JetBlue E-190 article

[Flying Freddie]

UPDATE 1-Credit analyst sees US Air liquidating by year-end
Tue Feb 1, 2005 04:53 PM ET

NEW YORK, Feb 1 (Reuters) - US Airways Group Inc. (UAIRQ.OB: Quote, Profile, Research) will probably fail in 2005, one casualty of a year that may also see a Delta Air Lines Inc. (DAL.N: Quote, Profile, Research) bankruptcy, an analyst at research firm CreditSights said on Tuesday.

"The 2005 outlook for our airline industry is dismal," Roger King, a debt analyst specializing in airlines, said in a conference call with analysts, portfolio managers, traders and journalists.

"High fuel costs and declining yields in particular should push US Airways into liquidation," King said.

Declining yields, or average revenues per passenger, are hammering major carriers along with high fuel costs, overcapacity, union battles and problems with underfunded pensions and a lack of access to capital, he said.

Bankrupt US Airways, widely seen by analysts as the weakest of a struggling industry, is particularly vulnerable because of its focus on the competitive northeastern market. But few have forecast that the No. 7 U.S. carrier would fail this year.

Told of King's comments on the conference call, US Airways spokesman David Castelveter told Reuters: "We have worked hard to overcome obstacles that many thought were insurmountable, yet like the industry, we still face a number of challenges."

"We are taking the next steps to build an airline that can be successful in a low-fare environment," Castelveter added.

US Airways said last year it was in danger of liquidating before it secured $1 billion in labor concessions.

The airline has said it has operating cash through June, when it hopes to exit bankruptcy, though it will need to find $250 million in equity to do so.

Delta, the No. 3 U.S. airline, secured $1.1 billion in financing from units of General Electric Co. (GE.N: Quote, Profile, Research) and American Express Co. (AXP.N: Quote, Profile, Research) , helping it to avert filing for bankruptcy protection. No similar rescues are likely this year, King said.

Delta officials were not immediately available to comment.

"Delta's own guidance indicates it will not achieve a positive operating margin in 2005, setting up a second liquidity event this fall," King said, adding that the airline's pension and debt loads make it particularly vulnerable.

"Manna will not fall from heaven 2 years in a row," he added. "Look for a bankruptcy this fall."

King said current industry turmoil would likely bolster low-cost carrier Southwest Airlines (LUV.N: Quote, Profile, Research) , already the industry's most valuable airline.

The strength of the Dallas-based airline and other low-cost carriers like JetBlue (JBLU.O: Quote, Profile, Research) is bad news for the sector's traditional carriers, which still have higher cost structures even after aggressive efforts to cut expenses, King said.

"They can just keep the pressure on the legacy carriers from the yield standpoint and force cash outflows that inherently destabilize the balance sheets," he said. (Additional reporting by John Crawley in Washington)

 

[lowecur]

Actually for Wheelchair purposes we shall classify the E-jets as RJ's. If they make them store it by taking out a row of seats, then the passenger should be made to ride it down the back steps at FLL.

Doesn't the FAA require on board storage for 100 pax or more? Just remove one seat.

 

[lowecur]

UPDATE 1-Credit analyst sees US Air liquidating by year-end
Tue Feb 1, 2005 04:53 PM ET

What does this have to do with the E-190? Incidently, I hope he's wrong.

 

[Flying Freddie]

The article has nothing to do with the 190. It was for the good General to read to keep up on current events!

 

[General Lee]

Flying Freddie,


Thanks, here is another article out yesterday:


Delta leads airline rally on upgrade, oil prices
Mon Jan 31, 2005 12:01 PM ET
By Jui Chakravorty


NEW YORK, Jan 31 (Reuters) - Shares of Delta Air Lines (DAL.N: Quote, Profile, Research) led a rally in airline stocks on Monday, as Merrill Lynch raised its ratings on four U.S. carriers, and oil prices slipped on news that oil production would not be cut.

Delta shares, which have tumbled more than 35 percent in the last two months, rose more than 10 percent.

Merrill Lynch analyst Michael Linenberg hiked his ratings on Delta and AirTran Airways (AAI.N: Quote, Profile, Research) shares to "neutral" from "sell," and upgraded America West Airlines (AWA.N: Quote, Profile, Research) and Continental Airlines (CAL.N: Quote, Profile, Research) to "buy" from "neutral."

Shares of all four airlines rose on the New York Stock Exchange after dropping 25 to 30 percent since the start of 2005.

"Our rating upgrades should not be construed as us having a more positive view on industry fundamentals," Linenberg wrote in a research note. "Rather we think the recent sell-off has created a buying opportunity for some of the names," he added.

Delta rose 45 cents, or 8.95 percent, to $5.48 at midday.

"Delta's shares have been the worst performer in our universe," Linenberg said. "We believe the uncertainty of a new fare initiative compounded by higher fuel prices is fully discounted in its stock price," he added, referring to Delta's recent move to slash its fares by as much as 50 percent.

America West, which has cut back its 2005 capacity growth forecast and plans to eliminate most transcontinental flights, will likely see revenue improve in 2005 due to those cuts, Linenberg said.

America West rose 26 cents, or 5.49 percent, to $5.00.

Continental, which hopes to garner $500 million in labor concessions, will achieve the targeted cost cuts within the next several months, Linenberg said. Shares of Continental rose 34 cents, or 3.34 percent, to $10.52.

"Although the revenue environment is expected to be challenging for AirTran for at least the next two quarters, we think its share price accounts for this," Linenberg said.

AirTran shares, which have fallen 24 percent so far this year, rose 41 cents, or 5 percent, to $8.58.

The airline industry, which struggled with a downturn in travel following the Sept. 11, 2001 attacks on the World Trade Center, in the past year has also been suffering from fare wars stemming from intense competition and an oversupply of seats. Rising fuel prices, the second-highest expense at an airline after labor, have also hurt results.

But the American Stock Exchange Airline Index , down 21.7 percent from the start of the year, rose 2.8 percent to 48.39 on news of lower oil prices.

U.S. light crude prices fell 73 cents to $46.65 a barrel, following OPEC's decision to leave its production unchanged.

Dick McCabe, Merrill Lynch's chief market analyst, believes the index appears to have been in a long, gradual bottom-building process since late 2002, after falling from an early 2001 peak near 180.

"A rally above initial resistance, which is now indicated at 60-62, would be a particularly encouraging sign, indicating that the long potential bottoming process is coming to an end and that a sustainable or major recovery trend is finally evolving," Linenberg said.


Bye Bye--General Lee

 

[~~~^~~~]

"Unlike some of our competition, all Song flights accomodate the needs of our disabled veterans on board American built jetliners."


New Song advertising campaign

Call FOX News, FDJ2 and I agree on something!

 

[~~~^~~~]

You are thinking $2.2Billion like everyone else, but you and everyone else didn't really read the articles. Most of that ($1.5B) was a write down or "charge" for ASA/Comair

Correct - the airline I fly for is worthless. But all you had to do is ask any of the pilots.

 

[scabseeker]

As a "Vet" I appreciate the sentiment, but being disabled is not a get out of jail free card where everyone caters to your every need and whim.

Wow, so would you prefer to be disabled because everyone caters to you?

Support our troops? I guess as long as they are able-bodied young ones.

 

[jetblue320]

Red,


Well, Song was voted ahead of Jetblue as best LCC, and that is a fact. And, I would think (correctly, again) that what is said in the public arena (like print articles) could be held against you-------in a court of law. Grinstein stated last Feb that Song was "profitable"-----and I would think that means something in that direction. Maybe it was by $1, I don't know. You don't know either. Sarbanes Oxley was created after the Enron debacle, and it was created to protect everyone from false statements and false accounting practices. The CEO and CFO are really held accountable, and could go to jail. So, all in all, we don't know but have to "believe" in what was said, because there are ramifications if the info was false.


Have a great blue day RED.


Bye Bye--General Lee

General,

This is my second time asking/posting this question to you...............

WHO voted Song ahead of JetBlue as best LCC????? Was it an agency, a magazine, a website????

Serious, I hadn't heard or seen that one............

C yaaa

 

[General Lee]

Airways Magazine and I believe the NY Times paper, doing a survey of LCCs. I will try to look it up and find it. I am not making that up.



Bye Bye---General Lee

 

[Dizel8]

I think it was Airways or Airliners, the name escapes me. Well, actually it was 1 person, who flew segments on a few of the US LCCs and then wrote the article.

So, not really as laudatory as say if Conde Nast Traveller would do a survey of the LCC's.

Now General, you know I cannot be quiet when you say:"We have a better product". If it is superior to jetblue, why are you selling it for 15-30% less at a time DAL is losing money, altruism? More importantly, what does it say about the DAL mainline product, after all, only "special talent" from mainline is allowed on Song, mainline offers no IFE, no increased legroom etc. I find it farfetched, that Song can support a money losing mainline, after all, having actually seen the jetblue financials and the fares, one could surmise, that even Song is losing money. After all, Song charges less and, more than likely in true numbers, cost more to produce CASM wise.

As for SOX04 and you illusions of candor from the boss. As I have said before, it is possible, not likely but possible, that Song is profitable. It truly depends on what cost are borne by Song and which are paid by mainline, btw an argument I have heard between the wholly owned and DAL pilots. Which entity pays for the airplanes, the gates, the reservations centers, the maintenance, the spare parts, the warehousing of same, the pilots etc. the list is pretty long. Does Song pay its proportional share of those bills?

If the only cost borne by Song is the crews, then yes, Song would be wildly profitable, but when all the other cost are added in, that may indeed not be the case. Based on how Song is accounted for could indeed insulate Grinstein from accusations of wrong doing. We cannot tell, because DAL does not break out numbers for any individual entity. Of course, the bigger issue, is the fact that Song is a division of DAL, which sadly continues to lose money.

Which brings us to a philosophical question, to borrow from a SWA ad:"If we did not exist, would low fares". Before jetblue showed up, DAL customers were enjoying ratty old 73-200 with few amenities between NY and FL, now you are offering them much better. What is the purpose of Song, is it to offer a better product to the customer or is it to try and stop Southwest, Airtran and jetblue? One would hope it is the former and that the powers that be have learned, but I think it is the latter.

 

[Jeff Helgeson]

Yeah, but....

Take out one seat and put in a frozen margarita machine! Gets around the 100 seat requirement and makes the other 99 seat occupants very happy!

....after all those margaritas, somebody on board is going to need a wheelchair to get off the airplane. You didn't think about that one now did ya!!!

 

[Dizel8]

Ahh, but that is what the FAA required wheel chair is for!

 

[dlredline]

Airways Magazine and I believe the NY Times paper, doing a survey of LCCs. I will try to look it up and find it. I am not making that up.

Bye Bye---General Lee

GL,

Save ya the time:


1. The Airways Magazine article: The LCLF Coast-to-Coast Experience written by Gianfranco Beting, Issue No. 100 (Volume 12, Number 4, June 2004) discusses the explosion of Low Cost Carriers, and describes several, including Song and JetBlue. There is no "ranking" of the carriers, though there is a picture of a Song aircraft on the cover, so maybe this is where you mistakenly assumed Song was "ranked" ahead of others.

2. New York Times: Nothing, nada, nunca, bupkus, though there have been several articles written over the past year and a half by staff writers and free lance contributers describing their experiences on each carrier, but hardly any official "ranking".

3. Latest "official" ranking of low cost carriers (aside from Conde Nast, which ranked JetBlue as No. 1) came in an article written by Dan Reed (USA Today 4/5/2004) titled "Low-fare carriers' service bests big rivals" which stated "Four low-cost carriers — JetBlue, Alaska, Southwest and America West — topped the 2004 Airline Quality Ratings issued jointly Monday by Wichita State University and the University of Nebraska-Omaha."


I'm sure you didn't make it up, but maybe you're just repeating something told to you that isn't necesarily "official" in nature. Personally, I'm not a big fan of any subjective "poll". Ask John Kerry about the accuracy of a poll these days.

Take care,

Red

 

[jetblue320]

Airways Magazine and I believe the NY Times paper, doing a survey of LCCs. I will try to look it up and find it. I am not making that up.



Bye Bye---General Lee

Not accusing you of making it up, you knew that!

Thanks DLRed.