Tag Archives: American Airlines

American Airlines Unveils Embraer 175 Regional Jet Design

By Grant Martin, Contributor

As the bankrupt American Airlines continues to revitalize its fleet and prepare for a merger with US Airways, the carrier today introduced a new airplane into its livery: the 175. The Brazillian-made small regional jet will be operated by Republic Airways and will initially fly out of Chicago to New Orleans, Pittsburgh and Albuquerque. As the airline receives further orders, service will be expanded around the country and eventually to other departing airlines. …read more

Source: FULL ARTICLE at Forbes Latest

New Tools Offer A Wealth Of Airline Miles For Hotel Bookings

By Grant Martin, Contributor

Airlines and hotels have been dabbling in sharing loyalty points for years, allowing frequent travelers to earn points by flying with partner carriers or staying in partner hotels. In general, however, the partnerships have been modest, with most programs designed to discourage users from moving around too many points. Exchanging 30,000 Hilton Honors points to American Airlines, for example. will only net a traveler 4,500 miles. Free rooms in the Hilton network start at 7,500 points. …read more

Source: FULL ARTICLE at Forbes Latest

New York officials seek human remains amid debris from Boeing jet

The medical examiner’s office plans to search for Sept. 11 human remains in an alley behind a mosque near the World Trade Center where landing gear from the type of Boeing jet used in the attacks was suddenly discovered.

The chief medical examiner’s spokeswoman, Ellen Borakove, said the area first will be tested as part of a standard health and safety evaluation for possible toxicity. She said sifting for human remains is to begin Tuesday morning.

Police said Saturday that detectives had been in contact with officials at Chicago-based Boeing Co. who confirmed the wreckage was from a Boeing 767. Police have said the landing gear had a clearly visible Boeing identification number.

The American Airlines and United Airlines planes hijacked by Islamic extremists in 2001 were Boeing 767s. Boeing spokesman John Dern said he could not confirm whether the ID matched the American Airlines plane or the United Airlines plane.

Workers discovered the landing gear part on Wednesday between a luxury loft rental building and a mosque that in 2010 prompted virulent national debate about Islam and freedom of speech because it’s just blocks from ground zero.

On Saturday, yellow police tape blocked access to a metal door that leads to the hidden alley behind the planned Islamic community center, known as Park51.

Retired fire department Deputy Chief Jim Riches, who lost his son in the terrorist attacks, visited the site on Saturday. He said the latest news left him feeling “upset.”

“The finding of this landing gear,” he said, “just goes to show that we need federal people in here to do a comprehensive, full search of lower Manhattan to make sure that we don’t get any more surprises,” as happened in 2007 when body parts were discovered in nearby sewers and manhole covers.

Of the nearly 3,000 victims, Riches noted, about 1,000 families have never recovered any remains.

The New York Police Department has declared the alley a crime scene where nothing may be disturbed until the medical examiner’s office completes its work. It’s unclear how long that may take, Borakove said.

The piece of wreckage was discovered by surveyors inspecting the planned Islamic community center on behalf of the building’s owner, police said.

The twisted metal part — jammed in an 18-inch-wide, trash-laden passageway between the buildings — has cables and levers on it and is about 5 feet high, 17 inches wide and 4 feet long, police Commissioner Raymond Kelly said Friday.

“It’s a manifestation of a horrific terrorist act a block and a half away from where we stand,” he said after visiting the alley.

The commissioner noted that a piece of rope intertwined with the part looks like a broken pulley that may have come down from the roof of the Islamic community center.

When plans for the center became public in 2010, opponents said they didn’t want a mosque so close to where Islamic extremists attacked, but supporters said the center would promote harmony between Muslims and followers of other faiths.

The building includes a Muslim prayer space that has been open for three years. After protests

Source: FULL ARTICLE at Fox US News

Beware Another American Airlines Reservations Breakdown

By 24/7 Wall St.

Filed under:

The breakdown of the reservations system of AMR, parent of American Airlines, will not be the last for the company. Carrier mergers are notorious for the customer disruption they cause. As American marries U.S. Airways Group Inc. (NYSE: LCC), the likelihood of more reservations catastrophes grows.

The last two huge mergers of U.S. carriers are evidence that the recent American reservations debacle and other customer trouble will happen again.

The New York Times reported in mid-2011 that the Delta Air Lines Inc. (NYSE: DAL) buyout of Northwest created a customer disaster:

The airline had the worst record among large carriers for on-time arrivals last year, and it accounted for a third of all customer complaints, the worst of any airline, for categories like service and lost bags, according to the Transportation Department.

And Independent Traveler.com wrote about airline reservations systems:

The problems associated with merging the reservations systems of Delta and Northwest, and to an even greater degree United and Continental, were covered extensively in the travel press.

The United merger with Continental that created United Continental Holdings Inc. (NYSE: UAL) also showed how mergers can cause reservations system issues. The New York Times reported in its assessment of the recent American Air reservation system collapse:

Such nationwide breakdowns are rare but not unprecedented, particularly when airlines merge. United Airlines experienced similar problems last year when its reservation systems failed repeatedly as it merged them with those of Continental Airlines.

If a bankrupt AMR cannot maintain its own reservation system properly, it is easy to imagine how the same system could trigger similar problems, or even worse.

There are several things fliers can virtually bank on. Mergers cause a number of predictable events. Among them are layoffs, higher ticket prices, lower customer service standards and broken frequent flier systems. But at the top of the list is the most critical aspect of travel, as far as the passenger is concerned. Can he book a seat, get on the plane on which it is booked and actually take off to his destination?

Filed under: 24/7 Wall St. Wire, Airlines, Mergers & Acquisitions Tagged: DAL, LCC

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From: http://www.dailyfinance.com/2013/04/17/beware-another-american-airlines-reservations-breakdown/

Media Digest (4/17/2013) Reuters, WSJ, FT, Bloomberg

By 24/7 Wall St.

Filed under:

The role of central banks in stimulus will be considered at International Monetary Fund (IMF) and G-20 gatherings. (Reuters)

Display ad revenue at Yahoo! (NASDAQ: YHOO) drops sharply. (Reuters)

News Corp. (NASDAQ: NWSA) will call its entertainment company 21st Century Fox. (Reuters)

Carl Icahn agrees to limit his stake in Dell Inc. (NASDAQ: DELL) but can join other bidders to make an offer for the company. (Reuters)

Procter & Gamble Co. (NYSE: PG) will lengthen the number of days after which it pays suppliers, which will allow it access to $2 billion in cash. (WSJ)

A new IMF report attacks the results of austerity taken on by financially troubled nations. (WSJ)

A reservations system glitch limits American Airlines bookings and causes a number of flights to be halted. (WSJ)

Boeing Co. (NYSE: BA) completes tests of batteries on its Dreamliner 787, but the FAA has not approved them. (WSJ)

Intel Corp.’s (NASDAQ: INTC) profits drop by 25% as PC sales tumble. (WSJ)

Investment manager John Paulson loses $1.5 billion in his bet on gold prices. (FT)

The drop in gold prices hits central bank asset values by $560 billion. (Bloomberg)

Filed under: 24/7 Wall St. Wire, Press Digest Tagged: BA, DELL, INTC, NWSA, PG, YHOO

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From: http://www.dailyfinance.com/2013/04/17/media-digest-4172013-reuters-wsj-ft-bloomberg/

American Airlines back online after computer glitch

American Airlines restored access to its reservation system on Tuesday afternoon after a four-hour long outage that grounded its flights across the U.S.

Problems began around 11am Central time (16:00 GMT) when the airline began suffering “intermittent outages” to its reservation system. American Airlines relies on Sabre for much of its reservations, but said the problem was with its system and not those of Sabre.

Within two hours of first notifying the public of the problems, American halted its flight operations, disrupting the travel plans of tens of thousands of travellers. The exact number of passengers affected was not immediately clear, but in March the airline carried an average of 313,000 passengers worldwide on its network per day.

At 3:30pm Central time (20:30 GMT) the problem had been fixed, the airline said.

To read this article in full or to leave a comment, please click here

From: http://www.pcworld.com/article/2034997/american-airlines-back-online-after-computer-glitch.html#tk.rss_all

American Airlines Grounded. Accident of Cyber Attack?

By Brigham A. McCown, Contributor Currently all American Airlines flights are being delayed due to an unspecified computer system outage. According to AA staff, the company has not yet provided any details as to the duration of the outage, or its cause. Ticketing and air operations systems have been affected. These systems are also utilized for employees to communicate to counterparts throughout the American system.

From: http://www.forbes.com/sites/brighammccown/2013/04/16/american-airlines-grounded-accident-of-cyber-attack/

American Airlines grounds all flights on computer glitch

American Airlines grounded all its flights across the U.S. on Tuesday after an unidentified computer problem hit its reservation system.

“We are now in a system-wide ground delay until 4:00pm CT as we work to resolve this issue. We apologize for any inconvenience,” the airline said in a message on Twitter.

It had earlier confirmed the problem was with a reservation system, but more details were not immediately available.

The airline first posted that its system was offline shortly after 11 a.m. Central Time (16:00 GMT).

To read this article in full or to leave a comment, please click here

From: http://www.pcworld.com/article/2034851/american-airlines-grounds-all-flights-on-computer-glitch.html#tk.rss_all

American Airlines reservations system down, flights grounded nationwide

American Airlines flights across the country are grounded because of computer problems.

American asked the Federal Aviation Administration to halt its flights until 5 p.m. EDT. Flights on regional affiliate American Eagle heading to Dallas, Chicago or New York’s LaGuardia Airport have been stopped until 3:30 p.m. EDT.

Some passengers are stuck on planes while others can’t make reservations.

Passengers are using social media to flood the airline with complaints.

American Airlines spokesman Kent Powell said Tuesday that the airline is trying to resolve the issues as quickly as it can.

On Twitter, American is sending out apologies but not offering customers much information about when the problem will be fixed.

From: http://feeds.foxnews.com/~r/foxnews/national/~3/4s1C4lVHAKk/

Few Steps Remain in American Airlines, US Airways Merger

By The Associated Press

Filed under: , , , ,

Matt Rourke/AP

By DAVID KOENIG

DALLAS — US Airways began studying a potential merger with American Airlines several months before American filed for bankruptcy protection in late 2011, according to papers filed Monday by the two companies.

The documents give a blow-by-blow account of how the merger was negotiated, including the thorny issues of how to share ownership of the merged company and who would run it.

The companies also revived a proposed $20 million severance deal for Tom Horton, the CEO of American parent AMR Corp. A federal judge had declined to approve the payout, finding that it violated a 2005 bankruptcy law, but he had left open the possibility that a payment could be reconsidered later.

US Airways Group Inc. (LCC), whose CEO, Doug Parker, will run the combined company, played up the importance of Monday’s filings with the bankruptcy court in New York and the U.S. Securities and Exchange Commission.

“With these materials filed, we are one step closer to completing the merger, which we expect to occur in the third quarter of this year,” US Airways officials said a memo to employees.

The bankruptcy court has already signaled approval for the merger, which would create the world’s largest airline. The deal faces only a few more hurdles, including approval from the U.S. Justice Department and US Airways shareholders.

AMR will have 60 days to win support among creditors for its reorganization plan. Major creditors were closely involved in negotiations leading to the merger announcement in February, so it seems unlikely that they would derail the plan that will be considered by U.S. Bankruptcy Judge Sean Lane.

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It’s less clear whether antitrust regulators in the Justice Department will impose major conditions on the deal. Regulators approved other big airline mergers — Delta and Northwest, United and Continental, Southwest (LUV) and AirTran — so industry analysts expect them to let this deal pass.

The Justice Department, however, could require the American-US Airways combination to give up takeoff and landing slots at Washington’s busy Reagan National Airport, where it would be the dominant carrier, and possibly slots in New York, too.

The company will be called American Airlines Group Inc. It is expected to operate more than 6,700 flights a day to 336 destinations in 56 countries and have about 100,000 employees. Based on current figures, American will emerge slightly bigger than United Airlines (UAL) and Delta Air Lines (DAL) in the number of miles flown by passengers, the usual standard for ranking carriers.

Parker will be chairman and CEO after Horton steps down as chairman in 2014. Parker would get $19.5 million if he is terminated by the new company for a reason other than misconduct, according to a separate filing

From: http://www.dailyfinance.com/2013/04/16/american-airlines-us-airways-merger/

American Airlines CEO’s $20 Million Severance Payment Denied By Bankruptcy Judge

By The Huffington Post News Editors

DALLAS — A federal bankruptcy judge has denied a proposed $20 million severance payment for the CEO of American Airlines as part of the company’s merger with US Airways.

The judge ruled Thursday that the proposed payment to CEO Tom Horton exceeded limits that Congress set for bankruptcy cases in 2005.

Read More…

From: http://www.huffingtonpost.com/2013/04/12/american-airlines-ceo-bankruptcy-judge_n_3069777.html

American Eagle pilot charged after failing alcohol test before flight

An American Eagle pilot was charged Tuesday with three gross misdemeanors after authorities said he failed a blood-alcohol test as he was preparing to fly a plane from Minneapolis to New York City in January.

Kolbjorn Jarle Kristiansen, 48, was arrested at the Minneapolis-St. Paul International Airport on Jan. 4 after airport police and a Transportation Security Administration officer said they smelled alcohol as they walked past a group of four pilots around 5:30 a.m. Authorities said a preliminary test revealed Kristiansen’s blood-alcohol content was 0.107, more than double the legal limit for pilots.

Kristiansen, of Raleigh, N.C., was charged in Minnesota’s Hennepin County District Court with three counts related to attempting to operate an aircraft under the influence of alcohol. Each count carries a maximum penalty of a year in jail and a fine of $3,000.

Kristiansen’s attorney, Peter Wold, said he hadn’t seen the charges but they were expected.

“He never operated the aircraft. He never touched the controls,” Wold said. “That’s just the fact.”

According to a criminal complaint, two officers approached Kristiansen and noted he had “glassy and watery eyes and was slow in responses to officer questions.” The complaint said Kristiansen admitted that he consumed alcohol the night before and was planning to fly.

After the preliminary test, a subsequent blood test revealed Kristiansen’s blood-alcohol level was 0.09. Pilots are prohibited from flying if they have a blood-alcohol level of 0.04 or higher, half the level allowed for motorists.

American Airlines uses American Eagle to operate shorter connecting flights. Back in January, American Eagle spokesman Matt Miller said Kristiansen had been suspended, and an internal investigation was being conducted.

“The pilot involved in this matter continues to be withheld from service,” Miller said in an email Tuesday. “American Eagle has a well-established substance abuse policy that is designed to put the safety of our customers and employees first.”

Miller declined to comment when asked about the status of the internal investigation.

A message left with the Air Lines Pilots Association, Kristiansen’s union, was not returned.

The flight, with 53 passengers, was delayed about 2 1/2 hours as the airline found a replacement pilot.

Jeanne Cooney, a spokeswoman with the U.S. Attorney’s Office in Minnesota, said that based on the circumstances of the case and the different way federal and state statutes are written, it was appropriate that the case be handled by state court.

While federal law criminalizes the operation of an aircraft while under the influence of alcohol, state statutes make it a crime if a person also makes an “attempt” to operate an aircraft while under the influence.

…read more

Source: FULL ARTICLE at Fox US News

SED International Holdings Appoints Derrek Hallock SVP and GM U.S. Commercial Division

By Business Wirevia The Motley Fool

Filed under:

SED International Holdings Appoints Derrek Hallock SVP and GM U.S. Commercial Division

LAWRENCEVILLE, Ga.–(BUSINESS WIRE)– SED International Holdings, Inc. (NYSE MKT: SED), announced today that the Company has appointed Derrek P. Hallock as SVP and GM of the U.S. Commercial Division. The Commercial Division has responsibility to grow SED‘s business among the VAR, MSP and OEM communities. Mr. Hallock will be based in the company’s Atlanta area headquarters and will manage both the client sales and vendor management functions of the Commercial Division.

Last week SED announced that it is focusing its business on three areas: IT storage systems, small business IT solutions and merchandized e-commerce fulfillment. A major focus among these areas is the small business solutions market served by IT VAR‘s and MSP‘s. “Derrek is the ideal candidate to grow SED‘s penetration of the Small Business market in the U.S.,” said Bob O’Malley, President and CEO. “His experiences in supply chain management, VAR sales and Distributor Marketing Services are a perfect fit to our new focused strategy.”

Most recently Mr. Hallock was Tech Data’s Vice President of TDAgency, with direct responsibility for managing a $60 million full service marketing and advertising agency. TDAgency creates channel enabled marketing programs that bridge the demand connection between IT manufacturers and channel client objectives. Prior to TDAgency, Mr. Hallock had responsibility for Tech Data’s SMB VAR Sales managing operations in the U.S., Canada and Costa Rica. He has also held management positions at CompuCom Systems, Dixie Aerospace and American Airlines.

“I am delighted to be joining the SED International team and returning to a leadership role in the Small Business IT marketplace,” said Derrek Hallock. “Small Businesses across the U.S. have the same appetite for technology as large enterprises. With the right support from SED and our channel partners, they have the ability to implement leading IT solutions much faster. SED‘s strategy to leverage cloud services, storage applications and demand for mobile solutions will enable our clients to achieve profitable growth and further penetrate the SMB marketplace.”

ABOUT SED INTERNATIONAL HOLDINGS, INC.

Founded in 1980, SED International Holdings, Inc. is a multinational, preferred distributor of leading computer technology, consumer electronics, small appliances, housewares, and personal care products. The company also offers custom-tailored supply chain management services ideally suited to meet the priorities and distribution requirements of the e-commerce, Business-to-Business and Business-to-Consumer markets. Headquartered near Atlanta, Georgia with business operations in California; Florida; Georgia; New Jersey; Texas; Bogota, Colombia and Buenos …read more

Source: FULL ARTICLE at DailyFinance

US Airways-American Merger: Where Some Safety and Consumer Advocates May Differ

By John Goglia, Contributor On most issues of concern to aviation safety advocates and representatives of passenger groups, there is far more agreement than disagreement on what the nation’s airlines need to be doing – mandatory kid’s seats, better oversight of outsourced maintenance by the FAA and the airlines, higher flight crew experience levels at regional carriers, the list goes on.  Which makes sense: if something advances safety, it also benefits the flying public and vice versa is usually true.  But when it comes to airline mergers – like US Airways and American Airlines – opinions between the two advocacy groups can diverge. Where a number of consumer advocates worry that the consolidation of air carriers in the industry will lead to higher fares and a reduction in services, many safety advocates, myself included, see consolidation as a way to bring some much needed fare stability to the airline industry – and allow airlines to maintain or improve their safety margins.  Yes, higher fares are a most likely result from yet another airline merger [full disclosure: I retired from USAir in 1995 and still receive retiree benefits] but the industry consolidations have come about because the current fare structures do not accurately reflect the airlines’ costs of providing air transportation and are unsustainable in the long run. Safety Improvements Require Consistent Airline Profits …read more

Source: FULL ARTICLE at Forbes Latest

"The World's Leading Airline" Is Actually the Worst in the U.S.

By Adam Levine-Weinberg, The Motley Fool

Filed under:

United Continental CEO Jeff Smisek has been marketing United as “the world’s leading airline” for the past year. At an industry conference last month, Smisek stated that he wasn’t worried about American Airlines taking the title of the world’s largest airline following the latter’s merger with US Airways . Instead he was focused on the goal of being the world’s leading airline. This entails having the best route network to get people where they need to go, and providing strong customer service along the way.

Unfortunately for United and its customers, reality doesn’t quite live up to Smisek’s vision. The 2013 Airline Quality Rating survey (an annual study of various quality of service metrics for the U.S. airline industry) put United at the bottom of the list (No. 14). Furthermore, the No. 12 and No. 13 airlines — SkyWest subsidiaries SkyWest Airlines and ExpressJet Airlines — are regional carriers doing most of their flying for United. United’s poor service quality will make it difficult for the airline to sustain its historical revenue premium. As a result, I believe the market is overestimating United’s ability to bounce back quickly from its disappointing 2012 earnings performance.

Survey says!
The Airline Quality Rating survey (link opens a PDF) takes into account four criteria: on-time performance, denied boarding frequency (aka “getting bumped”), mishandled baggage, and customer complaints. For 2012, United and its regional partners were near the bottom of the pile in terms of on-time performance and mishandled baggage, and were by far the worst offenders in terms of denied boardings and customer complaints. United’s overall score of -2.18 was far worse than the scores for its major competitors:

Airline

Rating (smaller negative number is better)

American Airlines

-1.11

Delta Air Lines

-0.58

Southwest Airlines

-0.81

United Airlines

-2.18

US Airways

-0.87

Data from 2013 Airline Quality Rating survey

United Continental‘s performance significantly deteriorated compared to 2011, when United scored -1.45 and Continental scored -1.41. Much of this drop can be attributed to the difficult merger integration process, particularly a number of IT system problems that disrupted flight schedules and hurt customer service. Nevertheless, even if the company had maintained its 2011 rating, that still would have placed it significantly behind all of its major competitors.

Why it matters
Despite its poor service compared to peers and unit revenue growth near the bottom of the industry for 2012, United still maintains a modest revenue premium over competitors. This is partially the result of having hubs in many of the biggest and wealthiest cities in the country. However, it its also partially a legacy of Continental Airlines‘ reputation for superior service. As recently as 2009, Continental was the top-ranked network carrier in the AQR survey. However, United Continental has lost that customer service advantage to Delta, and it should not be surprising that Delta …read more

Source: FULL ARTICLE at DailyFinance

Airline Stocks: Is It the End of the Party?

By Adam Levine-Weinberg, The Motley Fool

Filed under:

After finishing 2012 with a strong December, airline stocks went on a tear in the first quarter of 2013. Of the five largest U.S. carriers (excluding American Airlines, which is in bankruptcy), the worst performer was JetBlue , which still gained a solid 17% for the quarter, outperforming the S&P 500 by nearly 10%.

Airline Q1 2013 Stock Performance vs. S&P 500, data by YCharts

However, in the past week, airline stocks have been buffeted by one piece of bad news after another. In just three days, a number of airline stocks have lost 10% or more of their value.

Airline 1 Week Stock Performance vs. S&P 500, data by YCharts

This quick reversal implies that we have probably reached the end of the airline rally. However, that does not mean that long-term investors should necessarily avoid the sector altogether. If you pick your spots carefully, you should still be able to earn some nice returns in airline stocks.

The rally
Last quarter’s massive airline rally was primarily driven by speculation about a potential merger between American Airlines and US Airways , followed by enthusiasm about the potential benefits for the industry, after the merger agreement was announced. Moderating oil prices also helped give airline stocks a boost. It seemed to me that the merger’s potential benefits were already priced in by the time the agreement was announced in mid-February, but investors continued to push airline stocks higher. Most notably, Jim Cramer came out as bullish on US Airways in early March, reversing a long-held aversion to airline stocks.

The main rationale for buying airline stocks based on the American-US Airways merger was the idea that consolidation would lead to capacity discipline, boosting pricing power. Continued unit revenue gains at the major airlines in January and February added to this hope. However, consolidation is not particularly new for the airline industry. In the past five years, Delta Air Lines merged with Northwest, United and Continental merged to form United Continental , and Southwest Airlines purchased AirTran. Most of the benefits of tamer — not to mention saner — competition have already been achieved.

The reality check
In the past week, airline investors have faced a major reality check. First, United Continental published an investor update before the long weekend in which it announced that non-fuel unit costs would increase by 11.4%-12.4% in the first quarter, far worse than its original projection of an 8%-9% increase. As a result, various analysts cut their Q1 estimates for United, anticipating an even larger loss than previously expected. Nevertheless, analysts were encouraged to see that United expects unit revenue to increase 5.4%-6.4% for the full quarter (implying a gain of roughly 7% in March).

However, if United’s report led investors to believe that the revenue environment is strong, Delta and US Airways proceeded to dump cold water on that notion. On Tuesday, Delta reported unit revenue growth of …read more

Source: FULL ARTICLE at DailyFinance

Coming Soon to Washington: Cheap Flights?

By Adam Levine-Weinberg, The Motley Fool

Filed under:

Ever since American Airlines and US Airways announced their intention to merge in February, investors and industry observers have been wondering what effect the merger will have on competition. For the most part, American and US Airways have complementary route networks: They only overlap on 12 routes out of a total of 900. As a result, the two companies’ management teams have recently stressed that the merger should not raise antitrust concerns.

There’s always a but!
However, JetBlue Airways CEO Dave Barger recently squared off against US Airways CEO Doug Parker about the “new American’s” dominant position at Reagan National Airport, just outside of Washington, D.C. Reagan National is one of several U.S. airports covered by slot restrictions, where the number of flights is capped. As a result, airlines can only add flights by acquiring slots from carriers that already serve the airport, which can be very difficult to accomplish. JetBlue has had trouble growing its presence at Reagan National because of the unavailability of slots.

US Airways is already by far the largest carrier at Reagan National. Last year, the company completed a “slot swap” with Delta Air Lines , whereby Delta received 132 slot pairs at New York’s LaGuardia Airport in return for 42 slot pairs at Reagan National Airport. To win regulatory approval for that transaction, the two carriers had to divest eight slot pairs at Reagan National, leaving US Airways with 55% of the slots there. (JetBlue purchased those slots at auction for $40 million.) Based on current schedules, American Airlines appears to hold approximately 50 of the remaining slot pairs. As a result, if the merger goes through with no slot divestitures, the combined carrier would hold approximately two-thirds of the slots at Reagan National Airport.

US Airways and American only compete on two routes from National Airport: Nashville and Raleigh-Durham. Thus, a merger would only directly impact competition on those two routes. However, American’s potential stranglehold on slots at National Airport would give the company a massive competitive advantage in the D.C. region.

National is the key to D.C.
Doug Parker argued last week that holding two-thirds of the slots at Reagan National would not violate antitrust laws for two reasons. First, US Airways utilizes many smaller regional jets and turboprops there, so the combined carrier would only control about half of the seats, even though it would have two-thirds of the slots. Second, the D.C. area is also served by Washington Dulles Airport, where United Continental operates a hub, and Baltimore-Washington International Airport, which is the third-largest focus city for Southwest Airlines (including flights by its AirTran subsidiary). Between those three airports, American would only operate 25% of flights.

However, National is by far the closest airport to downtown D.C. and has its own stop on the Metro system. This makes it the preferred airport for most travelers in the region. While Dulles Airport will be connected to the Metro …read more
Source: FULL ARTICLE at DailyFinance

Delta Hits Turbulence on Sequester Cuts

By Travis Hoium, The Motley Fool

Filed under:

Delta Air Lines stock is languishing on a generally upbeat day for the markets, down more than 7% late in the trading session. Delta had expected March to show a big improvement in revenue per seat-mile flown — a key metric for airlines — but sequester cuts and technical problems left the result short of forecasts. Revenue per seat-mile did grow 2% in March from a year earlier, but less than a month ago company officials had said they expected 4.5% to 5.5% growth.

One of the issues cited in today’s announcement was a decline in last-minute bookings by government employees, which Delta thinks owes to the sequester. Expensive airline tickets are an easy item to cut, and with across-the-board spending cuts taking effect March 1, Delta took a hit this month.

But that wasn’t Delta’s only problem in March. The company pointed to “temporary inefficiencies” in determining what to charge for flights, which had customers grabbing either cheaper tickets from competitors or inexpensive tickets from Delta. The company may be able to gain some of this revenue back in coming months, so this is the least concerning point.

Good for competitors?
The question is whether Delta’s loss is competitors’ gain. Today, investors don’t think so, judging by the decline in airline stocks. One analyst downgraded United Continental just yesterday because he thought higher costs would hurt the airline. The stock is down 4.3% today.

The merger of US Airways and American Airlines was supposed to lead to less competition and higher prices, but the latest data point doesn’t seem to be supporting that thesis. U.S. Airways is down 4.6% as of the time of writing.

Investors should keep an eye on trends in revenue per seat mile over the next few months. Sequester pressure will subside, but long-term challenges that have always faced the airline industry, such as fuel costs and fierce price competition, will remain.

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The article Delta Hits Turbulence on Sequester Cuts originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance