Sky Talk

Picking up steam: speculation on airline spinoffs

TheStreet.com reports that the idea of spinoffs of non-core assets at airlines is picking up steam, with United Airlines' CEO saying last week that it plans to examine "unlocking the value" of business units such as the carrier's maintenance unit and frequent flier program. Additionally, an analyst said Northwest Airlines may also do the same. A major investor in American Airlines set off the most recent round of industry speculation on spinoffs, when it sent a letter to AA asking that management consider spinning off AAdvantage.

-- Scott

(AP photo: A United manager at San Francisco maintenance base)

Shareholder pushing AA to sell frequent flier program

FL Group, an Icelandic investment firm that is the third largest shareholder of AMR Corp., American's parent company, issued an open letter to the board this morning urging them to "immediately consider strategic alternatives that would significantly increase shareholder value."

The group complains that AMR shares have fallen almost 50 percent since January 2007, costing shareholders close to $5 billion.

FL Group is recommending that American sell off its American AAdvantage frequent flier program, which could raise up to $4 billion, according to the firm.

Here's what the firm's CEO, Hannes Smarason, had to say:

"FL Group has significant experience in the airline sector and strongly believes that there are strategic alternatives which should be considered to increase shareholder value.  After taking a close look at the company over an extended period of time, our suggestions include monetizing assets, such as AAdvantage, that can be used to reduce debt or return capital to shareholders.  We believe that there is no time to lose given the recent developments in the market place."

FL Group holds 8.25 percent of AMR's shares.

The New York Times notes other airlines, including United, are considering spinning off their frequent flier programs.

- Trebor

AA cuts number of miles needed for short-haul flights

American Airlines has temporarily slashed the number of AAdvantage miles it takes to get a short haul flight. For travel completed through Feb. 28, it'll cost you 15,000 miles for one of the short hauls, down from 25,000 miles, AA says.

Eligible routes out of D/FW Airport include St. Louis, Atlanta, Denver, and Vail, Colo.

According to USA Today's Today in the Sky blog, United Airlines also has cut the number of miles it takes to get a short-haul ticket.

-- Scott

Oneworld alliance adds Hong Kong's Dragonair

The oneworld air alliance, led by American Airlines and British Airways, said Hong Kong's Dragonair will join the alliance Nov. 1. That will allow American AAdvantage customers to earn and redeem miles on Dragonair.

AA doesn't fly to Hong Kong, but serves it through Cathay Pacific, another oneworld partner. Dragonair's addition will add several Chinese cities to the oneworld map: Chongqing, Changsha, Chengdu, Fuzhou, Haikou, Kunming, Guilin, Ningbo, Nanjing, Shenyang, Sanya, and Wuhan.

Dragonair (right, at a 2005 ceremony in China) will also add Kota Kinabulu, Malaysia; Phnom Penh, Cambodia; and Phuket, Thailand, to the "alliance map," oneworld said.

-- Scott

AA Advantage offers discounts on short hop redemptions

AAdvantage, for a limited time, is cutting the number of miles it will cost you to get a free ticket on short hop flights of 750 or fewer miles. Some eligible routes out of D/FW: Denver and St. Louis.

-- Scott

Miles buzz

Frequent fliers have been buzzing about this bit of news from American about its Aadvantage program. Some of the comments from the road warriors at FlyerTalk:

It's a great way to help ensure your infrequent flyers become even more infrequent.
Obviously they want to prod people into desired behaviors to comply with said policy.
But if people think the policy is unfair, they won't be inclined to do that.

The sky is hardly falling down; it is hardly difficult to keep an account active ( 10 mins on opinion place every year would do it ) ; 18 months of inactivity hardly makes someone a Frequent Flyer does it?

Perhaps someone else has already noted this, but I just got my new PLT card a few days ago, and I realized that if I stopped flying/spending/redeeming now, my status would outlast my miles!