January 22 Airline News



More airlines bracing for possible bankruptcy [BR][BR]FORT WORTH (Knight Ridder) - As union leaders blasted American Airlines' labor cost-cutting strategy at a news conference yesterday, a report surfaced that the airline is preparing itself in case of a future bankruptcy filing. [BR][BR]Citing sources close to the matter, Reuters news service reported that American Airlines has hired bankruptcy lawyers in case a war with Iraq worsens the industry's already-critical financial condition. [BR]
[P align=justify]Complete Story:[BR][A href=http://seattletimes.nwsource.com/html/businesstechnology/134619658_airlines22.html]http://seattletimes.nwsource.com/html/businesstechnology/134619658_airlines22.html[/A] [BR][BR]Will the DOJ allow airline mergers?[BR][BR]WASHINGTON (TheDeal.com) - The Department of Justice's recent clearance of an alliance involving Delta Air Lines, Continental Airlines and Northwest Airlines has sparked debate over whether the antitrust division may be more receptive to mergers among major hub-and-spoke carriers. [BR][BR]Those arguing that airline mergers now have a shot of winning antitrust approval note that this is the second major alliance the antitrust division has permitted in recent months. The other was an alliance of UAL Corp. and US Airways Group Inc. Though the alliances are far short of mergers, they do involve five of the six major hub-and-spoke carriers. [BR][BR]Antitrust experts said the Department of Transportation has now become more aggressive on airline competition than the antitrust division, an odd reversal given that the DOT approved many of the mergers that created the fortress hub carriers despite Justice Department objections. [BR][BR]As proof, they cite the decision Tuesday, Jan. 21, by the DOT to challenge the Delta-Continental-Northwest alliance on competition grounds — even though the carriers accepted several conditions required to win the antitrust division's consent. [BR][BR]The general trend has been that Justice is more aggressive, said one antitrust lawyer, requesting anonymity, who has worked on airline mergers. It is now an open question. Is DOT inclined to take a tougher position than DOJ? That seems to be what is taking place. [BR][BR]The ramification of such a flip in position could be significant. Airlines in recent years have flocked toward alliances because the antitrust division would not permit mergers. Yet if the DOT is blocking alliances, it makes mergers more attractive, especially because the antitrust division has lead authority over acquisitions. [BR][BR]A second antitrust lawyer who has worked on previous airline deals said the Justice Department's approval of the Delta-Continental-Northwest alliance with few restrictions suggests the antitrust division no longer considers the hub-and-spoke business model to be viable. If the business model no longer works, then it is not a problem to permit the carriers to work together, the lawyer said. [BR][BR]This lawyer, also requesting anonymity, said the antitrust division might even be more receptive to an outright merger than it was to the alliance. The reason: A merger is more likely to generate efficiencies that will be passed on to consumers. [BR][BR]Airlines start alliance, defy DOT [BR][BR]WASHINGTON (USA Today) - In a rare act of public defiance, three of the nation's biggest airlines said Tuesday that they would ignore some government restrictions on their alliance and launch the partnership this summer. [BR][BR]Complete Story: [A href=http://www.usatoday.com/travel/news/2003/2003-01-21-alliance.htm]http://www.usatoday.com/travel/news/2003/2003-01-21-alliance.htm[/A] [BR][BR]US Airways comments on trilateral alliance [BR][BR]PITTSBURGH (Post-Gazette) – By announcing their intent to ignore the Department of Transportation conditions, it looks like Delta, Northwest and Continental airlines have decided they want to be known as the ‘Outlaw Alliance’, US Airways said yesterday. [BR][BR]AMR Reports Fourth Quarter Loss of $529 Million [BR][BR]FORT WORTH (PRNewswire-FirstCall) - Consistent with expectations, AMR Corporation, the parent company of American Airlines, Inc., today reported a fourth quarter net loss of $529 million, or $3.39 per share. This compares with last year's fourth quarter net loss of $734 million before special items, and $798 million -- $5.17 per share -- after special items. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/prnews/030122/daw011_1.html]http://biz.yahoo.com/prnews/030122/daw011_1.html[/A] [BR][BR]AMR warns red ink 'unsustainable' [BR][BR]FORTH WORTH (CBS.MW) - AMR fell 16 percent after turning in narrower-than-expected fourth-quarter losses Wednesday, noting that further losses are unsustainable as it works to eliminate $4 billion in costs this year. [BR][BR]Complete Story:[BR][A href=http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B6197FB4D%2D869D%2D4B97%2DA344%2D2EC1381CD8EC%7D]http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B6197FB4D%2D869D%2D4B97%2DA344%2D2EC1381CD8EC%7D[/A] [BR][BR][FONT size=3][/FONT][STRONG]AMR Lost Industry-Record $3.5 Billion [/STRONG][BR][BR]DALLAS (Reuters) - AMR Corp., the corporate parent of American Airlines, posted the largest yearly loss in aviation history on Wednesday -- $3.5 billion in 2002. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/rb/030122/airlines_american_earns_3.html]http://biz.yahoo.com/rb/030122/airlines_american_earns_3.html[/A] [BR][BR]AMR Corp. sees losses continuing in first quarter [BR][BR]DALLAS (Reuters) - AMR Corp. Chief Financial Officer Jeff Campbell on Wednesday said he expected American Airlines' pretax loss for the first quarter to be comparable to the airline's fourth-quarter pretax loss. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/rf/030122/airlines_american_loss_3.html]http://biz.yahoo.com/rf/030122/airlines_american_loss_3.html[/A] [BR][BR]AMR CFO believes American Air can avoid bankruptcy [BR][BR]DALLAS (Reuters) - AMR Corp. Chief Financial Officer Jeff Campbell said on Wednesday he resisted the idea that a bankruptcy at American Airlines was inevitable. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/rf/030122/airlines_american_cfo_1.html]http://biz.yahoo.com/rf/030122/airlines_american_cfo_1.html[/A] [BR][BR]American Air warns labor on cost cuts, Continental hires bankruptcy attorney [BR][BR]CHICAGO (Chicago Tribune) - Financially troubled American Airlines increased the pressure on employees Tuesday, saying it needs to make progress on reducing labor costs within four to six weeks. [BR][BR]Complete Story: [A href=http://www.chicagotribune.com/business/chi-0301220402jan22,1,6526841.story]http://www.chicagotribune.com/business/chi-0301220402jan22,1,6526841.story[/A] [BR][BR]S&P may cut AMR, American Airlines corp credit rtgs [BR][BR]NEW YORK, Jan 22 - Standard & Poor's Ratings Services said today it placed its 'BB-' corporate credit ratings and other ratings for AMR Corp. and subsidiary American Airlines Inc. on CreditWatch with negative implications, reflecting continuing heavy losses and diminishing sources of backup liquidity as available collateral is used for borrowings. AMR today reported a net loss of $529 million in the fourth quarter of 2002, a decline from the $734 million net loss, before special items, in the prior-year period, and a full-year 2002 net loss of $3.5 billion ($2.0 billion before special items), an increase from the $1.4 billion net loss, before special items, in 2001. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/rf/030122/airlines_amr_s_p_1.html]http://biz.yahoo.com/rf/030122/airlines_amr_s_p_1.html[/A] [BR][BR]American Airlines may go bust[BR][BR]LONDON (Evening Standard) – The world's biggest carrier, American Airlines, issued a stark bankruptcy warning today as it announced the biggest annual loss in aviation history. The airline said the $3.5bn (£2.1bn) loss for 2002 was 'clearly unsustainable', adding that its future 'cannot be assured'. The threatened collapse of AA sent shock waves reverberating around the aviation world. [BR][BR]Complete Story: [A href=http://www.thisislondon.com/news/business/articles/timid58196?source=]http://www.thisislondon.com/news/business/articles/timid58196?source=[/A][BR][BR]Northwest likely to ask unions for concessions [BR][BR]EAGAN (TwinCities.com) - Northwest Airlines acknowledged Tuesday that it may again target its union contracts as part of an effort to cut continuing losses, which now amount to about $1.2 billion for the past two years. [BR][BR]Complete Story: [A href=http://www.twincities.com/mld/pioneerpress/5000351.htm]http://www.twincities.com/mld/pioneerpress/5000351.htm[/A] [BR][BR]Southwest Airlines Reports Fourth Quarter Earnings and 30th Consecutive Year Of Profitability [BR][BR]DALLAS (PRNewswire-FirstCall) - Southwest Airlines net income for fourth quarter 2002 was $42.4 million, compared to $63.5 million for fourth quarter 2001. Net income per diluted share was $.05 for fourth quarter 2002, compared to $.08 in fourth quarter 2001. The $.05 per diluted share compares favorably to First Call's consensus estimate of $.03 for fourth quarter 2002. The Company's fourth quarter 2001 net income, excluding special items, was $32.4 million, or $.04 per diluted share. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/prnews/030122/daw004_1.html]http://biz.yahoo.com/prnews/030122/daw004_1.html[/A] [BR][BR]Southwest earnings slump, top views [BR][BR]DALLAS (CBS.MW) - Shares of Southwest Airlines fell Wednesday after the company topped Wall Street expectations in its fourth quarter but warned that it could lose money in the first quarter for the first time in its 30-year history. [BR][BR]Complete Story:[BR][A href=http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B1E0AB64A%2D822D%2D421E%2D8ED8%2D507F1D3FE004%7D]http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B1E0AB64A%2D822D%2D421E%2D8ED8%2D507F1D3FE004%7D[/A] [BR][BR]Southwest to add 11 new aircraft in 2003 [BR][BR]DALLAS (Reuters) - Southwest Airlines Inc. Chief Financial Officer Gary Kelly said the low-cost carrier plans to add 11 aircraft to its fleet this year, raising its capacity for 2003 by 4.2 percent. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/rc/030122/airlines_southwest_fleet_1.html]http://biz.yahoo.com/rc/030122/airlines_southwest_fleet_1.html[/A] [BR][BR]Sprint Announces Marketing Relationship with US Airways [BR][BR]OVERLAND PARK (PRNewswire) - announced today a marketing relationship with US Airways to offer the airline's Dividend Miles members the opportunity to earn up to 6,000 bonus miles for choosing Sprint for residential long-distance service and, later in the first quarter, up to 5,000 bonus miles for activating a new PCS wireless subscription. Sprint becomes the long-distance communications partner for US Airways effective immediately. [BR][BR]Complete Story: [A href=http://biz.yahoo.com/prnews/030122/cgw017_1.html]http://biz.yahoo.com/prnews/030122/cgw017_1.html[/A] [BR][BR]US Airways dumps frequent-flier partner WorldCom [BR][BR]PITTSBURGH (Business Times) - US Airways has followed other airlines in dumping WorldCom's MCI as a frequent flier program partner, as carriers grow concerned about the ability of WorldCom - operating under bankruptcy protection - to live up to its part of the bargain. [BR][BR]Complete Story: [A href=http://www.bizjournals.com/pittsburgh/stories/2003/01/20/daily35.html]http://www.bizjournals.com/pittsburgh/stories/2003/01/20/daily35.html[/A] [BR][BR]US Airways departure leaves Worcester airport with no commercial flights [BR][BR]WORCESTER (AP) - US Airways will stop flying to Worcester Regional Airport next month, leaving the airport with no commercial flights. [BR][BR]Complete Story: [A href=http://www2.bostonherald.com/news/local_regional/ap_worc01222003.htm]http://www2.bostonherald.com/news/local_regional/ap_worc01222003.htm[/A] [BR][BR]US Airways Express Closures [BR][BR]ARLINGTON (theHub.com) - US Airways Express carriers Allegheny and Piedmont will end service to both Worcester, Ma., and Columbus, Ga., due to low demand. The closures will affect 13 employees in Worcester and 19 employees in Columbus. Employees and local governments have been informed of the change, which is scheduled to be effective in Columbus on Feb. 8. The scheduled Worcester closure date is also Feb. 8, with a potential delay due to Essential Air Service (EAS) requirements that may call for US Airways to continue service for 90 days from date of notice. US Airways is the last commercial carrier serving the airport and is required to petition for government approval before eliminating service. At Worcester, Allegheny currently operates three Dash-8 flights to and from Philadelphia. At Columbus, Piedmont operates three Dash-8 routes to Charlotte. [BR][BR]US Air Wins Court Approval; Clock Ticking On Pension Plan [BR][BR]WASHINGTON (Aviation Daily) - US Airways late last week received approval from an Alexandria, Va., bankruptcy court to request approval from its creditors on its reorganization plan, a key decision of the airline's plan to emerge from Chapter 11 by March 31. [BR][BR]However, the airline faces a tight timeline to find a way to implement an amortized pension plan. The airline has until Jan. 31 to mail the solicitation packages to more than 144,000 creditors, leading up to a March 18 hearing. The package must include some resolution to the pension problem, which means a decision needs to come in about five days. [BR][BR]The airline said it is pursuing a legislative solution, but industry observers doubt it will be able to reach that goal. The airline said it might have no choice but to terminate the existing pilot pension program and begin formal negotiations with pilots union on an agreeable replacement plan. [BR][BR]At the Friday conclusion of a two-day hearing, Judge Stephen Mitchell approved the airline's disclosure statement as having adequate information for the solicitation, and he authorized the airline to send out its disclosure statement and plan of reorganization. The Jan. 31 mailing will initiate a 38-day process in which qualified claim holders will vote on the company's plan. [BR][BR]US Airways to lay off at least 35 PTIA workers [BR][BR]GREENSBORO (The Business Journal) - US Airways plans to lay off at least 35 employees at its hangar at Piedmont Triad International Airport, starting after April 1. [BR][BR]Complete Story: [A href=http://www.bizjournals.com/triad/stories/2003/01/20/daily34.html]http://www.bizjournals.com/triad/stories/2003/01/20/daily34.html[/A] [BR][BR]Senate Refuses to Ease US Airways Pension Liability [BR][BR]WASHINGTON (AP) - The Senate on Wednesday rejected legislation intended to give financially strapped US Airways Group Inc. an extra 25 years to fund its accrued pension liabilities. [BR][BR]The provision, offered as an amendment to a $385 billion omnibus spending bill, failed on a 64-31 vote.[BR][BR]Complete Story: [A href=http://biz.yahoo.com/djus/030122/1952001234_1.html]http://biz.yahoo.com/djus/030122/1952001234_1.html[/A] [BR][BR]US Airways' President and CEO Comments on Senate Vote Defeating Pension Restoration Funding Plan [BR][BR]ARLINGTON (PRNewswire-FirstCall) - US Airways President and Chief Executive Officer David Siegel issued the following statement this evening after the vote by the U.S. Senate to defeat by a vote of 64-31 the Specter amendment to H.J. Res. 2, the FY 2003 omnibus appropriations bill. The amendment would have granted the Pension Benefit Guaranty Corporation (PBGC) the ability to authorize a restoration funding plan for the US Airways pension obligations.[BR][BR]Complete Story: [A href=http://biz.yahoo.com/prnews/030122/dcw065_1.html]http://biz.yahoo.com/prnews/030122/dcw065_1.html[/A] [BR][BR]US Senate kills plan to help bankrupt US Airways, McCain says he is willing to take up matter for entire industry[BR][BR]WASHINGTON (Reuters) - The U.S. Senate killed a proposal late on Wednesday to allow US Airways Group Inc to restructure payments to its employee pension system, increasing chances the bankrupt carrier will terminate its pilots' retirement plan.[BR][BR]Complete Story: [A href=http://biz.yahoo.com/rf/030122/airlines_congress_1.html]http://biz.yahoo.com/rf/030122/airlines_congress_1.html[/A] [BR][BR]US Airways signs up for travel[BR][BR]PITTSBURGH (Post-Gazette) – Cendant Corp. said yesterday that its Galileo travel reservation unit formed a program with travel agents and US Airways and United Airlines to boost its market and increase bookings at the company’s hotel and car rental chains. Under the company’s Momentum program, airlines will provide Galileo with all available discounted tickets and those for sale over the Internet. In exchange, Galileo will charge those airlines about $2 less for each ticket booked. [BR][BR]Mesa Scrambles To Comply With 'Jets For Jobs' Obligations [BR][BR]PHOENIX (Aviation Daily) - The deadline for Mesa Air to give US Airways assurances that the Phoenix, Ariz.-based carrier would comply with the Jets for Jobs program passed yesterday as pilots and management at Mesa continued contract negotiations. [BR][BR]Mesa CEO Jonathan Ornstein told Senior VP of Corporate Development at US Airways Bruce Ashby on Jan. 3 that Mesa wouldn't be able to comply with Jets for Jobs for the flight schedule effective Jan. 5. [BR][BR]Recognizing the status of ongoing labor negotiations at Mesa, US Airways and Mesa have taken extraordinary efforts to mitigate the loss of three additional aircraft planned for the schedule from Jan. 5 through Feb. 8, Ashby said last week in a letter to Mesa President Mike Lotz. [BR][BR]Ashby also stressed that, if we are unable to have confidence in Mesa's ability to perform in the immediate future, it will be necessary for US Airways to seek alternatives for a similar amount of RJ capacity. Eight aircraft are scheduled to start revenue service at Mesa on Feb. 9 and 12, April 6 and 15, May 4 and 19 and June 8. [BR][BR]If pilots and management at Mesa don't reach a contract agreement and meet the Jets for Jobs obligations, jobs at Mesa are in jeopardy. Ornstein said one way the carrier had been preparing for the new jets was overstaffing to spool the jets quickly. If we don't move forward we'll find ourselves in position of excess crew. The DAILY has learned up to 100 jobs could be at stake. [BR][BR]Mesa Air Group Reaches Tentative Contract Agreement With Its Pilots, deal includes US Airways Jets for Jobs [BR][BR]PHOENIX (PRNewswire-FirstCall) - Mesa Air Group, Inc. today announced it has reached a tentative agreement for a new contract with the Air Line Pilots Association (ALPA), which represents the airline's 1,300 pilots. In addition, the parties have reached an agreement concerning participation in the US Airways Jets for Jobs regional jet expansion program. [BR][BR]omplete Story: [A href=http://biz.yahoo.com/prnews/030122/law098_1.html]http://biz.yahoo.com/prnews/030122/law098_1.html[/A][/P]