Thursday, April 29, 2010

United, Continental could announce merger on Monday
Updated 43m agoBy Dan Reed, USA TODAY

United and Continental airlines have reached the precipice of a merger agreement that their executives hope to announce on Monday, a source involved in the negotiations said Friday.
The announcement hinges on the boards of both airlines approving the deal, said the source, who is not authorized to speak for the airlines and requested anonymity. The board of United's parent, UAL, is to meet today. Continental's board is supposed to meet today and Sunday.

A union between Chicago-based United, the third-largest U.S. carrier, and No. 5 Continental, based in Houston, would create the biggest airline in the world. Based on passenger miles flown in 2009, the combination would be about 10% larger than the current world leader, Delta Air Lines.

Plans are that the merged airline would be based in Chicago and that Continental's name would disappear eventually. United had no comment. Continental didn't return a call. And the source said the deal still could fall apart before Monday.

United and Continental reached a similar point in merger negotiations almost two years ago. But at the last minute, Continental's board elected to remain independent.

The source says that Continental CEO Jeff Smisek would become CEO of the combined airline. United CEO Glenn Tilton would be the non-executive CEO for two years.

"I think it's a good move," says Bob Harrell, an airline industry consultant.

A merger would need approval from regulators, and some routes now flown by both carriers, such as between Chicago and the New York/Newark area, may draw attention.

But Continental and United generally have little overlap in the markets they serve, he says.

Continental's hubs are in Houston, Newark and Cleveland. It has a large presence in Latin America, where it is a strong No. 2 behind American.

United's hubs are in Chicago, Washington and Denver. It also has big operations in San Francisco and Los Angeles. Those are major gateways to Asia, where it has a major presence.

Tom Parsons, CEO of, says the merger would most hurt consumers who fly in and out of smaller regional airports that are served by both airlines. Reduced service and choice in such markets are likely.

"You're going to pay a premium for this merger," Parsons says. "The only way you're going to have lower airfares in 2011 is if a lower-cost airline comes to your city. If not, expect to pay more. It's sad for the consumer."

Seethu Seetharaman, a professor of management at Rice University's Jones Graduate School of Business, says it's possible for mergers to reduce fares if they create economies of scale and savings get pushed down to the consumer.

"But of all the merger situations I've studied or read about closely, I've never seen a situation in which prices went down," he says.

Wednesday, April 28, 2010

Hundreds of suppliers, one Boeing 737 airplane
For best-selling jet, vendors provide everything from engines to seats

By Allison Linn
Senior writer
updated 4:49 a.m. MT, Wed., April 28, 2010

SEATTLE - GM Nameplate isn’t exactly a household name, but its products are well-known to anyone who has flown on a Boeing airplane in recent years.

From a midsized room in a nondescript Seattle building, the family-owned company produces a vast array of graphics that go into Boeing airplanes, from the signs telling passengers where their seats are to the technical instructions for pilots and mechanics.

In all, it amounts to more than a million pieces a year, each meeting a specific airline’s color, branding and language specifications. Just getting the right hue of white to match each airline’s interior walls can be a challenge.

“It’s amazing how many different formulations we have,” said Greg Root, president of the company's superGraphics division.

Boeing Co. is one of the nation’s biggest and best-known manufacturers, employing 158,000 workers and producing tens of billions of dollars worth of commercial jets and defense systems annually for customers worldwide. But to assemble just one model of airplane — the 737, its smallest and most popular commercial jet — the company relies on a complex web of hundreds of suppliers providing everything from engines and fuselages to seats and exit signs.

“We can’t be experts in everything,” said Helene Michael, vice president of manufacturing operations for the 737 program.

Instead, Boeing likes to think of itself as an expert in getting all the parts in the right place at the right time, and then putting them together quickly.

“We kind of pride ourselves on being a large-scale systems integrator,” said John Hamilton, chief engineer for the 737 program.

While it can make good financial sense to integrate parts rather than build everything in-house, Boeing has learned the hard way — via its much-delayed 787 program — that there are also serious risks in relying too heavily on others. But with the commercial airplane industry poised to grow more competitive, and cash-strapped airlines looking for any way to pinch pennies, making airplanes cheaper and more efficiently may be the only way manufacturers can survive.

“The more efficient we get, the longer we stay in the phone book,” Michael said.

The 737, which is made up of 367,000 parts, is assembled at a factory in Renton, Wash., south of Seattle. Boeing delivered 372 of the single-aisle 737s last year — a little more than one a day. Its chief rival, Europe's Airbus, delivered 402 of its comparable A320 family of planes in the same period.

Faster, cheaper, better
To appeal to airlines and compete with Airbus, Boeing has not hesitated to outsource when there may be a cost savings. About five years ago, it even went so far as to spin off the Wichita, Kan., operation that makes 737 fuselages and other airplane parts. That now-independent company, Spirit Aerosystems, also does work for competing aerospace companies.

In part because Boeing serves so many large international airline customers, the company also relies heavily on international suppliers. Among major suppliers, China’s Xian Aircraft Co. makes the some 737 vertical fins, and Japan’s Mitsubishi Heavy Industries provides the wing’s inboard flaps.

“We recognize we can’t build every single piece of the plane in America,” Michael said.

But as one of the nation's top exporters and a major defense contractor, Boeing also recognizes the importance of keeping its assembly factories on U.S. soil.

Delicate balance
Boeing executives admit that it can be tough to find the right balance between what it makes at its own plants and what it acquires from outside companies.

The company has conceded it tipped too far in the wrong direction with the 787, which is undergoing test flights some two years behind schedule. Boeing relied extensively on other companies to both design and build 787 components, in part to alleviate the burden of financing such a big project. But the extensive outsourcing led to communication snafus and delays.

Aerospace analyst Richard Aboulafia of the Teal Group said the lesson from “the great fiasco of the 787” is that it’s not just what you outsource, it’s also how you outsource. He said Boeing failed by giving outsiders too much responsibility for designing integral parts of the aircraft.

Still, Aboulafia said that doesn’t mean it’s a bad idea to divide the work — and share the cost — of building an aircraft. He notes that airplane makers always rely on outside suppliers to build engines, one of the most important components in an aircraft, and the system has been highly successful.

“You look at the companies in the world that kept it all in-house, and it’s more likely to be General Motors and less likely to be Apple,” he said.

Move to ‘lean’ manufacturing
The 737 production lines stretches down two sides of a building so large some workers use oversized tricycles to get from one end to another. On a typical day, the moving line of green-hued, unpainted airplanes chugs along at about two inches a minute, as workers install the thousands of parts that transform the fuselage from an empty shell to a flight-ready machine.

Employees work around the clock five days a week on multiple airplanes, producing 31.5 new 737s a month, with each 737 coming together in 11 days. About 9,800 employees work in the Renton facility on both the 737 program and the P/8A Poseidon, a military version produced for the Navy.

Rival Airbus produces 34 of its narrow-body A320s per month, and plans to raise that to 36 in December

It wasn’t always this way. In the late 1990s, after a crisis so great that Boeing actually briefly shut down the plant, the company began a drastic overhaul of the Renton facility.

Between 2000 and 2006, relying on the type of “lean” manufacturing principles pioneered by carmaker Toyota, Boeing made the gradual shift from building 737s at stations to running a moving production line.

Seemingly small changes resulted in major efficiency gains.

Instead of spending an hour or two assembling the equipment they need for the day, Boeing factory workers now arrive at work to find a kit containing all the screws, hammers and other instruments they will need to get their specific jobs done.

Boeing also moved all the engineers who work on the 737 into offices that literally overlook the factory floor. Now if a worker has an issue, engineers can be at the scene in just a few minutes vs. the perhaps daylong lag when engineers were in other buildings.
Such changes have cut the amount of time it takes to produce a 737 in half, from 22 days to 11. Michael’s ultimate goal is to cut the production time to eight days per plane.

Competitive threats
The company says such improvements may be necessary to its survival.

The various 737 models account for about 33 percent of all Boeing and Airbus planes flying today, according to Forecast International. But while Boeing has chiefly competed with Airbus until now, the company is facing looming threats from a slate of potential competitors who are developing similar airplanes in China, Russia, Brazil and Canada.

Although Boeing and Airbus are the key players in the large commercial airplane market right now, aviation consultant Mike Boyd notes that several of the programs in development could quickly play catch up.

"Things can change really quickly," he said.

The airplane maker’s efficiency push has a ripple effect on Boeing suppliers. GM Nameplate, the graphics supplier, said it is sometimes asked to rush an order from its Seattle plant to the Renton facility in just a few hours, so production can keep flowing despite an unexpected change in an airline’s needs.

GM Nameplate has production facilities in China and Singapore but said it would not make sense to make the products for Boeing there.

“It’d cost more to ship it back than it would to produce it here,” said Brad Root, president of GM Nameplate's Seattle division.

Even Boeing’s own units say they feel the pressure.

Internal suppliers
On a recent weekday morning, Brian Crabtree was at work at Boeing’s Interiors Responsibility Center in Everett, north of Seattle, pulling new 737 interior panels from an industrial oven.

By the end of the day, about 100 of those panels would be completed and shipped 30 miles south to the 737 plant in Renton to be installed on a new airplane, perhaps as early as that evening.

The quick turnaround leaves little inventory sitting around, which saves money.

The Interiors Responsibility Center may be a Boeing facility, but Beth Anderson, its director, thinks of herself as the 737 plant’s supplier.

“They could go outside and do it somewhere else,” she said.

This isn’t just idle talk; in the late 1990s, Boeing’s 767 program did opt to go elsewhere for its interiors.

“We realized that we don’t automatically get to do this work,” Anderson said. “We have to prove ourselves.”

Hamilton, the 737 engineer, concedes the company could move its interiors manufacturing to an overseas supplier but said the Boeing unit has been able to stay competitive.

“Right now, we believe that making those locally is the right thing to do,” he said.

Convincing workers
As Boeing has grown more efficient, executives concede it has been tough to convince factory workers that they aren’t going to improve themselves out of a job. Hamilton said the 737 factory has had some layoffs but has tried to pare its staff through attrition from retirement, and by not hiring more workers when production levels rise.

The union representing Boeing factory workers, the International Association of Machinists, said the company employs 4,050 Machinists in Renton, working on both the 737 and the Navy’s P/8A.

In July 2001, prior to a major commercial airplane downturn following the Sept. 11 terrorist attacks, union spokeswoman Connie Kelliher said Boeing employed 6,022 Machinists in Renton, working on both the 737 and 757, which is no longer in production.

Boeing said Machinists employment has dropped because the company phased out the 757 and made productivity improvements.

James Cairns, a shop supervisor who overseas installation of the interior walls, said that he didn’t necessarily see the vision when Boeing began working toward the moving line about 10 years ago. But now, he said, he’s come to appreciate that production runs more smoothly and is safer, because workers are no longer crowded together amid a multitude of toolboxes, hoses and ladders.

“There is no way I’d want to go back to how we used to build the planes,” he said.

Still, not everyone is convinced all aspects of lean manufacturing are paying off. Crabtree, who works on the interior panels, said his unit’s new moving line, which relies on so-called “tugbots” that the company designed in-house, breaks down more frequently than the old chain system and is not as ergonomic as it could be.

Crabtree worries that things like the tugbots are just going to end up costing Boeing more money and increasing the chances the company will move his job to a place where the parts can be made more cheaply using non-union labor.

Those fears have been augmented by Boeing’s plan to open a second 787 assembly line in South Carollina, where labor is likely to be much cheaper than the unionized work force in the Seattle area.

“I like lean — there’s good ideas — but the best ideas come from people up here,” Crabtree said, gesturing to his fellow workers in the plant. “They don’t use our ideas.”

Boeing says that it has incorporated some ideas from the factory floor into its plants. Following an employee’s suggestion, the company bought and modified a hay baler to use for loading seats onto a 737.

Re-engine, or rethink?
As the 737 model ages and faces increased competition, bigger changes are likely on the horizon. The company is currently evaluating whether to introduce a new, more efficient engine to the aircraft, a move that would require other major design changes.

The company also could move to a completely new airplane design, a costly undertaking that may be difficult as it is still flight-testing the brand new 787, the wide-body 747-8 and the P/8A for the Navy. In addition, Boeing is gearing up to launch a new interior for the 737.

Still, the potential for such changes have left some worried that Boeing will choose to make future narrow-body aircraft in another part of the U.S., or even another country.

“What Washington state has to worry about, and I suppose America, is what Boeing decides to do with those replacement airplanes,” said aerospace analyst Scott Hamilton with Leeham Co.

John Hamilton, the 737 engineer, said he doesn’t envision the company moving its assembly any time soon.

“I think we’ll continue to build the airplane in the U.S. for a long time,” he said.

Gesturing toward the Renton factory floor, where workers hovered around the glistening line of 737s, he said: “You can’t readily duplicate that overseas.”
JetBlue Sings The Blues
Carl Gutierrez, 04.28.10, 10:25 AM EDT
High costs and a one-time charge result in a surprise loss for the airline.

JetBlue’s record first-quarter revenue wasn’t enough to keep its earnings out of the red, disappointing investors in an otherwise upbeat day for airline stocks.

On Wednesday, JetBlue ( JBLU - news - people ) reported a first-quarter loss of $1 million, or 1 cent per share, compared to the gain of $12 million, or 5 cents per share, posted in last year’s corresponding period. Wall Street expected a quarterly profit of 3 cents per share.

"While we are disappointed to report a loss for the quarter, we are confident that we are taking the right steps to return to sustained profitability," said Dave Barger, JetBlue's chief executive. The first-quarter report was reminiscent of the high cost issues the Forest Hills, N.Y.-based firm warned about at the beginning of the year. (See "Costs Weigh On JetBlue.") Much of the shortfall came from higher fuel costs, and a $15 million one-time charge to switch to a new reservation system.

Sales meanwhile rose 9.7% to a first-quarter record of $870 million, from $793 million. Despite the gain, JetBlue's top-line also fell short of expectations, as Wall Street anticipated revenue to the tune of $880.5 million. The company noted that severe winter storms in the Northeast cut sales by about $15 million.

There was still good in the report. Yield per passenger mile in the first quarter was 12.13 cents, up 3.8% compared to the first quarter of 2009. Passenger revenue per available seat mile for the first quarter 2010 increased 4.9% year over year to 9.32 cents and operating revenue per available seat mile increased 3.4% year-over-year to 10.32 cents.

"We are encouraged by recent revenue trends as the economic environment appears to be improving and we derive additional revenue benefits from our new customer service system," said JetBlue Chief Financial Officer Ed Barnes.

Monday, April 26, 2010

Would Anyone Miss the Continental Brand Name?
April 26, 2010, 5:58 PM ET. T

The possibility of moving Continental’s headquarters to Chicago from Houston is causing some political turbulence down in Texas.

Rep. Sheila Jackson Lee, a Houston Democrat, held a news conference today outside of Continental’s headquarters hoping to rally fellow Texans behind the airline, should it merge with Chicago-based United.

“This may not be Hurricane Ike, but it’s a major storm of the business/economic variety for the entire Houston region. That makes it an “all hands on deck” moment for our city, state and congressional leadership,’’ reads Friday’s editorial in the Houston Chronicle.

Interestingly, you don’t see anyone rallying to keep the Continental name.

Under the latest merger terms being negotiated between the two airlines, United would be the surviving brand, meaning that the Continental name could be headed for the dustbin of airline history – one that is overflowing with discarded brands like Eastern Airlines and Piedmont Airlines.

Continental Airlines was founded in 1934, under the name Varney Speed Lines (Its first flight was a 530-mile route from Pueblo, Colorado to El Paso, Texas with three stops along the way. The company assumed the Continental name in 1937. It acquired Pioneer Airlines in 1956 and merged with Texas International, which was owned by airline investor Frank Lorenzo, in 1982

What is curious is that, Continental has as strong, if not a stronger brand, than United in many markets.

“Continental generally has a better brand, does well in customer surveys and does better in the NY market which is a key area that the combined company would seek to gain market share,’’ Hunter Keay, an airline analyst at Stifel Nicholaus , tells Deal Journal.

The United brand may have an edge over Continental in the West Coast and in China.

“United is better known around the world.” says Helane Becker, an airline analyst at Jesup & Lamont, a small New York brokerage and investment bank

If it’s effectively a toss-up between the two brands, other considerations might come into play, like the fact that United is headquartered in the home city of President Barrack Obama or the fact that Continental’s current chief Jeff Smisek may end up the CEO of the combined companies.

“Compromise is part of any merger talks,’’ says Becker.
American Air Cancels China Flight
Carrier's Inaugural Trip From Chicago to Beijing Halted Over Time-Slot

AMR Corp.'s American Airlines canceled its planned inaugural flight between Chicago and Beijing on Monday, citing a disagreement with Chinese aviation authorities over take-off and landing times.

American Air says it turned down Chinese authorities' offer of daily landing and take-off slots of 2:20 a.m. and 4:20 a.m.

The impasse delays efforts by American, the second-largest U.S. carrier by traffic, to make bigger inroads in the fastest-growing economy in the world. It also could complicate planned "open-skies" talks between the U.S. and China as some U.S. businesses voice concern Chinese protectionism is growing.

American said Monday it halted the launch of daily nonstop service between Chicago O'Hare International Airport and Beijing Capital International Airport because it hadn't received "commercially viable" arrival and departure slots from Chinese aviation authorities.

The airline, based in Fort Worth, Texas, said it would postpone the launch of its Beijing route tentatively until May 4 as it tries to resolve the dispute. American has had daily flights between Chicago and Shanghai since 2006.

American had scheduled the new Boeing 777 flight to depart Chicago on Monday and arrive in Beijing at 1:55 p.m. Tuesday, before departing Beijing again later that afternoon. It said Chinese authorities instead gave American daily landing and take-off slots at 2:20 a.m. and 4:20 a.m.

In a statement Monday, the U.S. Department of Transportation said it was "very disappointed" China didn't grant more favorable slot times to American.

"New transportation links such as these help to strengthen commercial and cultural ties between our two nations," it added. "We sincerely hope that China will work with American Airlines to find a commercially feasible solution."

The Chinese embassy in Washington didn't return calls seeking comment.

The U.S. and China are gearing up for planned negotiations in Washington, starting June 8, that aim to further liberalize air traffic between the two countries. The last formal bilateral talks took place in 2007.

The dispute coincides with a survey released by the American Chamber of Commerce in China that indicates rising concern among U.S. businesses that Chinese protectionist policies were jeopardizing their prospects in the key market.

The Transportation Department has conveyed its concerns about American's unfavorable slots to the Chinese government "via appropriate diplomatic channels," said a department spokesman in Washington. It declined to speculate on how the matter might affect the open-skies talks.

UAL Corp.'s United Airlines has the biggest market share among U.S. carriers of nonstop flights between the U.S. and Beijing and Shanghai, according to OAG, an aviation research firm. Continental Airlines Inc. is No. 2 among U.S. carriers, based on OAG data.

Delta Air Lines Inc., the largest U.S. carrier, also has applied for slot times with Chinese authorities for its planned nonstop service between Seattle and Beijing starting June 4. A Delta spokesman said the airline remains "hopeful" of securing favorable landing and take-off times.

American reached an agreement earlier this year with Japan's largest airline, Japan Airlines Corp., to forge a wide-ranging joint venture aimed at expanding the Texas carrier's reach in fast-growing Asian markets.

But American Airlines failed in its efforts to recruit China Eastern Airlines Corp. to join its oneworld alliance of global carriers. Instead, China Eastern said earlier this month it would join Delta's competing SkyTeam alliance, leaving oneworld as the only global alliance without a full-fledged partner on the Chinese mainland.

China Southern Airlines Co., another large Chinese carrier, already is a member of SkyTeam. The other major mainland carrier, Air China Ltd., belongs to the Star Alliance, which includes United and Continental.

In a conference call last week, American Chief Executive Gerard Arpey said his carrier remained well positioned through oneworld partner Cathay Pacific Airways Ltd., which is based in Hong Kong.

Write to Mike Esterl at

Sunday, April 18, 2010

5 major airlines pledge not to charge for carryon bags
NY senator wants others to follow Harry R. Weber, AP Airlines Writer,

On Sunday April 18, 2010, 12:03 pm EDT ATLANTA (AP)

In a remarkable gesture to fee-weary air travelers, five major U.S. airlines are committing to actually not charge a fee for something -- the sacred carryon bag.

The announcement Sunday comes despite the fact that some of those same airlines are expected to report first-quarter losses next week amid significantly higher fuel prices and the beating they took from the heavy February snowstorms.

Add-on fees for things like checked bags, pillows and food are a key revenue stream for them.For 26 large U.S. airlines, so-called ancillary fee revenue accounted for 6.9 percent of their total operating revenue in the third quarter of 2009, up from 4.1 percent a year earlier, the most recently available government data shows.

But major carriers risk alienating customers if they follow Spirit Airlines' lead and impose a fee on carryon bags. The small Florida airline in August will begin charging customers up to $45 to place a bag in an overhead bin.

Other fees haven't stopped people from flying, but many of those fees can be avoided. It would be hard for many travelers to avoid a carryon bag fee."We believe it is something that's important to our customers and they value, and we will continue making that available to them at no charge," American Airlines spokesman Roger Frizzell said.

New York Sen. Charles Schumer said Sunday that American, Delta Air Lines, United Airlines, US Airways and JetBlue Airways each have committed to him that they would not institute fees for carryon bags. He said he was hopeful other carriers would follow suit.Notably absent from the list was Continental Airlines, which is said to be in merger talks with United.

It wasn't immediately clear how long the airlines had pledged not to charge for carryons.

Frizzell couldn't say, and a spokesman for Delta declined to comment.Schumer said he planned to meet with Spirit Airlines leadership in the coming week.

He will have an uphill battle changing Spirit's mind, however.Ben Baldanza, Spirit's president and CEO, told The Associated Press on Sunday that his airline still plans to go forward with its carryon bag fee."Our plan was never predicated on anyone matching us," Baldanza said. "The fact that other people are saying they won't has never changed our view that this is right."He said the decision by the five major carriers actually puts pressure on those airlines because Spirit has lowered its fares more than the price of the new fee."We knew we took a risk with this strategy, but we believe on balance it's one that our customers will buy into," Baldanza said.

Schumer and five other Democratic senators -- Jeanne Shaheen of New Hampshire, Ben Cardin of Maryland, Amy Klobuchar of Minnesota, and Robert Menendez and Frank Lautenberg of New Jersey -- are supporting legislation that would tax airlines if they charged carryon bag fees.

Schumer said the legislation would move forward until it becomes clear that no airline will institute the charges.
European airlines send up test flights despite ash

April 17, … By ARTHUR MAX, Associated Press Writer Arthur Max,
Associated Press Writer – 1 hr 59 mins ago
AMSTERDAM – Several major airlines safely flew test flights without passengers over Europe on Sunday despite official warnings about the dangers of a volcanic ash plume, fueling a corporate push to end an economically devastating ban on commercial air traffic.

KLM Royal Dutch Airlines said that by midday Sunday it had flown four planes through what it described as a gap in the layer of microscopic dust over Holland and Germany. The ash began spewing from an Icelandic volcano Wednesday and has drifted across most of Europe, shutting down airports as far south and east as Bulgaria.

Air France, Lufthansa and Austrian Airlines have also sent up test flights, although most traveled below the altitudes where the ash has been heavily concentrated.

KLM said its planes of various types flew the 115-mile (185-km) flight from Duesseldorf in western Germany to Amsterdam's Schiphol Airport at an unspecified normal altitude above 10,000 feet (3,000 meters). They did not encounter the thick though invisible cloud of ash, whose main band has floated from 20,000 to 32,000 feet, the height of most commercial flight paths.

The announcement prompted some airline officials to wonder whether authorities had overreacted to concerns that the tiny particles of volcanic ash could jam up the engines of passenger jets. The possibility that the ash had thinned or dispersed over parts of Europe heightened pressure from airline officials losing hundreds of millions of dollars a day to end a flight stoppage that has thrown global travel into chaos and left millions stranded far from home.

"With the weather we are encountering now — clear blue skies and obviously no dense ash cloud to be seen, in our opinion there is absolutely no reason to worry about resuming flights," said Steven Verhagen, vice president of the Dutch Airline Pilots Association and a Boeing 737 pilot for KLM.

"We are asking the authorities to really have a good look at the situation, because 100 percent safety does not exist," Verhagen said. "It's easy to close down air space because then it's perfectly safe. But at some time you have to resume flights."

Meteorologists warned, however, that the situation above Europe remained unstable and constantly changing with the varying winds — and the unpredictability was compounded by the irregular eruptions from the Icelandic volcano spitting more ash into the sky.

KLM had permission from Dutch and European aviation authorities before sending the planes aloft but the Dutch and most other European authorities kept their air space closed to passenger traffic until at least 1800 GMT (1 p.m. EDT) Sunday, saying conditions remained risky.

KLM's first test flight was Saturday and the airline said it planned to return more planes without passengers to Amsterdam from Duesseldorf on Sunday, planning to bring the total number of flights to 10 by the end of the day. Engineers immediately took the aircraft for inspection as they landed.

"We hope to receive permission as soon as possible after that to start up our operation and to transport our passengers to their destinations," said Chief Executive Peter Hartman, who was aboard one of Saturday's flights.

Kyla Evans, spokeswoman for the European air traffic control agency Eurocontrol, said it was up to national aviation authorities to decide whether to open up their airspace. The agency's role was to coordinate traffic once it was allowed to resume.

Daniel Hoeltgen, a spokesman for the European Aviation Safety Agency, said the organization was in contact with airlines and national regulators with a view to allowing commercial aircraft to begin operating again.

"But there is currently no consensus as to what consists an acceptable level of ash in the atmosphere," Hoeltgen said. "This is what we are concerned about and this is what we want to bring about so that we can start operating aircraft again in Europe."

Air France said its first test flight Sunday, from Charles de Gaulle airport to Toulouse in southern France, "took place under normal conditions."

"No anomalies were reported. Visual inspections showed no anomalies," Air France said in a statement soon after it landed. "Deeper inspections are under way."

It did not say how high the planes had flown.

Germany's Lufthansa flew 10 empty long-haul planes Saturday to Frankfurt from Munich at low altitude, between 3,000 and 8,000 meters (9800 and 26000 feet), under so-called visual flight rules, in which pilots don't have to rely on their instruments, said spokesman Wolfgang Weber.

"We simply checked every single aircraft very carefully after the landing in Frankfurt to see whether there was any damage that could have been caused by volcanic ash," Weber said. "Not the slightest scratch was found on any of the 10 planes."

German air traffic control said Air Berlin and Condor airlines had carried out similar flights.

Air Berlin, Germany's second-biggest airline, said it had transferred two planes from Munich to Duesseldorf and another from Nuremberg to Hamburg without problems on Saturday. They flew at 9,840 feet (3,000 meters).

A technical inspection of the aircraft after landing "did not reveal any adverse effects," the company said.

Air Berlin Chief Executive Joachim Hunold declared himself "amazed" that the results of the German airlines' flights "did not have any influence whatsoever on the decisions taken by the aviation safety authorities."

Businessman Niki Lauda said Sunday that his Fly Niki airlines planned a test flight from Vienna to Salzburg. Austrian Airlines spokesman Martin Heheman said it was flying an Airbus A320 to the southern city of Graz, where the plane will undero a technical check to see what if any effects the volcanic cloud had. If none, three more test flights from Graz to Vienna are planned.

Austrian Airlines spokeswoman Pia Stradiot, when asked if the firm thought the flights were safe, said: "That's exactily what we want to test and this is why we are immediately checking the planes after they land."

Rognvaldur Olafsson, a spokesman with the Civil Protection Agency in Iceland, said Sunday the eruption is continuing and there are no signs that the ash cloud is thinning or dissipating.

"It's the same as before," he said. "We're watching it closely and monitoring it."

The British Meteorological Office said there was no way to be certain that areas clear of ash will remain that way. The cloud "won't be present at all parts of the area at risk at all times, you can see clear area, but it will change, it won't stand still," said meteorologist John Hammond.

The Met Office said the ash reached up to 20,000 feet, but that the grit also was dropping to low levels in some places and settling on the ground in parts of southern England.

The aviation industry, already reeling from a punishing economic period, is facing at least $200 million in losses every day, according to the International Air Transport Association.

National air safety regulators have the right to close down a country's air space in cases of extreme danger. But they can also grant waivers to airlines to conduct test flights or to ferry empty airliners from one airport to another at lower altitudes not affected by the main ash clouds.

The Swiss Federal Office of Civil Aviation began allowing flights Saturday above Swiss air space as long as the aircraft were at least at 36,000 feet (11,000 meters). It also allowed flights at lower altitudes under visual flight rules, aimed at small, private aircraft.

Ash and grit from volcanic eruptions can sabotage a plane in various ways: the abrasive ash can sandblast a jet's windshield, block fuel nozzles, contaminate the oil system and electronics and plug the tubes that sense airspeed. But the most immediate danger is to the engines. Melted ash can then congeal on the blades and block the normal flow of air, causing engines to lose thrust or shut down.

Scientists say that because the volcano is situated below a glacial ice cap, magma is being cooled quickly, causing explosions and plumes of grit that can be catastrophic to plane engines, depending on prevailing winds.

"Normally, a volcano spews out ash to begin with and then it changes into lava, but here it continues to spew out ash, because of the glacier," said Reynir Bodvarsson, director of Swedish National Seismic Network. "It is very special."

Bodvarsson said the relative weakness of the eruption in Iceland also means the ash remains relatively close to the earth, while a stronger eruption would have catapulted the ash outside of the atmosphere.

In 1989, a KLM Boeing 747 that flew through a volcanic ash cloud above Alaska temporarily lost all four engines. The engines restarted at a lower altitude and the plane eventually landed safely.
Associated Press writers Karl Ritter in Stockholm, Greg Katz in London, Angela Charlton in Paris, Toby Sterling and Mike Corder in Amsterdam, Slobodan Lekic in Brussels, and Malin Rising in Stockholm contributed to this report.

Friday, April 16, 2010

Flight disruptions in Europe get even worse

By JILL LAWLESS, Associated Press Writer Jill Lawless, Associated Press Writer – 30 mins ago
LONDON – Thick drifts of volcanic ash blanketed parts of rural Iceland on Friday as a vast, invisible plume of grit drifted over Europe, emptying the skies of planes and sending hundreds of thousands in search of hotel rooms, train tickets or rental cars.

Polish officials worried that the ash cloud could threaten the arrival of world leaders for Sunday's state funeral for President Lech Kaczynski and his wife Maria in the southern city of Krakow.
So far, President Barack Obama, Russian President Dmitry Medvedev and German Chancellor Angela Merkel are among those coming and no one has canceled. Kaczynski's family insisted Friday they wanted the funeral to go forward as planned but there was no denying the ash cloud was moving south and east.

The air traffic agency Eurocontrol said almost two-thirds of Europe's flights were canceled Friday, as air space remained largely closed in Britain and across large chunks of north and central Europe.

"The skies are totally empty over northern Europe," said Brian Flynn, deputy head of Eurocontrol, adding "there will be some significant disruption of European air traffic tomorrow."
The agency said about 16,000 of Europe's usual 28,000 daily flights were canceled Friday — twice as many as were canceled a day earlier.

U.S. airlines canceled 280 of the more than 330 trans-Atlantic flights of a normal day, and about 60 flights between Asia and Europe were canceled.

The International Air Transport Association said the volcano was costing the industry at least $200 million a day.

Southern Iceland's Eyjafjallajokull (ay-yah-FYAH'-plah-yer-kuh-duhl) glacier began erupting for the second time in a month on Wednesday, sending ash several miles (kilometers) into the air. Winds pushed the plume south and east across Britain, Ireland, Scandinavia and into the heart of Europe.

Gray ash settled in drifts near the glacier, swirling in the air and turning day into night. Authorities told people in the area with respiratory problems to stay indoors, and advised everyone to wear masks and protective goggles outside.

In major European cities, travel chaos reigned. Extra trains were put on in Amsterdam and lines to buy train tickets were so long that the rail company handed out free coffee.

Train operator Eurostar said it was carrying almost 50,000 passengers between London, Paris and Brussels. Thalys, a high-speed venture of the French, Belgian and German rail companies, was allowing passengers to buy tickets even if trains were fully booked.

Ferry operators in Britain received a flurry of bookings from people desperate to cross the English Channel to France, while London taxi company Addison Lee said it had received requests for journeys to cities as far away as Paris, Milan, Amsterdam and Zurich.
The disruptions hit tourists, business travelers and dignitaries alike.

German Chancellor Angela Merkel had to go to Portugal rather than Berlin as she flew home from a U.S. visit. Norwegian Prime Minister Jens Stoltenberg managed to get a flight to Madrid from New York but was still not sure when or how he would get back home.

The military also had to adjust. Five German soldiers wounded in Afghanistan were diverted to Turkey instead of Germany, while U.S. medical evacuations for troops in Iraq and Afghanistan are being flown directly from the warfronts to Washington rather than to a care facility in Germany. The U.S. military has also stopped using temporarily closed air bases in the U.K. and Germany.

Aviation experts said it was among the worst disruptions Europe has ever seen.

"We don't have many volcanoes in Europe," said David Learmount of Flight International, an aviation publication. "The wind was blowing in the wrong direction."

In Iceland, torrents of water carried away chunks of ice the size of small houses on Thursday as hot gases melted the glacier over the volcano. Sections of the country's main ring road were wiped out by the flash floods.

More floods from melting waters are expected as long as the volcano keeps erupting — and in 1821, the same volcano managed to erupt for more than a year.

Small amounts of ash settled in northern Scotland and Norway, but officials said it posed little threat to health.

The ash cloud, drifting between 20,000 to 30,000 feet (6,000 to 9,000 meters) high and invisible from the ground, initially blocked the main air flight path between the U.S. east coast and Europe. On Friday, the cloud's trajectory was taking it over northern France and Austria and into eastern and central Russia at about 25 mph (40 kph).

Fearing that microscopic particles of highly abrasive ash could endanger passengers by causing aircraft engines to fail, authorities shut down air space over Britain, Ireland, France, Denmark, Norway, Sweden, Finland and Belgium. That halted flights at Europe's two busiest airports — Heathrow in London and Charles de Gaulle airport in Paris — as well as dozens of other airports, 25 in France alone.

Air space restrictions were lifted, imposed or extended Friday as the cloud moved.
Italian aviation authorities were closing airspace in northern Italy on Saturday until midday, with airports in Milan and Venice to close.

Germany shut down all of its international airports, including Munich and Frankfurt, Europe's third-busiest terminal.

Sweden and Norway declared skies in the far north to be safe but kept a lockdown on flights to both capitals — Stockholm and Oslo.

Aviation officials said the air over England would remain closed to flights until at least 1 p.m. (1200 GMT, 8 a.m. EDT) Saturday, and British Airways announced it was canceling all of its flights to and from London airports late Friday and on Saturday. Airspace restrictions in Scotland and Northern Ireland have been lifted, and Irish aviation authorities reopened airports in Dublin and Cork.

In France, airports in Paris and about 20 other locations in northern France will remain closed until at least midday Saturday.

Belgium extended its flight restrictions until late Saturday morning.

Switzerland, Slovakia, Croatia and Hungary closed their airspace, and Poland expanded its no-fly zone to most of the country, excluding Krakow.

Iceland, a nation of 320,000 people, sits on a large volcanic hot spot in the Atlantic's mid-oceanic ridge and has a history of devastating eruptions. One of the worst was the 1783 eruption of the Laki volcano, which spewed a toxic cloud over Europe, killing tens of thousands.
Associated Press Writers Robert Barr, Jennifer Quinn and Jane Wardell in London, Karl Ritter and Louise Nordstrom in Stockholm, Melissa Eddy and Verena Schmitt-Roschmann in Berlin, Ciaran Giles in Madrid, Bradley Klapper and Frank Jordans in Geneva, Ian MacDougall in Oslo and Pauline Jelinek in Washington contributed to this report.

Thursday, April 15, 2010

500 ex-Aloha workers now at Hawaiian
Posted on: Tuesday, April 13, 2010

By Alan Yonan Jr. Advertiser Staff Writer

Hawaiian Airlines has hired about 500 former Aloha Airlines employees since the latter shut down two years ago, and the number continues to grow as the state's largest airline moves ahead with expansion plans.

"We still see a lot of former Aloha employees," said Mark Dunkerley, president and chief executive officer of Hawaiian Holdings Inc., in an interview yesterday. "We certainly encourage them to apply. There is definitely sentimental hope among everyone at Hawaiian to help out former Aloha employees."

About 1,900 Aloha Airlines employees lost their jobs when Hawaiian's main competitor went out of business March 31, 2008, due to soaring fuel prices and a costly fare war initiated by go! airlines' June 2006 startup.

Of the roughly 1,000 employees Hawaiian has hired in recent years, about 500 are former Aloha workers, he said. Hawaiian's total workforce currently stands at about 4,000, Dunkerley said.
Hawaiian plans to add 10 new long-range Airbus A330-200 aircraft through 2014, the first of which will be delivered at the end of this month. A second will come in May and a third in November. The airline is hiring 45 flight attendants and 10 pilots for each aircraft, Dunkerley said.

"The number of applications we've received is overwhelming," he said. The airline recently advertised for "a couple of dozen" flight attendant positions and received 2,500 applications, Dunkerley said.

Many of the new pilots needed for the expansion were hired at the end of last year and are undergoing training, Dunkerley added.

Hawaiian will take 200 employees to Toulouse, France, during the last week of this month for a ceremony at which it will take delivery of the first Airbus, Dunkerley said. The plane's first commercial flight is tentatively scheduled for early June.

Hawaiian hopes to use its new A330-200s for routes it is seeking between Honolulu and Tokyo's Haneda Airport. Hawaiian has applied with the U.S. Department of Transportation for two of four new Haneda routes that are being offered to U.S. carriers.

Dunkerley said he expects the DOT to announce its decision between now and the end of May. If it succeeds in its bid, Hawaiian would begin flights in October.

Other carriers bidding for the routes are Delta, American, United and Continental airlines. Of the four, Hawaiian is the only one that doesn't now fly to Japan.

Hawaiian also announced yesterday that it received the top spot for the second consecutive year in a quality ratings study that looks at air carriers in terms of on-time performance, baggage handling, denied boardings and customer complaints.

Hawaiian beat out 17 other carriers in the 20th annual Airline Quality Rating study by researchers at Purdue University and Wichita State University.

Hawaiian was best of all airlines in on-time performance, and was second-best in fewest denied boardings and fewest mishandled bags in 2009, the study said.

The full report is available online at
Shares of Hawaiian Holdings closed up 9 cents at $7.26 yesterday on the Nasdaq market.
Reach Alan Yonan Jr. at
American Airlines sharpens focus on business travel
Carrier sets sights on premium traffic; Deal with JetBlue helps reel them in

April 14, 2010, 5:58 p.m. EDT By
Christopher Hinton, MarketWatch

NEW YORK (MarketWatch) -- American Airlines is sharpening its focus on the premium-travel market as the economy recovers and corporations increase their travel budgets, committing billions to buy new jets and upgrade its business-class cabins.

"We love all our customers, but some travel far more frequently than others and pay for premium cabins, and we are focused on getting them the best experience with minimum hassle, and a network that is targeted to their value," said American Executive Vice President Daniel Garton, in an interview.

American Airlines
The Fort Worth, Texas-based carrier is one of the world's largest airlines, but ranks No. 1 for premium traffic, represented most by business travelers willing to pay for the extra comfort and service, especially on the already high-margin international routes.

But competition for those prime passengers is getting fierce, with Delta Air
Lines and Continental Airlines on American's tail to expand their market share in the global market.

To improve its position, American is pursuing a partnership with Japan Airlines to boost its transpacific market share and British Airways to strengthen its transatlantic business.
The airline recently announced it was teaming up with New York-based JetBlue Airways to add more U.S. destinations to its network to attract international business travelers seeking connections beyond the Northeast.

It's also committed some $4 billion over the next four years to replace its aging MD-80 fleet with new Boeing Co. 737-800 jets and upgrade the interiors of its long-haul 767s and narrow-body 757s, according to Garton.

Garton said the airline is also waiting "patiently" for its first Boeing 787 Dreamliner, scheduled for delivery in 2012.

Meanwhile, the airline has spruced up its long-haul business-class cabins, adding deep reclining seats, quality food choices and expanded entertainment services.

"American Airlines has always been highly regarded by business travelers," said Kevin Mitchell, head of the Business Travel Coalition, an industry group.

"Pre-flight meals, airline clubs, comfortable seats, power for laptops, good onboard service, entertainment systems are all valued by business travelers on long-haul flights," he said.
But at the end of the day, business travelers want to get to their destination, albeit refreshed and ready to go to work. And while American is struggling to get its alliances and partnerships in line to enhance its offers, some rivals are making gains.

Year-to-date through March, international traffic at Continental surged 11% with sharp gains in its transpacific and transatlantic markets as it added new destinations, while American's international traffic was up just 1.7%.

Garton concedes that other airlines have a wider breadth of service than American -- hence the recent deal with JetBlue -- but its hub operations are also in the world's top premium markets: Dallas/Fort Worth, New York, Miami, and Los Angeles.

And that gives them a certain edge.
"In the markets that are most important, we have it covered, particularly for the business traveler," Garton said.

Having more daily flights to London's Heathrow, the world's busiest airport at one of the centers of global finance, is far more valuable than a route to Venice, he added.

And size matters. Pointing to Heathrow, New York's JFK, Tokyo's Narita Airport, and Los Angeles International, Garton said, "if you compare them to some of these other markets for premium customers, it's unbelievable how much larger they are."

Christopher Hinton is a reporter for MarketWatch based in New York.

Tuesday, April 13, 2010

Continental expected to make United bid
By Linda Loyd
Inquirer Staff Writer

Posted on Tue, Apr. 13, 2010

A Wall Street analyst expects Continental Airlines to bid to acquire United Airlines, after reports that United and US Airways were in merger talks.

Stifel Nicolaus airline analyst Hunter Keay said in a client note Monday that a United-US Airways merger is "a suboptimal scenario" because of pilot labor issues, revenue risks, and "problems with regulatory review due to higher domestic overlap" on routes United and US Airways have in common.

"We expect Continental to respond to reported United-US Airways merger plans with a bid for United," Keay wrote, "partly as a defensive maneuver. . . .We expect Continental to respond relatively quickly." Keay said he had no knowledge of merger negotiations or discussions between Continental and United.

Industry observers acknowledge that Continental is a better match for United. "But it takes two to agree," said aviation consultant Robert W. Mann, of Port Washington, N.Y.

Continental and United discussed merging in 2008, until Continental walked away.

A combined United-Continental would create the world's largest airline, ahead of Delta Air Lines, now the largest after acquiring Northwest Airlines in 2008. A combined US Airways-United would be the second-biggest U.S. carrier. Delta and Air France-KLM are larger worldwide.
Continental's strong presence in New York and in Pacific markets would complement United, said Gimme Credit L.L.C. bond analyst Vicki Bryan in a client note.

A United-Continental combination "could generate nearly $2 billion in revenue and cost savings, perhaps twice the benefits" of a United-US Airways merger, she wrote.
Continental has more cash - $2.9 billion - vs. US Airways' $1.3 billion and "stronger free cash flow as a percentage of revenue, and slightly lower leverage," Bryan said.

Keay said a United-US Airways merger would "seriously jeopardize" the joint ventures Continental and United had been pursuing to coordinate on scheduling and pricing.

A United-Continental merger would face less regulatory scrutiny because the carriers have fewer overlapping city pairs - nine, whereas United and US Airways have 14.

Keay said that, in a United-US Airways merger, proposed service or job reductions at Philadelphia International Airport "would be met with pushback" by politicians, possibly including U.S. Sen. Arlen Specter (D., Pa.), who protested when US Airways closed its Pittsburgh hub in 2006.

"We see potential political and/or legal issues with the handling of US Airways' Philadelphia hub, given the relatively close proximity to United's Washington Dulles hub," Keay wrote.
"We see a high likelihood of forced asset divestitures at Philadelphia or Dulles, and
Phoenix or San Francisco, given hub redundancy."

Gimme Credit's Bryan noted, "US Airways lacks the rich appeal of new markets."
United and US Airways' overlapping markets - such as Washington - could result in reduced market share "if the combined carrier was required to sell common slots, for example, before the merger could meet regulatory approval," Bryan said.

Most airline CEOs, including United's Glenn Tilton and US Airways' Doug Parker, have touted the benefits of more industry consolidation.

In 2002, Tilton was recruited to United, after nearly three decades in the oil industry, to turn around the troubled Chicago-based carrier. Hit by competition from low-fare carriers, United's labor costs were among the highest in the industry. Two United passenger planes were hijacked in the Sept. 11 terror attacks.

After United filed for Chapter 11 bankruptcy reorganization, management in 2003 eked out hefty concessions from unions that saved about $2.5 billion.

"United flight attendants and pilots have been at war with the company since the restructuring," said Mann. "It wasn't a small haircut. These were scalpings."

US Airways filed for bankruptcy protection twice in the last decade and was saved from liquidation in 2005 by combining with America West Airlines, of Tempe, Ariz.

Parker, with America West since 1995, became CEO of the new US Airways. Under his leadership, US Airways improved operational problems at Philadelphia International Airport - uneven baggage service, and one of the worst records for on-time flights.

Parker made an unsuccessful hostile bid for bankrupt Delta in 2006. US Airways tried to combine with United in 2008, but United walked away.

One of US Airways' biggest unresolved headaches from its 2005 merger has been integrating its pilots and flight attendants, which are split on seniority lines - with more-senior crews employed by the old US Airways and less-senior personnel working for the former America West.

"US Airways hasn't been able to run one airline," said Mann. "They still operate on two separate contracts. They still fly on two separate fleets."

If United and US Airways merge, seniority integration of the workforces will have to be resolved. Management has to be "willing to pay to play," Mann said.

"I think they could convince people who are today opposed to a merger to participate. They are going to have to share the economics," Mann said. "If they try to do it cheap, chances are they'll have a lot of resistance."
Frontier name to remain, Midwest name to be dropped
By Steve Raabe The Denver Post
Posted: 04/13/2010 10:18:42 AM MDT

Republic Airways officials announced this morning that Frontier will be the operating brand name for Republic's Frontier and Midwest carriers.

Republic's Vice President of Marketing Ian Arthur said that Frontier had stronger growth potential between the brand names Frontier and Midwest.

About 400 Frontier employees assembled at a Coors Field party suite for the announcement, stood and erupted in raucous cheers when the announcement was made.

Frontier's popular animal-themed marketing campaign will also survive and be the new brand's focus in future marketing. As a concession to Midwest, Republic officials said chocolate chip cookies will be served on all flights, a trademark amenity of Midwest.

The announcement followed months of speculation about the future of the Frontier and Midwest brands after Indianapolis-based Republic Airways bought the airlines last year.

Republic had said that it planned to "harmonize" the brands in a way that would recognize the identities of the airlines and their respective customer loyalty.

Frontier, born in Denver, is known for its "A Whole Different Animal" ad campaign, with talking tail animals and its seatback TVs.

Last month, about 150 Frontier employees and fans rallied in downtown Denver in support of preserving Frontier's name and animals.

"Workers at Frontier Airlines are proud of their hometown airline and their great customer service model," Teamsters union official David Bourne said in a letter this week to Republic chief executive Bryan Bedford. "I hope that you retain the strength of their pride in their service."
Midwest, based in Milwaukee, has a longtime motto of "Best Care in the Air" and is known for serving chocolate-chip cookies baked inflight.

Bedford said that in addition to slogans and ad campaigns, the rebranding decision involved unifying the airlines' policies, procedures, pay scales, benefits, labor unions, information technology systems, bookkeeping systems and management.
AA flight making emergency landing in Iceland

34 mins ago

LONDON – Airport authorities say an American Airlines flight is making an emergency landing in Iceland after reports of chemical fumes in the cabin.
Keflavik Airport spokesman Fridthor Eydal says several passengers have complained of dizziness. He says the flight is due to land around 1345GMT and emergency teams are on the ground.

The flight was en route from Paris. Its final destination was not immediately clear.

AA flight made emergency landing in Iceland

15 mins ago

LONDON – Airport authorities say an American Airlines flight is made an emergency landing in Iceland after reports of chemical fumes in the cabin.

Keflavik Airport spokesman Fridthor Eydal says several passengers have complained of dizziness. He says the flight landed around 1345GMT and emergency teams are on the ground.

The flight was en route from Paris. Its final destination was not immediately clear.

Friday, April 09, 2010

Union Blood Boils Over Rumored Airline Deal

Madalina Iacob, 04.09.10, 05:35 PM EDT
Flight attendants and pilots find fault with potential US Air/United tie-up. Analysts think the latter might have a better fit with Continental.

Shares of United Airlins parent UAL and US Airways spiked earlier this week after reports that the pair were in merger talks, but some groups impacted by the deal aren't flying so high and are voicing their displeasure.

The potential deal drawn the ire of pilot and flight attendant unions, which is likely to make any potential tie-up a long and complicated process like the two-year saga leading up to the marriage of Delta Air Lines ( DAL - news - people ) and Northwest.

The “track record of management at each of our airlines is abysmal,” according to a joint press release Friday from a union that represnts 21,000 flight attendants at UAL ( UAUA - news - people ) and US Airways ( LCC - news - people ). “For nearly five years US Airways CEO Doug Parker has failed to negotiate a joint flight attendant contract, continuing to operate the airlines separately with disparate treatment of flight attendants at each former airline. Parker has left merger issues unresolved all this time, which hardly qualifies him to consider the possibility of another merger," the statement continues.

Meanwhile, pilots at United Airlines have expressed concerns about the integration costs that would come with the deal, noting that US Air and America West have yet to achieve operational integration more than four and a half years after their combination.

Airline stocks were mixed Friday with the NYSE Arca Airline Index down .2% at $38.53. The index vaulted to a two-year high Thursday when investors reacted to the reports that US Air and United were in talks. US Air fell 3.1% to $7.32, while UAL shares lost gained 1.3% to $20.50. Continental Airlines ( CAL - news - people ) , which has been mentioned as a potential party-crasher on any US Air/United deal, rallied 1.4% to $21.53.

Consolidation "would be a significant positive for combining carriers and the broader industry,” Barclays Capital analysts said in a note, arguing that a merger between United and either US Air or Continental could generate cost savings of $250 million to $400 million per year, even after labor dislocation costs.
United Pilots: Merger Chatter Not Serious
By Ted Reed 04/09/10 - 03:33 PM EDT

CHICAGO (TheStreet) -- The head of the pilots union at United says chatter about merger talks between United Airlines(UAUA) and US Airways(LCC) is vastly overstated.

"Presently, there are no meaningful merger discussions with US Airways," wrote Wendy Morse, chairman of the United chapter of the Air Line Pilots Association, in a message to United pilots on Wednesday. "The United master executive council has confirmed that the report is speculation," Morse wrote, referring to a New York Times article that said the two carriers "are deep" in merger discussions.

The union, Morse went on to say, "vehemently [opposes] any merger that would not lead to a stronger and more viable United Airlines."

On Thursday, in a press release, Morse shifted her focus to say that it would be difficult to merge with US Airways because of the seniority battle that continues to divide the airline's pilots nearly five years after the 2005 merger between US Airways and America West.

She said media reports about the merger had "caused a great deal of consternation among the pilots I represent" and added that United pilots "are not opposed to any merger that would benefit the careers and the long-term future of United pilots.

"A merger with US Airways does not appear to come close to meeting that standard," she wrote.
Stock in US Airways began the week at $7.32. Shares climbed as high as $7.87 on Thursday. On Friday, US Airways shares lost 23 cents to close at $7.32.
Meanwhile, stock in United began the week at $19.63. On Friday, shares reached a high of $20.55 before closing at $20.50, up 27 cents.
-- Written by Ted Reed in Charlotte, N.C.

Wednesday, April 07, 2010

U.S. Air, United "deep" in merger talks
On Wednesday April 7, 2010, 7:01 pm
By Jui Chakravorty and Deepa Seetharaman

NEW YORK (Reuters) - U.S. Airways Group Inc (NYSE:LCC - News) and UAL Corp's (NasdaqGS:UAUA - News) United Airlines are in merger talks, a source familiar with the situation said on Wednesday.

The discussions, which have been going on for about two weeks, are not the first between the two airlines, the source said.

The shares of both airlines shot up after market close. The New York Times first reported the news, citing people familiar with the situation.

Talk of continued U.S. industry consolidation had picked up since Delta Air Lines Inc (NYSE:DAL - News) acquired Northwest in 2008, becoming the world's biggest airline.

At the Reuters Travel and Leisure Summit in February, the chief financial officers of US Airways and United said their companies were open to a merger.

"UAL has been supportive of consolidation for a long time," UAL Chief Financial Officer Kathryn Mikells said at the Reuters summit. US Airways Chief Financial Officer Derek Kerr said in a separate interview that his airline was open to merging with another U.S. carrier.

"Consolidation is one of the major ways this industry can become profitable," Kerr said.

Tempe, Arizona-based US Airways could not immediately reached for comment after Wednesday's report.

"As we've consistently said, we don't comment on rumors or speculation. We've been consistent on our position on consolidation generally for several years, and that position is well known," said Jean Medina, spokeswoman for Chicago-based UAL.


Such a deal would create one of the world's largest airlines. The Times reported on Wednesday the deal is not expected to be announced for at least several weeks and talks could still fall apart.

US Airways shares were up about 26 percent at $8.61 after the closing bell. United's stock was up 8.2 percent at $20.51. Shares of other airlines also rose.

The two carriers had come close to merging with each other in 2008, sources said at the time. United and Contential Airlines Inc (NYSE:CAL - News) also contemplated a deal before Continental walked away from the talks.

Analysts in the past raised possible antitrust hurdles with a US Airways/United pairing due to the strength of their East Coast routes, especially in Washington where US Airways is moving to bolster its operations.

(Reporting by Jui Chakravorty and Deepa Seetharaman; additional reporting by Kyle Peterson; editing by Andre Grenon)

Tuesday, April 06, 2010

Spirit Airlines to charge $45 for carry-on luggage
By Blake Ellis, staff reporterApril 6, 2010: 7:59 PM ET

NEW YORK ( -- Spirit Airlines will soon be the first of the major U.S. airlines to charge passengers to carry on their luggage.

Beginning in August, the carrier will slap on an additional fee of up to $45 for any bags placed in overhead bins, the carrier said Tuesday.

If you pay online in advance, it will cost you $30 to stow your carry-on in an overhead bin, but if you wait until you get to the gate, it will cost $45. Passengers may still place one personal item under the seat in front of them, free of charge.

The new carry-on fee went into effect Monday and applies to flights booked for Aug. 1 or later. Fliers who pay in advance for their carry-on luggage will be the first to board the airplane, Spirit said.

"In addition to reducing fares even further, this will reduce the number of carry-on bags, which will improve inflight safety and efficiency by speeding up the boarding and deplaning process, all of which ultimately improve the overall customer experience," Chief Operating Officer Ken McKenzie said in a statement.

At the same time, Spirit will lower fees for checked luggage. Spirit Airline members will pay $15 for their first and second bags if they pay online, instead of the $19 and $25 that was previously charged. Non-members, however, will pay more: The first bag is $25 online and $45 at the airport; $30 for the second bag.

While many other airlines also charge for checked luggage, they still allow passengers to stow carry-on luggage for free.

David Castelveter, a spokesman at Air Transport Association, which represents the leading U.S. airlines, said he's not aware of any ATA members charging for carry-on luggage.

JetBlue (JBLU) lets passengers bring a carry-on bag as well as a personal item aboard with no extra fee. Customers are also able to check their first bag for free, but a second checked bag costs $30.

Other major airlines, including Delta (DAL, Fortune 500), Continental (CAL, Fortune 500), Frontier and United, all let passengers carry on one bag and one personal item for free, but charge fliers around $20 for the first checked bag and $30 for the second.

Thursday, April 01, 2010

Air Comet Flight Attendants Pose Nude In Pay Dispute

Unpaid air hostesses strip in protest
Reuters – A flight attendant posing nude in a calendar picture is seen in this handout released March 31, 2010. …
56 mins ago

MADRID (Reuters) – Flight attendants owed up to nine months' wages by a grounded Spanish airline have posed nude for a calendar to draw attention to their plight, one of the cabin crew turned models said on Wednesday.

The calendar, numerous excerpts of which appeared in the Spanish media, shows the Air Comet attendants, all female, posing provocatively in and outside airline cabins, and in one case on top of a jet turbine.

"We are just demanding our rights to receive what is ours, we each have eight or nine months of unpaid salaries," attendant Adriana Ricardo, who appears in the calendar, told Reuters.
Air Comet, run by the embattled chairman of Spain's main employers' association CEOE, Gerardo Ferran, filed for administration in December after a British court impounded nine of its aircraft at the request of German bank HSH Nordbank.
(Reporting by Jonathan Gleave, editing by Paul Casciato)

American Airlines, JetBlue propose swap of slots in New York, Washington
07:28 AM CDT on Thursday, April 1, 2010
By TERRY MAXON / The Dallas Morning News

The air battle over New York is heating up again.

Countering a major move by Delta Air Lines Inc., American Airlines Inc. said Wednesday it is strengthening its operations at two of the three major New York airports.

"We are in a tough, important fight in New York – a fight we intend to win," American chairman and chief executive Gerard Arpey told employees in an internal message.

American is adding a total of 31 flights out of LaGuardia Airport and Kennedy International Airport, and it is investing at least $30 million to upgrade its two LaGuardia concourses.
It is also studying expanding its new Kennedy terminal so Oneworld partner British Airways PLC can join it there.

American announced a deal with JetBlue Airways Corp. to pick up some takeoff and landing slots at Kennedy. JetBlue will gain some of American's slots at Ronald Reagan Washington National Airport, allowing JetBlue to begin service there in November.

JetBlue CEO Dave Barger (left) and American CEO Gerard Arpey exchange model airplanes. They forged a deal trading some airport slots and feeding each other passengers. " JetBlue CEO

Dave Barger (left) and American CEO Gerard Arpey exchange model airplanes. They forged a deal trading some airport slots and feeding each other passengers.

In addition, JetBlue and American will feed passengers to each other through New York and Boston.

"Our announcements today demonstrate our strong commitment to New York, and we look forward to expanding that commitment in the months and years to come," Arpey said.

"We have a long history in New York, and we're going to grow those roots with new routes, new partnerships, even deeper local relationships and the kind of service that New Yorkers expect and that will attract more visitors and commerce to the city," he said.

The deal underlines the growing competition among airlines at New York, a fight that had been muted somewhat in recent years by deep losses for many carriers.

Delta's plans
Delta, the world's largest airline since its October 2008 merger with Northwest Airlines Inc., wants to expand its operations significantly at LaGuardia. It has a deal with US Airways Inc. to trade slots to boost Delta's LaGuardia flights in exchange for US Airways getting Delta slots at Washington National.

Delta spokeswoman Heather Faulkner said the carrier "remains very committed to the New York market." She pointed to investments in business-class service on transcontinental flights, sponsorships of New York sports teams and facilities, and 30 international flights added at Kennedy since 2006.

Delta and American have stepped up their battle for business at Kennedy International Airport and elsewhere in the New York area, where Continental is the dominant carrier. "

Delta and American have stepped up their battle for business at Kennedy International Airport and elsewhere in the New York area, where Continental is the dominant carrier.

"Moreover, Delta, which has invested more than $70 million on facilities improvements in the market, plans to dramatically enhance our customer-facing presence at JFK and LaGuardia Airports," she said. "We are working very closely with the Port Authority of New York & New Jersey to implement this plan and will announce more specifics in the future."

Among the new American service announced Wednesday are flights from LaGuardia to Minneapolis-St. Paul, Minn., and Atlanta, two major Delta hubs, and to Charlotte, N.C., US Airways' largest hub. American Eagle, American's regional unit, will begin flights from Kennedy to Cincinnati, Ohio, a smaller Delta hub.

Delta announced March 18 that it would begin a shuttle service between LaGuardia and Chicago O'Hare on June 10. LaGuardia-O'Hare is a major route for American and United Airlines Inc., which both operate Chicago hubs, and Arpey said American would add LaGuardia-Chicago flights this summer.

The number of takeoffs and landings at Kennedy, LaGuardia and National are limited, and airlines need the slots to operate at those airports.

If Delta's deal goes through as requested, Delta will have 49 percent of LaGuardia's slots, up from its 24 percent share. American's share is 21 percent.

Delta alone carried 11.5 percent of LaGuardia's passengers in 2009, behind American's 17.7 percent. However, Delta controlled 27 percent of the traffic if Northwest, Delta regional carrier Comair Inc., and other partners are added in. Even with its American Eagle affiliate, American trailed with 21.4 percent.

At Kennedy, JetBlue was the 2009 leader, with more than 25 percent of the traffic, ahead of Delta's 18.1 percent and American's 14 percent. With Northwest and regional carriers included, Delta carried nearly 24 percent of Kennedy's passengers. Delta has 16.4 percent of Kennedy's international passengers, ahead of American's 14.2 percent.

Continental's clout
But the largest carrier in the New York area is Continental Airlines Inc. by virtue of its Newark, N.J., connecting hub. Last year, it carried 18.8 percent of the passengers handled by the three airports, ahead of Delta's 11.7 percent and American's 11.3 percent. Including regional partners, Continental carried 24 percent of the traffic, compared with Delta's 18.3 percent and American's 12.9 percent.

Among provisions of the American-JetBlue deal are:
•American would pick up 12 pairs of landing and takeoff slots at New York Kennedy from JetBlue.

•JetBlue would obtain eight pairs of slots at Washington National and one slot pair at White Plains, N.Y., from American.

•American would feed passengers to JetBlue's U.S. flights on routes on which they do not compete.

•JetBlue would feed passengers to American at Boston Logan Airport and New York Kennedy to 12 international destinations that American serves from those cities.

•The two will also consider other areas of cooperation.

American said "certain portions" of its deal with JetBlue may be subject to regulatory review, while JetBlue said "regulatory approval is not required for this transaction."

At a news conference Wednesday with New York Mayor Michael Bloomberg, Arpey and JetBlue CEO Dave Barger didn't rule out the possibility that JetBlue might some day join Oneworld, the airline alliance started by American, British Airways and others.

JetBlue's largest shareholder, Lufthansa, belongs to the competing Star Alliance. JetBlue also has deals to exchange passengers with Lufthansa and Aer Lingus.
American Airlines, partners say they shouldn't have to give up Heathrow slots
07:30 AM CDT on Thursday, April 1, 2010
By TERRY MAXON / The Dallas Morning News

American Airlines Inc. and its Oneworld partners told the U.S. government this week that they shouldn't have to give up any slots at London's Heathrow Airport to protect competition.
But if the U.S. Department of Transportation does require them to give up takeoff and landing slots, the requirement should be consistent with that proposed to the
European Commission, the airlines said in filings made public Wednesday.

The commission is testing a proposal that the carriers lease slots to competitors: two pairs for Heathrow-Boston service, two pairs for Heathrow-New York, one pair for Heathrow-Dallas/Fort Worth and one pair for Heathrow-Miami.

But American and its partners said they see no need to give up any New York slots, since their competitors have been able to get slots to launch routes or add flights.

The Transportation Department proposes requiring the carriers to give up two pairs of slots for the Boston route and two pairs for any other route.

The five Oneworld carriers – American, British Airways, Iberia, Finnair Oyj and Royal Jordanian Airlines – applied for antitrust immunity in August 2008, so they could jointly set schedules and fares and otherwise cooperate. As they have done since they applied, the partners denied that Heathrow was a special case that deserved separate treatment from other European airports dominated by other airline alliances.

"Given the unprecedented level of new entry at Heathrow since the advent of U.S.-EU Open Skies, the availability of Heathrow slots for new entrants, and the fact that Heathrow is Europe's most competitive hub, the record simply does not justify imposing remedies," the applicants said.

However, Virgin Atlantic Airways Ltd., the most vocal opponent of the proposal, urged the department to turn down the application.

"The number of slots the DOT has suggested should be given up is entirely inadequate," Virgin president Richard Branson said, "and the idea that BA and AA's competitors should lease slots from them ... is astonishing."

But the Oneworld partners said Virgin should have no complaint. "Virgin serves Heathrow from eight North American gateways and leases out to short-haul carriers Heathrow slots it has used for trans-Atlantic service in the past, proving that Virgin has no need for a slot remedy."