I was able to be on the media call for Southwest’s fourth quarter, but unfortunately I was unable to ask a question, but I was able to pass it along to Paula Berg over at Southwest, and she was able help me out. I asked how bookings of business select and refundable fares were in the fourth quarter. I was wondering if the economic environment had any negative effect there. Business Select revenue was $19 million during the quarter, only a million less than the third quarter (it is unfair to compare to fourth quarter 2007 as the product was still new then. 24% of fares booked were full fare in the fourth quarter of 2008, compared to 26% for the same period in 2007. Overall, not as bad.
Monthly Archive for January, 2009Page 2 of 5
Today’s video comes from Jon Heckman. Hopefully, the symptoms in this commercial are greatly exaggerated. 
This week, American, Southwest, and United released their results. Next week will be a bit busier. Like the last post, the airline names link to their respective investor relations pages.
Tuesday, January 27
Wednesday, January 28
Thursday, January 29
- AOPA has some incredible pictures of the US Airways A320 being pulled out of the Hudson. (Via Business Aviation Now)
- Online Travel Review reports that British Airways is stopping growth of its OpenSkies subsidiary.
- American is reconfiguring some 757s to fly transatlantic service. (Via the comments section of the aforementioned OTR report.)
- Former Rep. Ray LaHood has been confirmed as secretary of transportation in the Obama administration.
- Rumors have been flying around that due to recent Microsoft layoffs, the Flight Simulator franchise could be dead. More on this later (maybe).
- Aer Lingus and United have announced a new plan to cooperate. PlaneBuzz and Cranky have all the details.
- Flying with Fish has a great post about the TSA in the new administration.
Southwest reported earnings yesterday, and there was a situation similar to last quarter: a net loss, but a profit with special items excluded. The airline lost $56 million ($0.08/share), but made $61 million ($0.08/share) excluding those items. The airline reported its 36th year of profitability, reporting a net income of $178 million for 2008, $294 million excluding special items.
Interestingly, the airline posted a $32 million cash gain on hedges, while United reported at $370 million loss in this area. Mark-to-market losses on hedges brought Southwest’s results down.
Southwest will be cutting back on growth – “indefinitely” was the word CEO Gary Kelly used on the earnings call. While the airline will start service at Minneapolis and LaGuardia this year, it will mean the re-shuffling of some aircraft, Southwest is going to finish this year with two less 737s (535) than the beginning of the year.
Yesterday, shares of LUV were up $1.43 (17.06%), to $9.81.
As I said yesterday, it’s a good idea to hop over to PlaneBuzz’s post on this earnings release as there are always good insights there. Click here for a transcript of the conference call.
There are more airlines reporting next week, and I’ll hopefully be posting a schedule over the weekend.
No, I’m not talking about any earnings reports. Thanks to my friend Boback for passing along this short article from the New York Post:
A US citizen was booted from a Turkish Airlines flight from Istanbul to New York after he complained there were “Arab types” on board, Turkish news media reported.
Daniel Sussman Pincus, whose age and hometown were not given but who was described in one report as an American of German origin, shouted his complaints as the flight was preparing to depart Monday.
American lost $340 million, or $214 when special items are not included. Shares of the airline took a beating, and were down $2.48, or 23.71%, to $7.98. You can click here for a transcript of the company’s analyst call.
Meanwhile, United posted a $547 million loss ($4.22/share), excluding special items. If those items are included, the loss was $1.3 billion, or $9.91/share. Hedging did play a role in the loss, as the airline posted a $370 million cash loss in hedges (in addition to a non-cash, mark-to-market loss of $566 million). United shares were down $0.71, or 6.11% yesterday, to $10.91/share.
There was a great gem in the transcript of the earnings call, courtesy of CEO Glenn Tilton:
As we have improved our costs, we have not lost sight of our customers and the fact that we are in a service industry. We have targeted for improvement elements of our business that have a highest impact on our performance and ability to provide the level of service our customers should expect. This focus is delivering results and its gathering momentum.
I could write something on my own to react to this paragraph, but I feel that such things should be left to professionals, so you can read Ben’s post on it over at One Mile at a Time.
I highly recommend reading the last few posts on PlaneBuzz, as they give a good summary of the results, and one of them discusses why shares of AMR took such a hit yesterday.
Anyway, Southwest reports today – let’s see what happens.
To continue the Delta hub discussion from yesterday, I found this article from the Atlanta Journal-Constitution via the ATA SmartBrief:
A feud over future operating costs between Delta Air Lines and the Atlanta airport could be good news for Memphis International Airport, a new Delta hub that’s eager to expand.
Memphis officials say they are not trying to take business from Atlanta but could provide a low-cost option to Delta if the airline wants to send more connecting flights through the Tennessee city.
Such a move is perfect for Delta. Memphis can try to put together a good package for Delta to try to convince the airline to keep it as a hub and possibly increase service. In the meantime, Delta can try to use Memphis in negotiations with Atlanta to try to keep costs at that airport attractive for the airline.
Anyway, American and United release their earnings today, and hopefully I will have a post about that later.
Like everything else in life, there are pros and cons for an airport to become the hub for an airline. On the bright side, the city gets more flights to more places than it usually would on its own, a feature that can be great for the surrounding metro area. But, a big negative is that the airline that starts hub operations gains a huge amount of influence in regards to airport decision making.
Atlanta is the latest example of such a situation. Some leases will be expiring in 2010, and it is obviously in Delta’s interest to keep its costs low. Sky Talk reported over the weekend that Delta was threatening to move some traffic away from the airport to other hubs (read: what was acquired through the merger) and Jon Heckman posted a link to a letter from Delta to airport management.
Now, Delta isn’t stupid, either – even if it does go through with its threat (provided the airline doesn’t get what it wants), it will try to cling on to as much O&D traffic as possible.
Like I always say, it will be interesting to see what happens…
Well, it’s that wonderful time of year again – earnings season! There are a few airlines reporting this week, clicking on their names will lead you to their respective investor relations pages where you will be able to see the results when they come out and listen to the analyst call. Please let me know if I forgot any!
Wednesday, January 21
Thursday, January 22
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