmanned aerial systems can fill that gap, and what the best option is for the rest of our close air support needs.

One can't help but suspect that when former Defense Secretary Bob Gates put the F-35B on probation last January that he had some of these same arguments in mind but didn't want to fight a war with the Marines in his final months in office. Secretary Panetta last week swooped in and freed the "B," winning friends in USMC HQ and Lockheed Martin, among othe places.

The extraordinary complexity and demands of the F-35B have undoubtedly hampered the whole F-35 problem, creating technical problems and sucking up limited (in Pentagon terms) development dollars and engineering resources. The need to redesign the whole aircraft (all three models) to take out weight was largely an effort to salvage any combat payload for the B-model. Now, with the airframes of early planes showing cracks and wear and tear early in their lives one has to wonder how much of those and future problems will be due to weight reduction for the F-35B.

 - Bob Cox

 

 

American retiree group asks bankruptcy court to create retiree committee

The newly formed AMR Retirees Pension Protection Corp. has asked the bankruptcy judge to appoint an official retiree committee to protect American Airlines' retiree interests.

In a filing made on Friday, the group said it was formed shortly after AMR Corp. filed for bankruptcy in November and names six former AMR employees as part of their organization including Robert Rumbaugh, the retired managing director of the Alliance Fort Worth maintenance base, and Steven O'Sullivan, former vice president of corporate revenue accounting.

"Although the Debtor has not yet made any formal application to this Court to terminate or modify retiree benefits in these cases, the Debtors' filings leave little doubt that such efforts will be undertaken in these cases," the filing said. "Accordingly, it is respectfully submitted that the formation of a Retiree Committee is appropriate now so that Retirees are properly in a position to protect their interests and are not forced to scramble to catch up if the Debtors file a motion to modify or terminate retiree benefits."

The group also seeks to let the retiree committee represent retirees whose union has said they do not plan to represent them in the bankruptcy proceedings. In December, the Allied Pilots Association informed its members that it would not represent retiree pilot interests during the proceedings.

-Andrea Ahles

 

Court deadline for AMR looms on its fleet decisions

AMR Corp. was supposed to have figured out by today which airplanes it wants to keep.

Since filing for Chapter 11 bankruptcy Nov. 29, the Fort Worth-based company, which operates American Airlines and American Eagle, has decided on about one-fifth of its 1,000-plus aircraft fleet.

Newer Boeing 737-800, Boeing 777-200 and Bombardier CRJ-700 planes are keepers, while older MD-80s, Boeing 757-200s and Fokker 100s parked in New Mexico are not.

As the 60-day court deadline for Section 1110 notices on aircraft approaches, American will be in U.S. Bankruptcy Court today asking to get out of leases on 18 aircraft. American has filed for extensions on more than 400 aircraft, including all 216 ERJ-145s it operates in its Eagle fleet, that will be presented to the court for signing in the next week, and it's likely to file more.

If American does not tell the court that it wants to keep an aircraft, renegotiate its lease or abandon the lease within 60 days of bankruptcy, lenders can repossess the aircraft, Deutsche Bank analyst Michael Linenberg wrote in an investor note last week.

"While the repossession of in-service is not the preference of most financiers, it is generally even less desired by an airline given the risk of operational disruptions that the loss of more than a small number of aircraft can create," he said.

Although some industry experts have said American will be much smaller when it emerges from bankruptcy, its fleet probably won't look much different than now.

"But American will be paying less for what they're flying right now," said Mike Boyd, an airline consultant at Boyd Group International.

As of Sept. 30, American had 616 aircraft and 52 that it leased or owned but did not operate. American Eagle had 299 aircraft and 44 leased or owned but not operating.

To read the rest of the article that appeared in Friday's Star-Telegram, click here.

-Andrea Ahles

American adds more DFW-Brazil flights, shows off 777-300ER interior

On Thursday, American Airlines announced it would increase flights between DFW and Sao Paulo, Brazil starting on June 14.

The carrier said it will operate the flight 12 times per week, up from the 7 flights per week it currently operates. American is also increasing flights from Miami to Brasilia and to Belo Horizonte to daily service and adding service between Miami and Manaus.

American also unveiled the new look of its 777-300ER that it will receive from Boeing in December. The carrier said that it will use the aircraft on its DFW-Sao Paulo route.

Here are a few pictures of the interior.

Business class

First class

Entrance to the premium cabin area

-Andrea Ahles

A few more details about American's Feb. 1 meeting with its unions

Changes in American Airlines' labor contracts are coming.

On Wednesday, the carrier said it planned to meet with all of its major unions - the APA, APFA and TWU - on Feb. 1 but did not discuss specifically what they would be talking about. Today, the Transport Workers Union shed a little light on what will be the topic of discussion and it is no surprise that it is about the labor contracts.

In the bankruptcy process, labor contracts can be altered under section 1113 of the bankruptcy code. American has not yet filed any motions with the bankruptcy court asking to modify its existing labor agreements with its pilots, flight attendants, mechanics and ground workers.

It looks like the Feb. 1 meeting will be the beginning of section 1113.

Read more here: http://blogs.star-telegram.com/sky_talk/2012/01/american-unions-and-nmb-to-meet-on-thursday.html#storylink=cpyHere is the letter from TWU deputy director Robert Gless:

Dear Brothers and Sisters:

The meetings scheduled for February 1, 2012 will take place at Flagship University in the Americana Room.

The AA group will meet at 10:00 am and the purpose of this meeting is to initiate the process for changes to our collective bargaining agreements pursuant to Section 1113 of the Bankruptcy Code. At this meeting, the Company's Chief Restructuring Officer, Beverly Goulet, will make a presentation on the company's restructuring Business Plan, and provide supporting information relating to the plan. Following that presentation, Jeff Brundage will discuss proposed changes that affect all Unions. Then, company negotiators will meet separately with each of the Unions to present specific proposals and supporting information.

The American Eagle group will meet at 2:00 pm to receive the same presentation of the AA restructuring Business Plan. Their negotiations will begin in the weeks following completion of the AA discussions.

Fraternally,

Robert Gless
Deputy Director Air Transport Division
AA System Coordinator

-Andrea Ahles

PBGC says 13,000 current or retired American employees will have pensions cut if plans are terminated

American Airlines is misleading its employees when it said not to worry about their pensions, a federal agency said on Thursday.

The Pension Benefit Guaranty Corp. said the airline itself has estimated that 13,000 current or retired employees will have their pension cuts.

“American Airlines is telling their workers and retirees not to worry, but they should,” said J. Jioni Palmer, PBGC’s director of communications. “American said nothing’s been decided yet, but didn’t even bother to pretend that it was trying to preserve its employees’ pensions.”

Earlier this week, American sent a letter to employees telling them that 90 percent of workers will not see any cuts in their pension benefits even if the carrier terminates their pension plans.

Here is the full statement from the PBGC:

The Pension Benefit Guaranty Corporation today pushed back on misleading statements to American Airlines employees by its management about their pension plans.

“American Airlines is telling their workers and retirees not to worry, but they should,” said J. Jioni Palmer, PBGC’s director of communications.

A recent letter to employees from management downplayed the serious consequences of what could happen if the company terminated its pension plans, Palmer said. The letter ignored that PBGC doesn’t insure retiree health benefits, which are usually canceled when companies terminate pension plans.

The American letter also downplayed the pension cuts that would occur if American’s plans are terminated and PBGC benefits are substituted.  Although the figure appears nowhere in the management letter, the airline itself estimates that some 13,000 current or retired employees will have their pensions cut.

American’s recent statements, through its lead bankruptcy counsel and in employee communications, have signaled the airline’s intent to dump its retirement obligations on the PBGC. “American said nothing’s been decided yet, but didn’t even bother to pretend that it was trying to preserve its employees’ pensions,” Palmer said.

Since the airline sought Chapter 11 protection on Nov. 29, 2011, the agency has been working to try to preserve American’s pension plans.  PBGC has repeatedly stated that the airline must be preserved, but that if it can do so while preserving its plans, that would be better both for PBGC and American’s employees. PBGC noted that other airlines had reorganized successfully without terminating their plans.

-Andrea Ahles

Lockheed sees fourth-quarter profits fall

Lockheed Martin fourth quarter 2011 profits fell 40 percent from a year earlier as three of its four business divisions recorded lower sales.

The giant defense contractor reported a quarterly profit of $683 million, or $2.09 a share. compared to $961 million and $2.67 a share in 2010. Sales in the quarter were $12.2 billion, down from $12.76 billion.

The average estimate of 23 analysts surveyed by Bloomberg was for a profit of $1.95 a share.

But the results were close to what Wall Street was expecting.  Lockheed "delivered a solid quarter reflecting improving margin performance despite top-line pressures," Peter Arment, analyst with Sterne Agee said in a note to investors. 

Joseph Nadol at J.P. Morgan wrote that Lockheed's 2012 profit and revenue guidance "generally looks within the range of expectations. ...  Sales were down (year-over-year) for the first time in 2011, but orders were strong and backlog grew. We do not anticipate a significant reaction from the stock relative to the market and the rest of the defense group today."

Operating profit for the Fort Worth based Aeronautics division, Lockheed's largest business sector, increased 10 percent to $461 million and sales grew less than 1 percent to $3.855 billion.

The Electronic Systems business division, which includes Grand Prairie-based Lockheed Martin Missiles and Fire Control, saw its operating profit decline 12 percent to $431 million as sales dropped by 8 percent to $3.7 billion.

- Bob Cox

American pilots thank customers for flying their carrier

The Allied Pilots Association, which represents 10,000 American Airlines pilots, issued a thank you letter to passengers on Thursday, saying they appreciate their customers' business.

The letter also told management it needs to make a commitment to their workers. The APA, along with the Association of Professional Flight Attendants and the Transport Workers Union, are scheduled to meet with AMR executives on February 1.

Here is the full letter:

"The 10,000 pilots of American Airlines want to thank everyone who has chosen to continue traveling aboard our airline as we go through bankruptcy restructuring. We appreciate your business and will continue doing all we can to earn it.

"We are committed to achieving a successful restructuring and understand that a financially healthy company is a prerequisite to enjoying full, rewarding careers. As pilots, we're in a unique position to provide essential front-line leadership in American Airlines' day-to-day operations, and we will play a vital role in the airline's restructuring.

"This won't be the first time we've persevered in tough times. In the days after the 9/11 attacks when air operations resumed, our pilots returned to their cockpits wihtout any assurance that the emergency security measures the industry deployed would prevent additional attacks. Hundreds of our pilots returned to military service to combat terrorism. On the financial front, to help prevent a bankruptcy filing by American Airlines in 2003, our pilots overwhelmingly approved billions of dollars in contract concessions that remain in effect today.

"Along with financial reforms, American Airlines' restructuring must also include a committment by those who manage our company to cultivate a better corporate culture - a culture that values the crucial competitive edge that a fully engaged workforce provides. Whatever the industry, the best companies all have at least one element in common: highly motivated, enthusiastic employees who deliver exceptional service day after day. We stand ready to help creat that same winning culture at American Airlines.

"Thank you again for choosing to fly American Airlines. We are honored to serve you."

-Andrea Ahles

Fight over American hiring bankruptcy advisors postponed to Feb. 29

A courtroom showdown over AMR Corp.'s request to hire several bankruptcy advisors and financial consultants has been postponed until February 29.

Originally, the bankruptcy court was scheduled to hear AMR's motions to hire firms such as Bain & Co., McKinsey & Co. and Rothschild Inc. at a hearing on Friday. According to filings made on Wednesday, those motions have been deferred to a hearing scheduled later next month.

AMR, American Airlines and American Eagle have asked the court for permission to hire these consultants. The U.S. Bankruptcy Trustee, the Transport Workers Union and the Association of Professional Flight Attendants have filed objections to the numerous consultants and investment firms that AMR wants to employ.

Here is the list of firms that AMR has asked to hire that will be heard by the court at the February 29 hearing.

-Rothschild Inc, financial advisor and investment banking services

-Bain & Co., strategic consultants for American Eagle

-SkyWorks Capital, advisor for aircraft restructuring

-Perella Weinberg Partners, financial advisor

-McKinsey & Co., management consultants

-Groom Law Group, law firm for special employee benefits

-Debevoise & Plimpton, law firm for special aircraft

-Paul Hastings, counsel for labor

-KPMG, tax consultants

-Morgan Lewis & Bockius, law firm

-Deloitte Financial Advisory Services, consultants

-Andrea Ahles

 

Lockheed shuffles Aero management; Heath retires, Lawson to succeed

Big leadership changes are in the works at Lockheed Martin Aeronautics Co., the Fort Worth-based division of Lockheed that builds the F-35 and F-16 fighter jets. (Full story that appeared in Friday's Fort Worth Star-Telegram).

Aeronautics President Ralph Heath will retire effective April 1 and be replaced by Larry Lawson, currently one of the two executive vice president/general managers on the F-35 program. Lawson is credited with getting Lockheed's F-22 production program on track in Marietta.

Heath, who is also executive vice president of Lockheed Martin, is a 37-year veteran of the aeronautics business in Fort Worth having begun his career with General Dynamics.

Lawson most recently has headed up the engineering and manufacturing side of the F-35 program. He will be replaced int hat position by Orlando Carvalho, who currently serves as vice president and deputy, of the F-35 program. 

Lorraine Martin will succeed Carvalho as vice president and deputy for the F-35 program; she is currently the vice president, C-130 program.George Shultz, currently vice president of Modernization programs for Aeronautics, will become the new vice president for the C-130 program.

- Bob Cox

 

 

 

 

Southwest and AirTran flight instructors ratifiy integration agreement

Southwest Airlines announced Wednesday that its flight instructors have ratified an integration agreement with those from AirTran Airways.

The agreement integrates the two groups' seniority lists, the Dallas-based carrier said. The agreement covers about 90 instructors. The instructors are represented by the Transport Workers Union.

"I want to commend all the parties involved for accomplishing something that is very rare in the airline industry—a successfully negotiated integration agreement outside of arbitration," said Capt. Chuck Magill, Southwest Airlines Vice President of Flight Operations. "I couldn't be prouder of both our Flight Instructors and our Pilots for reaching integration agreements in such a forward-thinking and decisive way. Our Flight Operations Team continues to demonstrate Leadership throughout this integration process, and their efforts should be recognized and commended."

-Andrea Ahles

Investors acquire aero supplier Fitz Manufacturing

A new Fort Worth company with plans to invest in the North Texas aerospace industry announced its first acquisition Wednesday, Fitz Manufacturing Industries of North Richland Hills.

Novaria Group said it had purchased the closely held manufacturer of aircraft parts because of its potential for long term growth. “They really do have great potential. They have a great reputation,” said Earl Larkin, managing partner of Navaria.

Novaria plans to retain the current management of Fitz but will bring added financial and management resources to the company to help the business grow, Larkin said, and “to better serve customers while preserving the culture and reputation for high quality that Fitz has built over the last 16 years.”

The company will be renamed Fitz Aerospace. Founder Greg Fitzgerald will remain an equity partner and chief executive of the company.

Fitz is a major provider of forged and machined small parts to Boeing’s commercial aircraft division as well as other aviation and defense companies. The company employs about 150 and is looking to add staff to meet demand for its products.

Novaria is a venture launched a year go by Larkin and Bryan Perkins, both formerly executives with the Fort Worth aerospace division of Parker Hannifan. They are backed by a Dallas-based private investment firm, Satori Capital.

Novaria and Satori will team up to make other acquisitions, Larkin said.

- Bob Cox

American and its unions to meet on Feb. 1

American Airlines has asked its three major unions to meet on February 1 to talk about changes it plans to make now that the carrier is in bankruptcy.

The Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union represents about 54,000 pilots, flight attendants, mechanics, ground workers and other personnel at the Fort Worth-based carrier.

The TWU told its members that it has not been notified of any meeting for its American Eagle workers.

American did not give specifics on what it planned to discuss at the meeting.

"American has asked the leadership of each union representing AA employees – the APA, APFA and TWU – to attend a meeting on February 1 to discuss the kinds of changes we believe are necessary for our airline to compete effectively in order to prosper and grow in the future.  Our challenges are great, but so are our opportunities," said spokesman Bruce Hicks. "We plan to discuss these issues with the union leadership before providing any information publicly."

-Andrea Ahles

US Airways confirms it has hired advisors for possible AMR takeover bid

It's official.

US Airways chief executive Doug Parker confirmed that his carrier has hired advisors to examine a possible takeover bid of American Airlines' parent company, AMR Corp. Parker's comments came during US Airways' fourth quarter earnings call with investors and Wall Street analysts this morning.

"Before we get to questions, I am aware that there is a good bit of speculation about our company and as it relates to AMR's bankruptcy and I am aware that there are therefore questions you guys may want to ask because indeed you are paid to speculate. But in an effort to head some of that off and keep us on the focus of the day, which is our earnings and not speculation, I'm gonna just.. I've got a little statement here to read that I'll do and I'll tell you what I can and if you guys would hopefully use that as the answer to all the questions you may have because that's going to be my answer to the questions you may have. We'll try to do it that way and head off any questions so...at any rate...

"I know part of the reason for the speculation has been US Airways' historical comments on consolidation, being such proponents of consolidation and the fact is we have been on record for a long time about the need for this industry to start earning a fair return on invested capital. And we've been on record that one of the ways to fix this problem is through consolidation. That being said the reality is a large amount of consolidation has already occurred in our business. We have a much less fragmented industry than we did when we merged America West and US Airways in 2005 and that industry consolidation has been a major contributor to the improved results that you see today at US Airways and throughout our industry.

"And furthermore, as today's results show, US Airways does not need to participate in consolidation. Our employees are running a terrific standalone airline and we're generating financial returns that are similar too or better than our larger peers. We're extremely proud that the hard work of our team has gotten us into a position where we can control our own destiny. We can now decide whether it's best for US Airways to operate as a standalone company or participate in further consolidation over time and that's what we intend to do.

"So while it's no longer imperative that our industry consolidate and its definitely not imperative that US Airways participate in consolidation, we, of course, are always interested in studying potential value-enhancing opportunities and part of studying these opportunities is ensuring we have good counsel. Therefore, as has been reported, we have indeed retained Barclays Capital, Millstein and Co., and Latham & Watkins to help us explore our options as they relate to AMR's bankruptcy. We expect AMR will remain in bankruptcy for quite sometime and therefore we anticipate that we and our advisors will be studying the situation for quite sometime. And while we're studying the situation we do not expect there will be any major developments and we certainly have nothing to report today."

-Andrea Ahles

Textron reports gains in Bell revenues, profit and high expectations

Bell Helicopter posted strong 4th quarter improvements in both revenues and profits and should perform even better in 2012, parent company Textron Inc. reported Wednesday.

Bell is riding a rising tide of revenues from its military aircraft programs, notably production of the V-22 Osprey, that will not peak until 2014 as orders now in backlog are filled.

Textron reported a fourth quarter 2011 loss of $19 million or 7 cents per share, in large part due to a $186 million write down of the true value of loans previously made by its Textron Finance subsidiary.

For all of 2011Textron reported a profit of $242 million or 79 cents a share, compared to $86 million and 28 cents a share in 2010.

Textron's Bell division, which primarily consists of  Fort Worth-based Bell Helicopter, saw its operating profit increase 21 percent to $167 million compared to $138 million int he same quarter of 2010. Revenues for the segment increased nearly 4 percent to 1.01 billion for the quarter.

For all of 2011 the Bell segment had an operating profit of $521 million, a 22 percent increase, as revenues increased 9 percent to $3.53 billion.

Textron officials predicted Bell revenues would increase nearly 20 percent in 2012 to $4.2 billion with a similar profit margin of 13 percent or better.

Textron Chief Executive Scott Donnelly said Bell Helicopter has "overachieved in driving down costs." Bell expects V-22 deliveries from orders already booked to peak at 40 aircraft in 2013, even with an anticipated new multi-year order from the Pentagon.

Donnelly said Bell is actively seeking international orders for the V-22 for production in 2015 and beyond.

Download TXT_Q411_Release

- Bob Cox

 

 

 

 

 

 

U.S. bankruptcy trustee objects to AMR's request to hire bankruptcy consultants and advisors

The U.S. bankruptcy trustee in AMR's case filed an objection to the company's motions to hire various consulting firms such as McKinsey & Co. and Bain & Co. The filing said AMR seeks to retain 14 professionals, including seven financial advisers or consultant-type firms.

"The Debtors are seeking to retain multiple professionals when the tasks for which they are being employed can be done by fewer firms," the trustee's filing said. "The burden of the necessity of a professional's retention rests with the Debtors, and in this case, such burden has not been met."

AMR's request to hire the firms is scheduled to be heard Friday.

One of the firms that AMR wants to hire is investment banking firm Rothschild Inc., to provide financial analysis and identify restructuring transactions for the Fort Worth-based carrier.

If the agreement is approved, Rothschild would receive a $200,000 monthly advisory fee, and $15 million if American’s reorganization plan is accepted by the court, or if another restructuring transaction occurs such as a merger or acquisition. Rothschild would also receive part of any new debt or equity raised as part of American’s restructuring.

-Andrea Ahles

Read more here: http://www.star-telegram.com/2012/01/24/3684882/american-airlines-workforce-will.html#storylink=cpy

Bad bolt led to fatal 2010 helicopter crash

An improperly manufactured steel bolt that sheared off in flight has been fingered as the likely cause of a June 2010 helicopter crash that killed a CareFlite pilot and mechanic.

The National Transportation Safety Board has yet to issue a final report on the investigation, but NTSB documents show that the crash probe quickly centered on a fractured drive pin, similar to an everyday bolt.

The bolt in question was one of two that anchor the complex mechanism that operates the helicopter’s rotor blades, transmitting the pilot’s flight commands to the blades that control the aircraft’s direction.

Bell Helicopter, which manufactured both of the drive pins used in the Bell Model 222 helicopter’s rotor control assembly, has already reached out of court financial settlements with the families of the victims.

Dallas attorney Jon Kettles declined to disclose details of the settlements, but said once the likely cause of the accident became clear Bell officials quickly agreed to compensate the families.

Complete story in Wednesday's Star-Telegram. Attached at the NTSB documents.

Download NTSB Materials Lab report

Download NTSB Investigator's factual report

- Bob Cox

 

Bankruptcy court getting form letters from American retirees about pensions

It looks like the U.S. Bankruptcy Court - Southern District of New York is the target of a letter writing campaign.

On Tuesday, there were five letters entered into the court's case docket for AMR Corp.'s bankruptcy case. All of the letters were from retirees of American Airlines and discussed their concerns about the company's pension plans.

And they all used the exact same language. Here's a copy of the form letter sent by the retirees:

Honorable Judge Sean Lane:

As a retiree of American Airlines, I earned my pension over the course of a XX year career, and I have counted on its financial security for my "Golden Years." If AMR is allowed to do away with the Pension Fund, there will be several more thousands of citizens "depending on the U.S. Government for money it doesn't have. Our Government is already operating under trillions of dollars of debt. This debt is adversely affecting our economy, and will be for decades to come.

AMR Executives should surrender some of their excessive pay, bonuses, and "golden parachutes" in order to improve AMR's financial future. The "workers" have sacrificed many times during the Company's history. It is time "someone else" does the sacrificing. American Airlines would not have been as successful were it not for the devotion and sacrifice of its workers.

Sincerely,

XXXXX

So far, the court docket shows five of these letters. It will be interesting to see how many more of them appear in the docket over the next few days.

UPDATE: There are now 27 letters from retirees in the bankruptcy court docket although they are not all the same form letter. Most of them are addressed from Cincinnati where American used to have a customer reservation office.

-Andrea Ahles

 

AMR CEO Tom Horton: "We will redesign American's management structure"

AMR chief executive Tom Horton told employees on Tuesday that the Fort Worth-based airline's management team is going to get a little smaller.

"Today, we are announcing an initiative through which we will redesign American’s management structure to ensure we are positioned for a successful future," Horton told employees in a letter. "The redesign starts at the top and will encompass the entire management and support staff team. I’ve already made several changes to streamline my Leadership Team and to remove a management layer."

There have been several management changes since American Airlines' parent company entered bankruptcy. Bob Reding, executive vice president of operations and Mark Burdette, vice president of employee relations, both retired at the end of last year. The company's chief information officer, Monte Ford, also resigned at the end of the year.

And then Horton added this: "Since we will be refining the organization and getting leaner, we will obviously end the process with fewer people."

Sounds like layoffs may be coming...but I'll let Sky Talk readers take a look at Horton's letter and see what they think.

UPDATE: Here is what Gimme Credit analyst Vicki Bryan thought about the Horton letter.

"While many of AMR's employees may have little sympathy for big shots losing their jobs and/or fancy titles, the most important message we took from Mr. Horton's long letter today was an acknowledgement from the company that management also was responsible for its failure--a mea culpa that is long overdue," Bryan wrote in an investor note on Tuesday. "AMR's communications to its employees the past two days seem to indicate that management wants to finally make fixing its problems a team effort."

-Andrea Ahles

Here is the full letter

January 24, 2012

Dear American Team:

From my recent conversations with many of you, I know there is widespread understanding in our company that we need to be competitive in every aspect of our business in order to regain our industry leadership and grow.  Today, I would like to explain a little more about one path we will take to meet that goal.

In our industry, being competitive is not just about costs.  Of course, we are using the restructuring process to create a competitive cost and capital structure.  But our peers have also taken advantage of their own restructurings to reinvest in every facet of the customer experience and to improve performance.  They have overhauled their organizations, sharpening their focus on important areas of the business, speeding up decision making, and becoming more efficient and productive.  Although we’ve made a lot of changes over the past few years, we must seize this opportunity to streamline our organization and focus fully on building a world-class airline that will prosper and grow.

Today, we are announcing an initiative through which we will redesign American’s management structure to ensure we are positioned for a successful future. 

The redesign starts at the top and will encompass the entire management and support staff team. I’ve already made several changes to streamline my Leadership Team and to remove a management layer. 

We will need to be better than the competition in everything we do.  The effort we are starting today will help us improve in all areas of our business, not just to compete – but to win.

The process will have three main objectives:

• We must have the right team for the job ahead.  In order to regain our leadership position against the very best the world has to offer, we need to ensure we have the best people in the right roles. 
• We must have a management structure that fosters accountability and high performance, adaptability, and fast, effective decision making.  We have to be able to continually adapt to the new world around us, and that means operating with greater speed and effectiveness, and embracing accountability.  One way we will do this is to design management positions with broader spans of responsibility and eliminate unnecessary layers of bureaucracy.
• We must have an efficient cost structure.  The ultimate goal, especially in the context of our broader strategic business objectives, is to create a highly effective, focused organization, but it will also help us achieve the competitive cost structure we need. Since we will be refining the organization and getting leaner, we will obviously end the process with fewer people.  As always, we will treat everyone fairly and with respect throughout the process.

I firmly believe this effort, while difficult, is essential to our long-term success.  We will do everything we can to move quickly, fairly and with transparency.  While the full process will launch in the days and weeks ahead, we are announcing this today because the groundwork begins immediately and I wanted you to hear about it directly from me.  We will be posting more information on Jetnet and answering your questions on an ongoing basis.

As we move forward, we need to stay focused on delivering for our customers.  Safety, reliability, and a first-rate customer experience must remain our top priorities.

As I’ve said before, the road ahead is not easy.  We have a lot to do and many difficult changes to make, but I know this effort is vital to our transformation and will help American get back on top.  The culture of innovation and performance that defined our storied past must define our future.  
 
                                                                                    Sincerely, Tom

American adds new route, Miami-Barcelona

American Airlines announced on Tuesday that it is adding a Miami-Barcelona route to its network starting on April 3.

The flight will be operated five times a week until June 14 when American said it plans to operate it daily.

"The addition of Barcelona further underscores the importance of our Miami hub and our commitment to its growth," said Peter Dolara, American's senior vice president. "This flight will further expand South Florida's historical ties to Spain and will complement our service to Madrid as well as Iberia's increased service to Spain's capital city."

American said it will use a Boeing 767-300 aircraft with 225 seats on the route. The carrier currently flies to Barcelona from its New York-JFK hub. It has a joint business agreement with British Airways and Iberia on trans-atlantic flights, with all of the carriers part of the Oneworld alliance.

-Andrea Ahles

American sends letter to employees to answer pension questions

American Airlines says more than 90 percent of its workers with vested pensions would not see reduced benefits even if the Fort Worth-based airline terminates its pension plans.

In a letter sent to employees Monday, American's senior vice president of human resources, Jeff Brundage, attempted to allay workers' fears about the future of their pensions. Since American's parent company, AMR Corp., filed for bankruptcy in November, employees and their labor unions have expressed concern that the airline would jettison its pensions.

"For those whose pension benefit has vested, if the pension plans are terminated, more than 90 percent of participants would see no reduction in their pension benefit accrued as of the Nov. 29, 2011, Chapter 11 filing date if payments begin at normal retirement age," Brundage wrote. He added that excluding pilots and upper management, only 2 percent of vested workers could see a reduction in pension benefits.

However, the company did not disclose what it plans to do with its pension plans, and it has not discussed pensions in bankruptcy court filings. On the day it filed for bankruptcy, the Pension Benefit Guaranty Corp. estimated that AMR's pension plans had about $8.3 billion in assets to cover about $18.5 billion in benefits. The agency, which would assume responsibility for paying pension benefits if American ends the plans, estimated that $1 billion in benefits would be lost.

Last week, American made only a $6.5 million pension contribution instead of the $100 million payment that was scheduled. In the question-and-answer section of Monday's letter, Brundage explained that some of the obligations accrued were considered "pre-petition" costs and "must be dealt with under the supervision of the court."

The letter also outlined three examples of nonpilot employees and what would happen to their pension benefits. Overall, employees with less than five years of qualified service would lose their benefits if the plans are terminated.

"Rest assured that whatever happens with our pension plans will happen as part of a comprehensive business plan aimed at making American Airlines a successful and profitable company that can grow and prosper for many years," Brundage said.

Read more here: http://www.star-telegram.com/2012/01/23/3681382/american-airlines-works-to-ease.html#storylink=cpy

Download Jeff Brundage Pension Letter QA 1-23-12 with this link.

-Andrea Ahles

American to write down value of its 757 fleet by $713 million

American Airlines said it will take a $713 million non-cash charge in its fourth quarter earnings results as it writes down the value of its Boeing 757 fleet.

"The company concluded the carrying value of Boeing 757 aircraft used in its domestic markets was no longer recoverable," said the filing made with the Securities and Exchange Commission on Monday. "Consequently, the 2011 results will include an impairment charge of $713 million to write these and certain related long-lived assets down to their estimated fair values."

As of September 30, American had 124 Boeing 757s with an average age of 17 years.

-Andrea Ahles

American asks court to keep another 5 planes

In bankruptcy filings made on Monday, American Airlines asked the bankruptcy court to keep another 5 planes, all MD-80s that were manufactured in 1989.

There are no cure amounts for four of the planes, the filings said. American proposed revising the terms of its lease on the fifth MD-80 but did not provide a cure amount.

On Friday, there is an "omnibus" bankruptcy hearing where several motions will be heard by the bankruptcy judge including whether or not American's parent company, AMR Corp., will be allowed to hire Rothschild Inc., McKinsey & Co., SkyWorks Capital LLC, Bain & Co., and Perella Weinberg Partners as advisors during its bankruptcy process.

-Andrea Ahles

Monday Midday Must-Reads

-Turbulence on an American Airlines flight from Brazil to Miami injured several flight crew members. According to the CBS affliate in Miami, the turbulence occured about 2 hours into the flight. “Seems like an air pocket,” recalled Gillas Correa, one of the 143 passengers aboard the flight. “Everything was fine and the next minute the plane just fell a huge drop.  I was watching the movie and heads just dropped out…Everybody was in a seatbelt or not everybody just moved up on their seats and some of them just smashed against the ceiling.”

-After seven years of greeting U.S. troops returning stateside for a little R&R, Dallas/Fort Worth Airport's "Welcome Home a Hero" program will come to an end in mid-March. On Friday, the Department of Defense announced that it was ending the military flights that come through DFW daily bringing troops home for their rest-and-relaxation breaks, consolidating operations through Atlanta instead. Here is NBC5's story on the end of the program.

-If you want your flight to be on-time, fly Alaska Airlines, says FlightStats.com which released its annual best on-time awards on Monday. And the best airport for on-time departures is Seattle-Tacoma International Airport, according to the website that tracks airline and airport performance. For a full list of winners, check out this USAToday piece.

Schnurman: Will Tulsa's efforts make a difference in keeping AMR maintenance base?

In a corporate bankruptcy, how much difference can a community make?

Tulsa, whose economy owes much to American Airlines, aims to find out. Early this month, more than 30 leaders launched a public campaign to keep American's maintenance base open and protect more than 6,500 jobs there.

Since American filed for Chapter 11 bankruptcy protection on Nov. 29, there's been much speculation about slashing jobs and closing facilities, especially in maintenance. Most rivals outsource much of that heavy work, often to offshore companies.

American executives are developing a reorganization plan and haven't indicated what's ahead. Tulsa wasn't willing to wait and react. And if this works, jobs saved in Tulsa could come at the expense of jobs in Fort Worth.

In front of TV cameras Jan. 3, a Tulsa union chief and the president of the chamber of commerce shared the same podium. Republicans and Democrats, mayors from several cities, leaders from the region and state, and congressional and Senate offices -- they all gathered in a gesture of unity and determination.

Tax breaks and other incentives? Check. Flexing political muscle in Washington? Count on it. Firing up the public? They'd throw a parade in front of American headquarters if it would help.

"I don't know if it'll matter," Tulsa union leader Sam Cirri said last week. "But I'll be damned if I'm going to sit on my hands and say, 'Whatever happens, happens.'"

Tulsa's enthusiasm is infectious, and it's a sharp contrast to the quiet, behind-the-scenes approach in Fort Worth.

This week, Mayor Betsy Price is scheduled to meet with American officials, a spokesman said, and she'll restate the city's commitment and offer to help. Bill Thornton of the Fort Worth Chamber of Commerce said there's been "considerable outreach" already, although he declined to give details.

When push comes to shove, does anyone doubt that Texas politicos will step up?

To read the full column, click here.

-Mitchell Schnurman

Read more here: http://www.star-telegram.com/2012/01/21/3676173/fighting-for-american-airlines.html#storylink=cpy

Lockheed official says F-35 problems fixable

A sneek peak at Sunday's Star-Telegram. Lockheed Martin exec Tom Burbage suggests DoD reports identifying problems and concens with the F-35 are overly pessimistic.

All those problems with the F-35 that have been reported of late? They're not that bad; they're being fixed. Just watch, they say.

"We're starting to see a lot of good stuff happening," Tom Burbage, Lockheed's co-executive vice president and general manager overseeing the F-35 program, said in an interview last week.

That view would seem at odds with recent Defense Department reports and officials' comments. An internal Pentagon report leaked last month cited numerous shortcomings in the testing performance of the three versions of the F-35, some key components and the design of the aircraft.

The program's top manager, Vice Adm. David Venlet, was frank about his concerns with the number and scale of problems in a published interview.

Without directly contradicting the reports or Venlet, Burbage downplayed the scale of the F-35 program's problems.

"We're in a test program. We're testing the most technologically advanced aircraft ever built," Burbage said. "There's going to be some problems along the way. That's why you test."

But then there's this admission that the F-35 can't meet all the combat acceleration requirements -- not top speed, just acceleration -- basically because of its size and heft.

Does any plane ever meet all the paper requirements, or is it that a lot of wishful thinking? Just asking.

- Bob Cox

 

Marine commandant cheers freedom for F-35B

Marine Commandant Gen. James Amos is very pleased with Secretary of Defense Leon Panetta's announcement that the F-35B is no longer on probation, although exactly what that word meant (bad dog!) in practical terms is still unclear.

The Marines issued a statement from Amos saying:

"I welcome the Secretary of Defense’s announcement removing the F-35B Lightning II from "probation" and granting it full status commensurate with the other two variants of the Joint Strike Fighter. I continue to be encouraged by the strong and steady progress that the F-35B team has made over the past year.

As the F-35B program continues to mature, I want to reconfirm my commitment to the Department of Defense’s leadership and to Congress that the introduction of the F-35B into our fleet training squadrons and combat units will be done responsibly based on the merits of the test program, subsequent satisfactory progress in the operational evaluation, and the integrity of the airframe design itself.

As the principal service chief responsible for the fielding and operational employment of the short take-off-and-vertical-landing (STOVL) F-35, I will continue to closely monitor the jet’s progress on a daily basis, as I have over the past 13 months.

The probation tag was former SecDef Robert Gates way of signalling displeasure with the B-model and, to a large extent, the F-35 program as well. In practical terms it meant that the Marines will only get to orfer fewer F-35Bs for the next couple of years than they would have liked, but then with the Pentagon's finances getting tighter that figures to happen anyway.

- Bob Cox

 

Now what Lockheed plane has an oxygen problem?

An interesting item in Friday's daily news release announcing Department of Defence contracts. Typically, contracts associated with a specific program say so, but not in this case.

Lockheed Martin Corp., Fort Worth, Texas, is being awarded a $7,024,566 firm-fixed-price contract for installation of a commercial sensor and associated hardware to measure the oxygen concentration and pressure within the oxygen system.  The result will be a real time display of O2 concentration and a warning if oxygen partial pressure drops below a threshold value.  The partial pressure of oxygen and hose pressure will also be data logged for use in post flight investigations.  The location of the performance is Marietta, Ga.  Work is expected to be completed by Aug. 31, 2012.  ASC/WWUK, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8611-08-C-2897 P000109).

Now unless I'm missing something, there's only one plane out there with an oxygen supply problem. The F-22 Raptor. It's built by Lockheed. In Marietta, Ga. A stealth plane. Maybe this is a stealth contract. The Air Force may not want to draw any more attention to a problem that may have killed one pilot (well, he couldn't turn on his emergency backup oxygen so the crash was really his fault) and that they seem unable to explain, let alone solve.

- Bob Cox

 

 

 

US Airways has AMR merger plan, Bloomberg reports

Starting on the day that American Airlines' parent company, AMR Corp., filed for bankruptcy, rumors have swirled that US Airways will try to buy the troubled airline.

Bloomberg News' latest piece about a possible US Airways-AMR tie up says that US Airways' executives are analyzing how to combine the two carriers to bolster a weak domestic route and improve revenues.

"President Scott Kirby is leading US Airways’ analysis of how to combine the airlines, said the people, who asked not to be identified because the matter is private. Any bid may still be close to a year away, because AMR now holds the exclusive right to file a reorganization plan, the people said.

American has pared its flight network to the point that some corporate travelers have gone elsewhere, leaving the money- losing carrier unable to support most of its hub airports, one person said. That deficiency could be solved by combining American, the third-largest U.S. airline, with No. 5 US Airways, the people said....

Traffic to American’s hubs would grow by funneling in travelers from US Airways, the person said. In turn, a stronger domestic system would feed into American’s routes across the Atlantic and to Latin America, said the person, who declined to give financial details because the numbers are preliminary," the article says.

US Airways chief executive Doug Parker has often said that consolidation in the industry is necessary. His carrier made unsuccessful bids for Delta Air Lines and United Airlines in the past few years.

-Andrea Ahles

Southwest says its AirTran subsidiary will stop serving six more cities on Aug. 12

Southwest Airlines is slowly taking cities out of AirTran Airways' network.

The Dallas-based carrier, which bought AirTran for $1.4 billion in May, announced Friday that AirTran would exit six cities on August 12. It will stop service to Allentown, Lexington, Harrisburg, Sarasota, Huntsville and White Plains on that date.

The carrier had previously announced it was pulling service from 10 airports where AirTran had flights. It ended service at Dallas/Fort Worth Airport in November and had planned pull-outs this spring.

"The airline industry continues to face many challenges, including significantly higher fuel costs," said Southwest chief commercial officer Bob Jordan. "We must do everything we can to operate efficiently and profitably, align service with Customer demand, and deliver the legendary Customer Service for which both airlines are known."

When Southwest bought AirTran, the Atlanta carrier served 69 cities. Southwest said 53 of those cities will convert to Southwest operations over time.

Here is the list of cities that AirTran has or will exit:

 

City	Date of exit
Dallas/Fort Worth Airport	Nov. 21, 2011
Asheville, N.C.	Jan. 7
Atlantic City, N.J.	Jan. 7
Moline, Ill.	Jan. 7
Newport News, Va.	Mar. 10
Knoxville, Tenn.	June
Miami, Fla.	June
Bloomington/Normal, Ill	June
Charleston, W.V.	June
Washington-Dulles	June
Allentown, Pa.	Aug. 12
Lexington, Ky.	Aug. 12
Sarasota, Fla.	Aug. 12
Harrisburg, Pa.	Aug. 12
Huntsville, Ala.	Aug. 12
White Plains, N.Y.	Aug. 12

-Andrea Ahles

APFA "outraged" that AMR didn't make its pension payment in full

The Association of Professional Flight Attendants is "outraged" that AMR failed to make its full $100 million payment to its pension plans due on January 15.

Here is the full statement from the APFA:

Laura Glading, President of the Association of Professional Flight Attendants (APFA), reacted to news today that American Airlines’ parent company failed to make its obligatory payment to employee pension plans this month. AMR Corp paid only a scant $6.5 million of the $100 million payment it was scheduled to make. The decision by AMR management threatens to undermine funding for the pension plans that cover over 130,000 American Airlines workers and retirees, including 16,000 active and 4000 retired Flight Attendants.

“I am outraged,” said Glading. “This is further evidence that Tom Horton and his team have their priorities upside down. For years, they awarded themselves millions in bonuses even while they destroyed the company we Flight Attendants worked so hard to build. Now, with a well-publicized $4 billion in cash on hand, they are forgoing their legal obligations to our pension plans. It seems they would rather spend the company’s cash on the lawyers and advisors that will help them try to scuttle our benefits packages. We’ve seen some changes at the top since the Chapter 11 filing, but there has been no change in direction whatsoever."

Although this week’s non-payment will not necessarily result in a freeze or termination of pension plans, it will certainly have an adverse affect on employee morale. At the outset of the bankruptcy AMR argued in court documents that the mere delay in benefit payments would “irreparably impair the Employees’ morale, dedication, confidence, and cooperation.”  The company also recognized that since the employees are the face of American Airlines, their support for the reorganization efforts is critical to its success.  Unfortunately, American’s words bear no resemblance to its actions and this decision will have precisely the results the Company claimed only weeks ago it wanted to avoid.

AMR Corp filed for Chapter 11 bankruptcy protection on November 29, 2011. The nine-member unsecured creditors’ committee includes the three major labor unions (APFA, Allied Pilots Association, and Transport Workers Union), the Pension Benefit Guaranty  Corporation, Hewlett-Packard Co., Boeing Capital Corp.,  M&T Bank, Wilmington Trust and Bank of New York Mellon.

-Andrea Ahles

TWU hires investment banking firm Gordian Group

The Transport Workers Union announced Thursday that it has hired Gordian Group, an investment banking firm, to help the union as AMR Corp. goes through the bankruptcy process.

The union, which represents 26,000 ground workers, mechanics and other workers at American Airlines and American Eagle, said Gordian has no institutional loyalties to any funds or AMR bondholders.

“We’ve said from day one that we’re going to fight like hell for our members,” said TWU International Union President James C. Little.  “That means having the best available talent in our corner, so we can level the playing field and advocate effectively for our members.”

The TWU also has a seat on the unsecured creditors committee. A meeting of creditors was held on Thursday in New York.

-Andrea Ahles

AMR makes only partial payment for its employee pension plans

American Airlines' parent company, AMR Corp., made only a partial payment in January to fund its employee pension plans, according to a federal agency.

The Fort Worth-based carrier contributed $6.5 million to its employee pension plans instead of making the $100 million payment due on January 15.

“The company has determined this is the appropriate course of action for the quarterly contribution amount due by Jan. 15 2012," said American spokesman Sean Collins. "This action allows the company to preserve cash.”

The Pension Benefit Guaranty Corp., the federal agency charged with protecting the pensions of private sector workers, said AMR's partial payment was troubling.

"This is a disturbing development, as the airline has more than $4 billion in cash," the PBGC said in a statement. "American's actions hurt the financial health of the pension plans, and undermine the retirement security of American's workers and retirees."

American has four traditional pension plans that cover almost 130,000 participants. When the carrier filed for bankruptcy on Nov. 29, the plans collectively had about $8.3 billion in assets to cover about $18.5 billion in benefits. The PBGC has previously estimated that about $1 billion in benefits could be lost if American were to end its plans.

-Andrea Ahles

Panetta to lift probation on STOVL F-35B

Breaking news from Bloomberg:

 Defense Secretary Leon Panetta  will lift a yearlong “probation” imposed on the most complex model
of Lockheed Martin’s Corp’s F-35 fighter jet, according to a U.S. official.
    Panetta will announce he is satisfied with the progress of the F-35B during a visit tomorrow to its test facility at Naval Air Station Patuxent River in Maryland, according to the official, who spoke on condition of anonymity in advance of the announcement.
    The B model is the most complex version of the fighter and is being watched as a bellwether for the $382 billion F-35 program, the Pentagon’s most costly. The Marine Corps plans to buy about 340 of the aircraft that can take off like a conventional fighter and land like a helicopter.
    Defense Secretary Robert Gates decided in January 2011 to put the Marine Corps jet on what was then envisioned to be a two-year “probation” to give Bethesda, Maryland-based Lockheed more time to demonstrate the fighter’s reliability.

-Bob Cox

Highlights from Southwest earnings call

Southwest executives fielded questions about passenger demand and the effect of its competitor, American Airlines, filing for bankruptcy, on a conference call with investors and Wall Street analysts this afternoon.

The Dallas-based carrier reported a $152 million fourth quarter profit on Thursday morning as its revenues increased to $4.1 billion

"We had an outstanding record revenue performance and it helped blunt the very significant rise in jet fuel prices," chief executive Gary Kelly said on the call.

Here are some of the topics that Kelly, chief financial officer Laura Wright and chief commercial officer Bob Jordan addressed.

On the employee letter Kelly sent out in December talking about cost issues: Kelly said, "It was the truth and it was really a reaction to the events across town but also a misunderstanding of whether it is an opportunity for Southwest or whether it presents more challenges. I was simply trying to address that. The fact is our pay rates are higher now than anybody else in the industry by quite some margin. We make that up by increased productivity so we need to sustain that and to the extent that we have become less productive in areas which has happened...We need to reenergize ourselves and to the extent we still have waste that hasn’t been wrung out of the company we want to attack that."

On whether Southwest may be interested in some of American Airlines' assets while the Fort Worth carrier is in bankruptcy: Kelly said, "I would fully admit and certainly wouldn’t want to be cute about this, a hub and spoke airline and with multiple aircraft...It is not obvious how that would fit for an airline like Southwest Airlines. What we would clearly do is we will pay close attention to anything that does become available whether it is a simple route or other assets. And we will be on our toes to move on those."

On how American's network overlap with Southwest's: "There is a lot of overlap in Dallas and a lot of overlap in Chicago even though it's not the same airports. We have a lot of overlap with them in California....There is plenty of overlap and there are plenty of opportunities to gain some share if they shrink," Kelly said. Wright added that there is a 35 percent network overlap between the two carriers.

On considering operating overnight flights: Jordan said the carrier is looking to expand its operating day with some later evening flights. "One of the things we can learn from AirTran...They did a fair amount of red-eye flying, some of that is pretty profitable... We are considering some of that with the combined schedules as we move forward. It’s nothing dramatic. We’re talking 10 to 15 flights, not 50 to 75."

On business travel demand: Kelly said, "Business travel looks very stable. I don’t see it going up or down in terms of the 4^th qtr performance. It does feel like we’re still lagging 2007, pre-recession levels with respect to business travel...But as we’ve been saying it’s a very healthy demand."

-Andrea Ahles

 

 

 

 

Leading Edge Fort Worth center gears up to paint Boeing's new 787 Dreamliner

Leading Edge Aviation Services’ new plant at Fort Worth’s Meacham Airport is gearing up to handle all painting of the new 787 Dreamliner airplanes that Boeing is building at its South Carolina plant, one of two factories that are producing the plane. The other one is in Everett, Wash. Here's the Star-Telegram's Dec. 18 print edition story about a South Carolina-built Dreamliner flying to Fort Worth on a "fit" test.

At one point last year, Leading Edge indicated it would be painting the South Carolina 787s in Amarillo. That was before last summer, when Leading Edge secured the Fort Worth facility.

Alicia Castle, a spokeswoman for the California-based Leading Edge, answered some questions by email about the Fort Worth center.

Q: Will the Fort Worth facility handle all of this painting?

A: Yes. Our Fort Worth facility, which specializes in luxury interiors, furnishings, custom design and paint, will be handling all of final paint and livery applications for the 787 contract.

Q: Why Fort Worth for this facility?

A: We chose FTW due to its skilled employment base, the proximity of the facility (central United States) and the fact that the facility has excellent infrastructure in place to support our core competencies, aircraft painting and VIP aircraft completions.

Q: How many employees does Leading Edge have here in Fort Worth? The Fort Worth Chamber of Commerce indicated over the summer that Leading Edge would have 150 employees at full production.

A: Currently, less than 50. When Boeing starts, we will increase to 100+.

Q: When does Leading Edge expect the first Dreamliner will arrive in Fort Worth for painting?

A: Late March 2012

Q: When does Leading Edge expect to get up to full production here in Fort Worth on the 787 job?

A: The Boeing production schedule is confidential, but we begin operations in late March 2012.

Q: Does Leading Edge have contracts in place at this point to do any other painting at the Fort Worth facility?

A: Yes, Leading Edge is currently painting wide body aircraft for United Airlines and has other major airlines under contract that may utilize the FTW facility. In addition, the Ft. Worth facility is a VIP aircraft paint and interior completions center.

Q: What kinds of employees is Leading Edge hiring locally?

A: Leading Edge is always looking for talented employees.  Leading Edge is hiring all skill levels from general aircraft painter, quality inspector, A&P mechanic, etc.

Q: How do people apply?

A: We accept applications through our website at www.leadingedgecorp.com or they can apply in person at the facility.

Applicants can apply in person at the Fort Worth and Amarillo faciities, Castle said. Fort Worth: 4601 N. Main St. Hanger 39 North, Fort Worth, 76106. (817) 750-0000. Amarillo: 10801 Baker St., Amarillo.(806) 335-2616.

 - Scott Nishimura

F-35 lands after dark

There's a first time for everything. Lockheed Martin said today that an F-35 stayed out after dark for the first time Wednesday before returning home to Edwards Air Force Base. 

With Lockheed test pilot Mark Ward at the controls, AF-6, an F-35A conventional takeoff and landing (CTOL) variant, launched at 5:05 p.m. PST and landed after sunset at 6:22 p.m. The mission consisted of a series of straight in runway approaches in twilight and darkness. 

The pilot also performed an evaluation of the F-35’s cockpit lighting which Ward called, “the best he’s ever seen.”  The testing will clear the way for night refueling and formation testing later this year. 

- Bob Cox

 

Schnurman: American leaders can't afford to be timid

For North Texas, it's almost unthinkable that American Airlines could fade away.

A reorganization, sure. But another carrier absorbing the Fort Worth giant or, even worse, a company breaking it into pieces and selling off the parts?

Those potential outcomes have been circulating after The Wall Street Journal first reported that Delta, US Airways and the investment firm TPG were weighing bids for the bankrupt airline.

Other suitors (or tire-kickers) are expected. And several Wall Street analysts predicted that American would not even emerge from Chapter 11 as an independent company.

A 20 percent probability at most, wrote Hunter Keay of Wolfe Trahan.

"I think there's almost no chance that American comes out as a stand-alone, reinvented airline," said Vicki Bryan, a bond analyst for Gimme Credit.

But Bill Swelbar, a research engineer at MIT's International Center for Air Transportation, said he couldn't imagine American going anywhere.

"American has multiple bankruptcies to learn from," he said. "If management loses control of the process, shame on them."

Read more here: http://www.star-telegram.com/2012/01/18/3670076/american-airlines-leaders-cant.html#storylink=cpy

-Mitchell Schnurman

Link to provide Pakistan with latest F-16 simulator technology

L-3 Link Simulation & Training in Arlington said that it has been awarded a contract from the U.S. Air Force to upgrade two Pakistan Air Force  F-16C Block 52 aircrew trainiong simulators with the company’s new SimuSphere HD-9™ visual display. It's the first contract to install SimuSphere HD-9 on training devices for a foreign nation.

L-3 Link’s SimuSphere HD-9 will provide Pakistani F-16 pilots with an increased level of tactical training realism. High-definition databases, image generators and theSimuSphere HD-9 visual display will combine to create a highly realistic training environment over a geo-specific visual database of Pakistan.

The two F-16C Block 52 simulators are scheduled for delivery in 2013 and will be installed and networked at Shahbaz Air Base.

L-3 Link is the leading provider of F-16 simulators worldwide. Since the 1970s, the company has delivered approximately 140 F-16 training devices in support of the U.S. Air Force, Air National Guard and 10 foreign nations.

- Bob Cox

Surveillance and booking photo from gun incident at DFW Airport

Dallas/Fort Worth Airport just released a photo of Judith Kenney, the Little Elm attorney, who made it through security with a handgun in her carry on.

The first photo is a surveillance still frame of the 65-year-old as she walked through the D-26 checkpoint on Wednesday. This was the photo that the TSA and airport police used to locate her, said DFW Airport spokesman David Magana.

The second photo is her booking photo. Kenney has been charged with Places Weapons Prohibited, a class 3 felony, as a result of the incident.

-Andrea Ahles

More cracks found in A380 wings

Airbus now says it has found cracks in wing components of at least two more of its A380 jumbo jets, according to both Reuters and the Wall Street Journal (subscription). From Reuters:

The announcement comes two weeks after tiny cracks were first reported in the wings of the 525-seat, double-decker aircraft, which entered service just over four years ago.

"Airbus confirms that some additional cracks have been found on a limited number of non-critical brackets ... inside the wings of some A380s," the planemaker said in a statement.

"Airbus emphasizes that these cracks do not affect the safe operation of the aircraft."

The European Aviation Safety Authority (EASA) confirmed it would issue a bulletin Friday mandating precautionary checks.

The latest cracking problem was discovered in two aircraft during a routine two-year inspection, an Airbus spokeswoman said. She declined to name the operators of the aircraft.

EADS subsidiary Airbus has so far delivered 68 superjumbos, starting with Singapore Airlines (SIAL.SI) which took the first aircraft in December 2007, followed by Dubai's Emirates and Qantas Airways (QAN.AX) of Australia.

- Bob Cox

 

APFA to hold run-off for national officers

In the midst of running around chasing the "passenger with a gun" story yesterday, I didn't have time to post this bit of news from the Association of Professional Flight Attendants.

On Wednesday, the American Airlines flight attendants union announced that there would be a run-off election for their national officers as no candidate received a majority vote.

However, based on the results of the first vote count, it appears that current APFA president Laura Glading may face an uphill battle to get reelected.

In the race for APFA president, Liz Geiss received 2,769 votes, Laura Glading received 2,149 votes and Rock Salomon received 1,882 votes. Geiss and Glading will be on the run-off ballot.

There will also be run-offs to elect vice president, secretary and treasurer. The run-off ballots will be sent out to flight attendants next week and votes must be cast by February 24, the union said.

Here is a break down of the primary results in the other national officer elections:

-For Vice President, Marcus Gluth received 2,886 votes, Anne Loew received 2,125 votes and Mike Baust received 1,753 votes. Gluth and Loew will be on the run-off ballot.

-For Secretary, Vicki Dale received 2,730 votes, Jeff Pharr received 2,243 votes and Tim Todd received 1,784 votes. Dale and Pharr are the candidates in the run-off.

-For Treasurer, Greg Gunter received 3,053 votes, Jennifer Brissette received 1,991 votes and Jamie Gillard received 1,719 votes. Gunter and Brissette will be on the run-off ballot.

-Andrea Ahles

Southwest posts $152 million fourth quarter profit

Southwest Airlines posted a $152 million fourth quarter profit despite a significant jump in jet fuel prices.

The Dallas-based carrier said its fourth quarter earnings increased 16 percent compared to the same period in 2010. Revenues, which include AirTran Airways results, jumped 31.9 percent to $4.1 billion.

Southwest bought AirTran for $1.4 billion in May. However, Southwest chief executive Gary Kelly said, "it will take several years to fully integrate AirTran into Southwest Airlines." He added that the company expects to get its single operating certificate from the Federal Aviation Administration during this quarter.

The carrier also posted its 39th consecutive annual profit, reporting a net income of $178 million in 2011, down 61 percent from 2010. Revenues grew 29.4 percent to $15.6 billion this year.

Higher fuel costs were to blame for the drop in annual profit. Southwest said it paid $3.18 per gallon for fuel in 2011, up 34.7 percent from the prior year.

Fourth quarter results included $86 million in positive special items. Without those accounting items, Southwest's earnings were $66 million, or 9 cents per share, beating Wall Street analysts estimates of 8 cents per share. Analysts do not include one-time accounting items.

Kelly was upbeat about the carrier's performance in the new year.

"Based on current traffic and booking trends, we expect another strong passenger revenue performance in the first quarter of 2012," he said.

Southwest executives will hold a conference call with analysts and investors at 11:30 a.m. CDT to discuss its earnings results.

-Andrea Ahles

 

American wants to keep another 5 planes

In a bankruptcy filing made on Wednesday evening, American Airlines asked the court to keep another 5 planes.

The carrier wants to keep four Boeing 737-800s and one 777-200, all manufactured in 2000. American did not list any "cure" amount in the filing to bring debt payments on the planes up to date.

-Andrea Ahles

Euless machine shop acquires Wichita firm

Gridiron Capital, a Connecticut private equity company, is amassing a portfolio of small machining companies that produce parts for the aerospace industry.

H.M. Dunn Co. of Euless, a longtime aerospace industry supplier acquired last year by Gridiron, has now acquired Nex-Tech Aerospace, a Wichita, Kan. machine shop, the Wichita Eagle reports.

“We thought it would be a great fit,” Gridiron managing director Geoffrey Spillane told the Eagle about the acquisition of Nex-Tech by H.M. Dunn. Dunn and Nex-Tech, formerly Thayer Aerospace, both manufacture "precision machine components and assemblies and kits for the aerospace industry. We intend, frankly, to grow both businesses.”

Gridiron, in a press release, said Nex-Tech's Thomas Gibbons will be chief executive and head of the combined company and partner with H.M. Dunn President Scott Pierce as the top management team.

Gridiron took a major ownership stake in H.M. Dunn in August, with longtime owner James Fultz retaining a share of the company.

Both companies build a wide variety of components for military and commercial aircraft, with customers such as Spirit Aerospace, Boeing, Lockheed Martin and Bell Helicopter, among others.

- Bob Cox