Tuesday, July 29, 2008

American Airlines avoids flight attendant layoffs
Tuesday, July 29, 2008 - 7:20 PM CDT
Dallas Business Journal

American Airlines Inc. will not need to lay off any flight attendants after enough employees agreed to take voluntary leaves of absence or early retirement offers, a spokeswoman for the airline said Tuesday.

Fort Worth-based AMR Corp., (NYSE: AMR) the parent company of American Airlines, previously announced plans to eliminate 900 flight attendant positions in response to growing capacity reductions.

About 300 flight attendants accepted what the airline is calling a "bridge to retirement program," while the remaining staff reductions will be handled through voluntary leaves of absence.
AirTran Taps the Brakes on Growth
07/29/08 - 03:26 PM EDT
by Ted Reed

After growing at a 20% rate during the past five years, AirTran is stepping on the brakes.

The carrier now says capacity will decline by 7% to 8% during the last four months of 2008 and by 4% to 8% during 2009, as it moves to sell aircraft and to defer 22 deliveries. "Our priorities have clearly shifted," said CEO Bob Fornaro, on an earnings conference call Tuesday. "Growth is far down on the list of things we are interested in. Number one is maintaining liquidity and ultimately returning to profitability."

AirTran's planning reflects the broad impact of the airline industry's effort to reduce capacity. Until recently, industry leaders like Gerard Arpey, CEO of AMR, have called for capacity reductions but had trouble convincing fast-growth, low-cost carriers to seriously commit. Now, the industry is expected to reduce capacity by 10% in the fourth quarter.

Ironically, the AirTran cuts come as the cost of fuel is falling. Oil traded Tuesday below $122 a barrel, continuing its decline from a record high above $147 earlier this month.

AirTran reported a disappointing second quarter. Revenue per available seat mile, or RASM, grew at just 0.1%, the lowest rate among major airlines. The carrier reported a net loss of $13.5 million, or 12 cents a share. Excluding special items, including a hedging gain equivalent to 22 cents a share, the loss was 29 cents a share. Analysts surveyed by Thomson Reuters had estimated a loss of 25 cents.

"These results are unacceptable and we are taking numerous steps to adjust," said CFO Arne Haak, on the company's earnings conference call. He said slow RASM growth followed a 12.3% second-quarter capacity increase, by far the highest in the industry, and a shift in consumer behavior to buying less-expensive tickets. "The decision to continue growth through the summer was made early this year, with fuel at $100," Haak said.

Despite disappointing results, AirTran shares were trading up 51 cents, or 19%, at $3.21 Tuesday afternoon. The gain reflected falling oil prices, improved liquidity and possibly the impression that the carrier had beaten estimates.

At the end of June, AirTran had unrestricted cash and investment balance of $445.9 million, a record quarterly high. Additionally, it negotiated an extension with its primary credit card processor through 2009 and also received a commitment for a letter of credit facility up to $150 million, which could be applied to a credit card holdback. The deals addressed two problems: "Previously, we had no provisions for a holdback and the agreement was up for renewal at the end of the year," Haak said.
American Airlines, El Al announce cooperation deal
Tuesday July 29, 3:45 pm ET
American Airlines, El Al to sell seats on each other's flights

NEW YORK (AP) -- El Al, Israel's national airline, and American Airlines said Tuesday they will begin selling tickets on each other's connecting flights beginning in September.
The agreement replaces a code-share deal that El Al had with Delta Air Lines Inc. until late last year, when Delta began its own direct flights from the United States to Tel Aviv.

The agreement with American will begin Sept. 2.

American will sell tickets on El Al flights from the U.S. to Tel Aviv as if they were American jets. El Al will sell seats -- or place its "code" on tickets -- on some American domestic flights from gateway cities reached by El Al flights.

Airlines use code-share agreements to expand their network without adding planes or employees. Customers of one airline typically earn miles for the part of their trip flown on the other's plane.

El Al Chairman Israel Borovich called the deal the most comprehensive code-share agreement between his airline and a foreign carrier.
American, a unit of Fort Worth, Texas-based AMR Corp., is the largest U.S. carrier.

Monday, July 28, 2008

American Airlines moving work out of Fort Worth base

11:17 PM CDT on Monday, July 28, 2008
By TERRY MAXON / The Dallas Morning News


American Airlines Inc. is moving maintenance support for its Boeing 777 aircraft from its Alliance Airport base in Fort Worth to its Tulsa, Okla., base, the airline confirmed Monday.
At the same time, American is sending additional work on the Boeing 767 to Alliance, reducing the impact on the Fort Worth facility.

An airline spokesman said it will be several weeks before the carrier can say how many job cuts or layoffs may be needed at Alliance, which has about 1,900 workers represented by the Transport Workers Union, as well as 175 management and specialist employees and 30 clerical workers.

The changes are part of American's restructuring as it prepares to cut its domestic capacity 11 percent to 12 percent, resulting in an 8 percent cut in overall flying capacity (including international service) by the fourth quarter.

American's executives have said overall employment will be cut in line with the 8 percent capacity reduction.

Maintenance and engineering employees learned of the looming changes Friday in a letter from Fred Cleveland, vice president of base maintenance.

American spokesman John Hotard said Monday that the airline won't know how many jobs may be cut at its three maintenance bases at Alliance, Tulsa and Kansas City, Mo., until sometime in August.

The Kansas City base could be in the biggest peril. It was acquired when American bought Trans World Airlines Inc. in 2001. None of the reallocated work thus far has gone to Kansas City.

Among the changes in the works:
•Boeing 777 maintenance checks will move from Alliance to Tulsa this fall. "The B777 will be a good fit, as the [Tulsa] base has the capacity for wide-body aircraft and a workforce that has wide-body experience," Mr. Cleveland wrote.
•Alliance, which now does the Boeing 777 work, will take on additional Boeing 767 duties. Its repair line will be upgraded to do maintenance checks as well, Mr. Cleveland's letter stated.
•American will combine the maintenance lines for its own McDonnell Douglas MD-80 jets and that for major customer Allegiant Air at the Tulsa base.
American plans to park 30 of its 300 MD-80 aircraft by year's end, with more expected to leave the fleet in 2009 as American takes delivery of 33 new fuel-efficient Boeing 737-800 airplanes.

Tulsa, which has been doing work on American's Airbus A300 fleet, will lose that job over the next 17 months as American grounds all 34 of its A300 jets, including 10 in 2008.
Kansas City is the smallest of the three bases and is home for the Boeing 767-200 fleet.

American may lay off 900 flight attendants

UPDATED JULY 30, 2008. 368 flight attendants took the VBR (bridge to retirement) and many others took short and long term leaves so NO FURLOUGHS FOR FLIGHT ATTENDANTS AT AMERICAN AIRLINES. ed.

American Airlines Inc. has told its flight attendants' union it MAY furlough 900 flight attendants beginning Aug 31, 2008.

The Association of Professional Flight Attendants said in a hotline message to its 19,000 members that the airline delivered a Worker Adjustment and Retraining Notification Act, or WARN, letter informing them of the possible layoffs. Texas' WARN ruling requires employers to give employees a 60-day advance notice of significant layoffs.

The letter said the 900 flight attendants with the least experience would be subject to furlough. (the former TWA flight attendants)

American Chief Executive Gerard Arpey in May said the Fort Worth-based airline would cut thousands of jobs as it reduces its capacity by 11 to 12 percent by the fourth quarter. Last week, American said it would significantly reduce its management and support jobs by September.

The flight attendants union says American has agreed to some provisions for early retirements, voluntary leaves of absence and "partnership flying" in which two flight attendants can share the same job.

The "voluntary bridge to retirement" or VBR, is limited to flight attendants not currently on furlough, who are at least 50 years old and with at least 15 years' seniority as of Aug. 31, the union says. Attendants would get a $15,000 severance payment and some limited medical and travel pass benefits.

The one-time "bridge to retirement" will be awarded first, followed by leaves at bases with an overage. Where overages then still exist, partnerships will be awarded. After these three voluntary provisions are exhausted, and should any overage still exist, the company will then determine how many of the remaining 900 flight attendants are ultimately to be furloughed.

Web sites: http://www.aa.com/, ww.apfa.org

Monday, July 21, 2008

Here come more cuts as these fine people lose their jobs...half of the workforce! Look for Midwest to disappear as well as Frontier. My bet is jetBlue and Frontier hook up. Same aircraft, same in-flight television...we shall see...the landscape will change as never seen before in the next year. I told you so!

Midwest Airlines to cut half of workforces with flight reductions and grounding all MD-80's
Monday, July 21, 2008 - 9:40 AM CDT Modified: Monday, July 21, 2008 - 9:41 AM
The Business Journal of Milwaukee

Midwest Airlines announced Sunday its new flight schedule beginning Sept. 8, slicing 11 cities to cut service back to 32 destinations while expanding its ticketing partnership with Northwest Airlines Corp.

Oak Creek-based Midwest Airlines will eliminate service to three airports: Ft. Lauderdale, Fla.; Ft. Myers, Fla.; and San Diego. Service to two West Coast destinations -- Los Angeles and Seattle/Tacoma -- will now be offered via Kansas City year-round, in the same way the airline currently offers service to San Francisco, but travelers flying from Milwaukee to those two cities will have one stop in Kansas City, as opposed to the non-stop flights now offered.

Long-haul flights from Milwaukee to West Coast cities are affected by the airline’s decision to ground its MD-80 aircraft, which have longer range than its Boeing 717s but are also less fuel-efficient. The airline is restructuring its routes, cutting back service and eliminating about 1,200 jobs -- about 40 percent of its work force -- because of skyrocketing fuel costs.

Service to Orlando, Fla., will now be offered seasonally during peak travel months. This season, nonstop Milwaukee-Orlando service will commence Oct. 21 and end April 30, 2009. As Midwest transitions to seasonal Orlando service, it will suspend service to that city from Sept. 8 through Oct. 20. Nonstop service between Kansas City and Orlando will be discontinued, but Kansas City-Orlando service will continue to be available via Milwaukee.

Midwest is also expanding its codeshare agreement with Eagan, Minn.-based Northwest Airlines (NYSE: NWA), adding more than 100 new city pairs to the program. Codeshare flights are essentially flights offered by an airline on a partner airline’s planes.

“We will remain true to our mission of serving major business destinations with more nonstop flights from Milwaukee than any other airline,” said Timothy Hoeksema, chairman and chief executive officer. “From Kansas City, we will continue to serve as an important resource for the business community, with flights to key East and West Coast cities. While there will be adjustments to frequency in some of these markets, we will continue to offer convenient service and the unparalleled customer service our passengers expect from us.”

The airline will also discontinue service to eight airports currently served by its Midwest Connect regional jet service: Baltimore; Hartford, Conn.; Louisville, Ky.; Muskegon, Mich.; Raleigh/Durham, N.C.; St. Louis; San Antonio; and Wausau/Stevens Point. Additionally, it will discontinue its nonstop Kansas City-Madison route, but will continue to offer the service via Milwaukee.

The new schedule, which is posted at http://www.midwestairlines.com, also includes frequency and timing adjustments on various routes.

Sunday, July 20, 2008

Fasten Your seatbelts...here we go again! Replacement new aircraft need less repairs...so hang in there, my colleagues. Let's hope we all land safely.

American Airlines to cut 1,500 jobs in maintenance
Friday July 18, 6:59 pm ET By David Koenig, AP Business Writer

American Airlines to cutting 1,500 maintenance jobs around US as it reduces aircraft fleet

DALLAS (AP) -- American Airlines will cut 1,500 jobs in its maintenance division as it reduces its fleet of aircraft.

The nation's largest airline told employees of the cuts in memos this week.

American did not break down the cuts by location. Tami McLallen, a spokeswoman for the airline, said Friday that those decisions had not yet been made.

The airline has maintenance hubs in Kansas City, Tulsa, Okla., and Fort Worth, Texas, plus many smaller bases around the country. Besides maintaining American's jets, workers at the hubs also work on jets brought in by other carriers.

American has about 14,000 employees in its maintenance division, including management and support staff, and 13,000 of them are represented by the Transport Workers Union, McLallen said.

The cuts include 1,300 mechanics and 200 management and support staff, she said.
The Fort Worth-based airline, part of AMR Corp., announced two weeks ago it would shed 8 percent of its work force -- about 6,800 jobs -- to cope with financial distress brought on by record fuel costs and a weakening economy.

The company has publicly identified only a portion of those cuts. It has said it will eliminate 900 flight attendant jobs and 200 pilot positions. The company is offering buyouts to senior employees to reduce the need for layoffs.

Chief Financial Officer Tom Horton hinted at the latest cuts when he said this week that American's maintenance organization was built for a much bigger airline than the one that will emerge after announced reductions in capacity.

American plans to cut its U.S. flying by up to 12 percent after the busy summer travel season ends.

On Wednesday, American announced it would speed up the retirement of its 34 Airbus A300 aircraft by the end of next year instead of waiting until 2012. American and its feeder carrier, American Eagle, will ground 103 planes this year.

AMR reported Wednesday that it lost $1.45 billion in the April-to-June quarter, most of it due to writing down the value of aircraft. Excluding those charges, the loss was $284 million.
AMR shares rose 22 cents, or 3.2 percent, to $7.13 in Friday trading.

Wednesday, July 16, 2008

American Airlines' owner swings to big loss in 2Q
Wednesday July 16, 11:41 am
ET By David Koenig, AP Business Writer

AMR, parent of American Airlines, swings to big second-quarter loss on fuel costs, charges
DALLAS (AP) -- The parent of American Airlines swung to a big loss in the second quarter as high fuel prices swamped an increase in revenue and led the nation's largest carrier to write down the value of its jets.

Still, the results reported Wednesday were not as bad as Wall Street had feared.
Aided by a sharp drop in oil prices, airline stocks surged. Shares of AMR Corp. jumped $1, or 22.7 percent, to $5.41 in morning trading just a day after hitting a 52-week low of $4.
AMR said that for the three months ending June 30, it lost $1.45 billion, or $5.77 per share, compared to a profit of $317 million, or $1.08 per share, a year ago.

Excluding special charges to write down the value of its fleet, AMR said it would have lost $284 million, or $1.13 per share.

Analysts, who typically exclude charges from their forecasts, expected AMR to lose $1.40 per share, according to a survey by Thomson Financial.

Revenue rose 5.1 percent, to $6.18 billion. Analysts expected $6.14 billion.
Fuel costs spiked 47.4 percent, to $2.42 billion -- an increase of about $780 million from a year ago.

A gallon of jet fuel went from $2.09 a year ago to $3.19, and would have been even higher if the company hadn't bought some of its fuel in advance at lower prices. AMR expects to pay $3.81 per gallon in the third quarter.

Chairman and Chief Executive Gerard Arpey called the second-quarter results disappointing, but he said the Fort Worth-based company was taking steps to manage through a tough stretch.
AMR, which also owns the American Eagle airline, is cutting about 6,800 jobs and reducing its U.S. flying sharply to bring down costs while raising fares and special fees to boost revenue. Analysts, however, expect the company to keep losing money at least through 2010.

"Our company continues to be severely challenged by the fuel crisis that has afflicted our entire industry, and we expect these difficulties to continue for the foreseeable future," Arpey said in a statement.

Arpey said the company would do whatever it takes -- including cutting capacity, raising revenue and changing its fleet -- to turn things around.

The company announced Wednesday that it would speed up the retirement of its 34 Airbus A300 aircraft by the end of next year instead of the original plan, which stretched through 2012. In all, American and Eagle will ground 103 planes this year.

Over the next three years, American is replacing some of its gas-guzzling MD-80 jets with 70 Boeing 737s, which get better mileage.

AMR also said Wednesday that it has put on hold its plan to sell or spin off American Eagle until conditions improve in the airline industry.

A sale could boost AMR's cash balance, which ended the quarter at more than $5 billion in unrestricted cash and short-term investments. In the quarter, AMR raised $720 million by mortgaging some planes and selling others, then leasing them back. Total debt fell to $15.2 billion, down from $17.3 billion a year ago.

Ray Neidl, an analyst with Calyon Securities, said the quarterly results were "a little better then expected" but the situation "remains dire."

American will be happy to turn the page on the second quarter, which began with a costly grounding of its entire fleet of 300 MD-80s because some failed inspections of the electrical wiring. The March-through-June period ended with AMR taking a $1.1 billion non-cash charge to write down the value of planes and $55 million for severance expenses.

During the quarter, American became the first major U.S. carrier to impose a fee for checking even a single bag, and it raised a variety of other special charges on passengers.
After the peak summer travel season ends, American expects to cut its U.S. capacity 11 percent to 12 percent compared with late 2007. The company said further reductions are expected next year.
July 16, 2008, 11:16 am
What Southwest Airlines Could Teach Delta and American
Posted by Heidi N. Moore

There is an interesting dichotomy at play in the airline industry: some airlines are actually profiting from rising oil prices.

Consider Delta Air Lines’ earnings today. The Atlanta airline, which has agreed to combine with Northwest Airlines, announced a $1.04 billion second-quarter net loss, partly because of rising fuel costs. But it could have been far worse. Delta actually earned a tidy bundle on the rising price of oil–more, in fact, than it counted in earnings this quarter.

Delta, with the help of its Wall Street investment bankers, created hedges to protect its business against rising oil prices. But as the WSJ reported today, “Delta hedged 49% of its fuel consumption and realized about $313 million in gains.” Delta’s earnings this quarter–excluding write-downs–were only $137 million.

American Airlines wasn’t as lucky, as its hedges missed the mark by a long shot. In June AMR revealed it had hedges on about 33% of fuel consumption. Taken in aggregate, it bet that oil prices wouldn’t rise above $78 a barrel this year. Oil today is at around $136 a barrel.

On the other side of the coin, consider Southwest Airlines. It has about $5 billion of fuel hedges, or about half of its market cap. Morgan Stanley analyst William Greene Tuesday went as far as to call Southwest an “oil play,” and complained that airlines’ fuel hedges cover a multitude of sins and may be an excuse for the airline to avoid cutting capacity. Greene wrote: “Considering that [Southwest’s] management recently suggested it may revisit its capacity plans and potentially raise growth suggests that management does not view its fuel hedge as a temporary comparative advantage but rather as a durable competitive advantage.

Not addressing the company’s economic challenges today may lead to a more difficult adjustment in the future.”The question, as always, is whether capacity cuts are what the industry needs. Greene believes they are. Still, late last week he presented several reasons why airlines would want to avoid any extensive cuts in capacity and “chase oil” instead.

In his words:
(1) The network effect of a hub-and-spoke model deteriorates as capacity is cut

(2) Labor contracts, fleet planning, and aircraft/facility financing make large capacity cuts difficult to reverse in the short-term

(3) An habitual (if currently muted) focus on maintaining and gaining market share

(4) An inability to predict competitive responses

(5) Lack of visibility in airline revenue trends

(6) Uncertainty surrounding oil prices, a pullback could quickly make many routes profitable

Employees who made significant concessions in union negotiations are going to be watching that bottom line very carefully. Especially the pilots at Delta and Northwest. As Delta noted today, “Pilots at both companies will receive pay raises and an equity stake in the combined company.” That money has to come from somewhere.

Monday, July 14, 2008

An American Airlines Hostess in 1967 (Getty photos)

The Way It USED to be!

When People Dressed For The Flying!

A Shame The Way People Dress At The Airport
And On The Aircraft!
The First Class Cabin When First Class was First Class!

The public wanted cheap seats (hence the flip-flops and T-shirt dress in First Class...when First Class WAS First Class) and airline management and the unions got greedy. Now you have an airline system falling flat on its ass. You cannot have it both ways. Decide what kind of airline you wish to be and set a business model. Changing the way you do business on a daily basis confuses everyone!

People hated airplane food; the butt of jokes...now they wished they'd have it back. Go figure.


Yearning for the Glamorous Golden Age of Flying
July 15, 2008

'Boeing Boeing,' JetBlue Indulge In Nostalgia'Boeing Boeing," a current hit on Broadway, is a revival of a 1960s farce about a bachelor in Paris who juggles three girlfriends, all dazzling, miniskirted stewardesses, by relying on the accuracy of airline timetables to schedule trysts. "My fiancées wheel about the earth so precisely as to be almost poetic," boasts the cad "Bernard."

Audiences in New York and London have found the proposition hysterical. Of course even in the early days of jet travel, airline flights run into delays and cancellations and schedules get discombobulated. Hilarity ensues.

The production, which won two Tony awards this year, channels a feeling many travelers share these days -- nostalgia for the good ol' days when flying was an uncrowded, enjoyable, adventurous dress-up luxury. You hear it often from longtime road warriors who hate the unpredictable flying-bus travel of today, especially in summer, when the U.S. air-travel system bogs down with long lines, late flights, missed connections and gruff service. Move along, shut up and pay your fees, right?

Nostalgia for the glam days of air-travel seems to be growing. JetBlue Airways Corp., for example, has launched an advertising campaign touting "Happy Jetting" that uses '60s style type in its print ads to give it a retro feel, trying to recall not only JetBlue's early days before it ran smack into long delays and stranded passengers, but also to the fond feelings people once had for air travel.

Can we ever go back to the fun traveling days of the 1960s and 1970s? What do you miss most about those bygone days? "I don't think people have let go of looking for every aspect of travel to be experiential," said Fiona Morrison, JetBlue's director of brand management and advertising.

There also have been various calls to rethink deregulation of the airline industry as it enters another tumultuous recession because of high fuel costs. Removing government controls on airline schedules and prices ignited tremendous growth in air travel, boosting the national economy and changing our lifestyles by making air travel cheap and available to the masses. But it also has meant instability for airlines, poorer service for many travelers and congestion in the skies, on runways and in terminals.

Robert Crandall, the now-retired chief of AMR Corp.'s American Airlines, recently called for re-regulating some aspects of the business, such as government playing a greater role in airline schedules to curb devastating delays.

"The idea of allowing airlines to schedule more flights than an airport can handle is unacceptable stupidity," Mr. Crandall said in an interview. "We can't have planes sitting for hours and spilling fuel out the tailpipe."

Joan Marcus
A flight from the mid-1960s.
The nation needs to accelerate deployment of a satellite-based navigation system as well, he said, because it will boost capacity, speed up air travel, reduce fuel use and pollution, and improve airline finances.

Of course, the good ol' days weren't as good as we probably remember them today -- flying was expensive and sometimes unreliable even then. Today's jets are more dependable mechanically and fly faster and higher in smoother air. Flying is much safer today than it was even 20 years ago, and airline schedules offer much more flexibility to consumers than they did in the 1960s and 1970s.

The trade-off for low ticket prices and ample air service is that airline seats are squished together, terminals are chock-a-block, passengers are sorted through connecting hub airports, more luggage gets lost, and delays have become rampant.

Few people in aviation, including Mr. Crandall, think we can ever go back to the days when half of the seats on jets were empty, offering comfort to fliers, and airports and airlines operated far below peak capacity. The reality of the airline world is that many travelers -- not all, but certainly most -- buy based on low prices and schedule convenience. They won't pay more for the promise of extra legroom and onboard meals.

"People regard the airline seat as a commodity," Mr. Crandall said.
JetBlue took off eight years ago trying to differentiate itself with some frills as well as cheap ticket prices, offering leather seats, onboard satellite television, friendly flight attendants and snacks instead of peanuts.

"When we launched, we were harking back to the glory days when it was exciting to travel," says Ms. Morrison. The "Happy Jetting" campaign is an attempt to recapture the airlines early days instead of the recent history of planes stranded in snowstorms and long delays.

The cast of the Broadway show 'Boeing Boeing.'
"Boeing Boeing" harks back much further to a day when airlines also sold sex appeal, with glamorous stewardesses chosen partly for their looks. The show was a flop on Broadway when it arrived in 1965, lasting only 23 performances. (The French farce, written by Marc Camoletti, had been a hit in Paris and London, and was made into a movie starring Tony Curtis and Jerry Lewis.)

But today it is much funnier because its premise seems so preposterous -- one man trying to organize three relationships based on airline schedules, a two-day layover for "Gloria," a Trans World Airlines stewardess, followed in short order by visits from "Gabriella" from Alitalia and "Gretchen" from Lufthansa. Say goodbye to one over lunch; welcome another a few hours later over dinner. "You just follow the timetable," says "Bernard," played by Bradley Whitford of "West Wing" fame.

Actress Kathryn Hahn, who plays "Gloria," said in an interview that many flight attendants come to see the show and lament at how much more difficult their jobs are now, with worries about air rage, terrorism, difficult travel and company layoffs.

"There's also something sad, something innocent about this play after Sept. 11 and after so many horrible travel tales," Ms. Hahn said.

Producer Sonia Friedman says "Boeing Boeing" would have been a disaster 10 years ago, with its political incorrectness and stereotypes panned by audiences and critics. Producers had a difficult time raising money for the revival, which opened last year in London, but the show proved a hit.
"It taps into a time people recall fondly," says Ms. Friedman, not only in terms of travel but also in relationships and sex. "And we know we can never do it again."

Thursday, July 10, 2008

Companies that vanished: TWA, a story of American Capitalism
Posted Jun 9th 2008 by Michael Rainey

The story of Trans World Airlines is the story of American capitalism in the 20th century. Founded by aviation pioneers and scrappy entrepreneurs, TWA became one of the largest and most successful airlines in the world. It racked up numerous awards and distinctions and created a devoted base of customers and employees.

Along the way, it also displayed the twisted corporate history typical of capitalism American-style, with plenty of buyouts and mergers and awkward transitions. Finally, it ended up the victim of vulture capitalists, who picked it clean and sold its carcass to a competitor. All in all, a heckuva ride.

The company got its official beginning in 1930, when Transcontinental Air Transport and Western Air Express merged to form Transcontinental & Western Air (T&WA). The merger was driven by one of the great motivators in American free market capitalism: the pursuit of lucrative government contracts.

In this case, the contracts were for airmail transport and the new airline was soon rolling in federal dough, though not for long. The great Air Mail Scandal of 1934 brought an end to that arrangement and the airlines split up, although the name lived on. From 1930 forward, TWA experienced some dramatic ups and downs.

After a TWA crash killed Notre Dame coach Knute Rockne in 1931, the airline nearly went out of business. It survived though and went on to pioneer the use of many of the great aircraft of the 20th century, including the first (and only) DC-1, the Boeing Stratoliner, and the Lockheed Constellation.

TWA also built some beautiful buildings, including the famous terminal at JFK in New York designed by Eero Saarinen. And TWA gained some noteworthy owners and managers along the way, most famously the reclusive though aircraft obsessed Howard Hughes, who lost control of the airline when his effort to upgrade to jets in the 1950s hit some financial turbulence. TWA peaked in the early 1980s, when it was carrying over half of all passengers traveling from the U.S. to Europe.

But deregulation and a lack of investment in new aircraft hit the airline hard, and the airline was acquired by Carl Icahn in 1985 in a hostile takeover. In classic form, Icahn took the company private in 1988, pocketing nearly $500 million for himself while saddling the company with $540 million in debt. Four years later, stripped of its most valuable assets (like the routes to London sold to American Airlines) and struggling with massive debt payments, TWA declared bankruptcy. More difficulties followed.

Icahn made a deal that allowed him to buy certain TWA tickets for 55 cents on the dollar, then sell them for his own profit, which he did relentlessly at Lowestfare.com, costing TWA hundreds of millions of dollars. Another bankruptcy in 1995 took care of that problem.

Then TWA flight 800 exploded over the ocean near New York City in 1996, killing all 230 aboard. After that, TWA focused on domestic routes, but with decreasing success. Finally, American Airlines bought TWA in 2001, ending its run as an independent company.

Although it doesn't seem to be part of the official history of the company, Trans World Airlines was also a victim of the September 11 attacks against the United Sates. The airline had been struggling for years before that, but the attacks and the resulting turmoil in the airline industry were a final nail in the coffin.

Oddly enough, I took a TWA flight to Paris in early September, 2001. I didn't know it at the time, but it was one of the last TWA flights over the Atlantic.My girlfriend and I were scheduled to return to the U.S. on September 17 on TWA. Most flights were canceled in the days after 9/11, so we knew we wouldn't be leaving on that day. But we went to the airport in Paris anyway -- we couldn't call TWA, since the phone lines were jammed -- and were amazed by what we saw.

Thousands of people waited in lines, and many of them looked like they had been at the airport for days. I could hear loud American voices offering large sums of money to get on a plane back home or anywhere close. One group of travelers bought tickets to Mexico City and planned to rent or buy a car to get back home to Dallas.

It was a pretty chaotic scene.But at the TWA counter, the situation was different: there were no passengers at all. We walked right up to the counter and immediately spoke to the agents. We quickly found out why there was no one else there: TWA was no longer flying back to New York. In fact, TWA was no longer flying at all.
So despite the fact that we had purchased round trip tickets on TWA and had flown to Paris on a TWA plane, we would not be flying home on one. We ended up flying home days later on American Airlines. But TWA was gone for good.

Wednesday, July 09, 2008

(The Tucson Airport Authority, a private entity, runs the Tucson Airport. If they had suspended or waved landing fees until jet fuel comes down to earth jetBlue and Executive Jet MIGHT have stayed in Tucson) ed.

ExpressJet cuts mean loss of Tucson flights
By Jack Gillum
Arizona Daily Star
Tucson, Arizona Published: 07.09.2008

ExpressJet Airlines Inc. is ending its nationwide branded service, effectively cutting four remaining destinations from Tucson International Airport in September.

This latest move by the Houston-based regional air carrier marks a setback for Tucson and other mid-sized cities serviced by the low-cost airline, which has been grappling with skyrocketing fuel costs of late.

ExpressJet was widely seen as a boon for Tucson travelers. In fact, the airline singlehandedly increased destinations available from the Old Pueblo by almost 50 percent in 2007, and airport officials frequently touted the new service.

But earlier this year, signs began emerging that the airline was facing trouble. In March, ExpressJet stopped its El Paso service, and in May, it announced it was cutting flights between Tucson and Spokane, Wash.; Austin, Texas; Omaha, Neb.; and Reno, Nev.

The airline’s demise disappointed many local air travelers. “It was perfect because they had so many nonstops,” said Pam Francis, 54, who travels between Tucson and Austin to visit her son. Stopping over in other cities with some other airlines, she said, “was a disaster.”

ExpressJet, on the other hand, was a $189 round-trip fare and “was just delightful all the way around.”Earlier this month, ExpressJet said it would be cutting its Delta Connection service on Sept. 1, effectively ending non-stop service between Tucson to Los Angeles International Airport.

The new announcement means it will no longer fly to Kansas City; Ontario, Calif.; San Antonio and Sacramento, Calif. The airline will continue to operate Continental Airlines’s daily, non-stop service to Houston.

“It was nice to be able to fly direct to some smaller airports,” said Brad Richwine, who works for Raytheon Missile Systems and would fly to Sacramento for work. “I’m sad to see them go."

Wednesday, July 02, 2008



BA to seek clearance for AA and Iberia merger
The London Financial Times
David Robertson, Business Correspondent

British Airways is said to be close to seeking clearance from competition authorities for a three-way operational merger with American Airlines (AA) and Iberia.

The deal would allow the companies to combine nearly all aspects of their operations, including sales, purchasing and marketing, leading to lower costs and greater economies of scale. Legal sources in the United States said that a submission to the US Department of Transport was expected as soon as next week.

The operational partnership may also provide a foundation for a full merger of the carriers should foreign ownership rules in the United States and Spain change. BA said two months ago that it was in talks with AA and Continental, another American carrier, about creating an alliance, but Continental has since walked away.

BA and AA have continued their discussions and are believed to have invited Iberia - in which BA has a 13 per cent stake - to be the third member. BA said last night that its talks with AA were continuing but a decision had yet to be made. If BA and AA do seek regulatory approval to merge their operations, it would be their third attempt, having been blocked by regulators in 1998 and 2001.

The authorities in Britain and America were concerned that the two carriers would have a dominant position on many North Atlantic routes and demanded that the airlines sell Heathrow slots to reduce their traffic. However, sources familiar with BA's discussions said that the airline was more optimistic of gaining approval this time because of the liberalisation of air travel rules between Europe and the US.

In addition, the dire state of the airline sector, which is striving to cope with high fuel prices, may force regulators to accept the deal. AA lost $328 million (£164.7 million)and Iberia €28.3 million (£22.5 million) in the first quarter of this year. BA has given warning that it may struggle to stay profitable this year. An analyst said: “There is a lot of pressure on BA and AA to do this deal and cut costs.

It's inevitable.” Another added: “Including Iberia makes sense, as it would give the alliance a strong position across both the North and South Atlantic.” Meanwhile, BA said yesterday that it had bought L'Avion, a French business-class only airline, for £54 million. L'Avion is the last of the survivors of the rush two years ago to launch all-business-class transatlantic services. Silverjet, MaxJet and Eos have all gone out of business. L'Avion will be merged with BA's new OpenSkies service, which flies from Paris to New York. The purchase price includes L'Avion's £26million in cash and two Boeing 757 aircraft.

Key words here are "could", "might", "may". Last time AA laid off nearly 2, 000 took leaves and retired. Stay tuned. Hopefully, leaves, job sharing and retirements will take care of the overage*

American COULD cut 900 flight attendant jobs

Wednesday July 2, 6:22 pm ET
By David Koenig, AP Business Writer

American Airlines indicates plans to cut 900 flight attendant jobs as soon as Aug. 31

DALLAS (AP) -- American Airlines says it could cut 900 flight attendant jobs as it reduces flights to cope with record high fuel costs. The Fort Worth-based airline expects to reduce jobs for pilots and mechanics too, but it hasn't released numbers yet.

American, the nation's largest carrier, said Wednesday that job cuts were necessary "to overcome near-term challenges and secure our company's long-term future."

American parent AMR Corp. said in a regulatory filing Wednesday it will take a charge of $70 million to cover severance costs for reducing its work force of 82,000, including the flight attendant jobs.

Further, AMR said, reduced flying and other cutbacks will lead the company to take a non-cash accounting charge of about $1.1 billion to $1.2 billion for the just-concluded second quarter. That charge covers the reduced value of the company's MD-80 and Embraer RJ-135 aircraft fleets.
Analysts were already expecting AMR to post a loss of about $330 million in the second quarter, according to a survey by Thomson Financial. Those forecasts typically don't include one-time charges.

In May, American announced it would cut domestic capacity 11 percent to 12 percent later this year, retire some planes and cut an unspecified number of jobs.

Federal law requires employers to give 60 days notice of major layoffs, and officials of the flight attendants' union said they received a notice Wednesday of job reductions that could start Aug. 31.

Airlines and union officials said they would try to reduce layoffs through attrition or by employees voluntarily taking leaves of absence or sharing jobs.

American has about 18,000 active flight attendants, so 900 jobs represents 5 percent of the ranks.

"We've all been sitting on the edge of our seats waiting for a number," said Frank Bastien, a spokesman for the Association of Professional Flight Attendants. "Most of us were pretty pleased it wasn't higher." (but it includes all former TWA flight attendants who have been recalled for less than a year, ed.)

Flight attendants had feared more job losses after the company said last week it would reduce management and support staff jobs by 8 percent.

American said it reached agreement with the union to offer voluntary measures such as leaves of absence to U.S.-based flight attendants 50 and older with at least 15 years of service. The airline said it struck a similar deal with the Transport Workers Union, which represents mechanics and bag handlers.

"These are difficult, but necessary changes given the unprecedented challenges we face with overcapacity in the industry, skyrocketing fuel prices, and a worsening U.S. economy," said American spokesman Tim Wagner.

American and sister airline American Eagle expect to spend more than $10 billion on jet fuel this year, up from $6.7 billion last year.

American is the latest airline to put a number on possible job cuts and reduced flying due to rising fuel costs and widening losses.

Continental Airlines Inc. is cutting 3,000 jobs and grounding 67 jets, and offered voluntary-departure packages -- but no cash -- to employees with at least 10 years experience.

UAL Corp.'s United Airlines, the nation's second-largest carrier, plans to eliminate 950 pilot jobs and 1,600 salaried positions. Delta Air Lines Inc. is shedding 4,000 jobs -- spokeswoman Betsy Talton said more than that number took incentives to leave, avoiding layoffs -- and US Airways Group Inc. is cutting 1,700.

Airlines are also raising fares and imposing new and higher fees for checking luggage, hauling a pet or sitting in a choice aisle seat.

Still, the industry's trade group, the Air Transport Association, predicts that U.S. airlines could lose $13 billion this year.

Shares of AMR fell 23 cents or 4.7 percent, to $4.62, as oil prices rose past $144 per barrel. The shares are trading at their lowest mark since early 2003, when the company was threatening to file for bankruptcy.