| From: Glenn Petersen | 12/9/2023 5:21:45 AM | | | | | | How the "big five" airlines came to dominate the skies
Axios
December 8, 2023
Alaska Airlines' proposed merger with Hawaiian Airlines would mark the latest in a decades-long run of industry consolidation that's left travelers with just five major carriers to choose from, per an Axios analysis of Airlines for America data.
Driving the news: Today's five biggest airlines — Delta Air Lines, American Airlines, United Airlines, Alaska Airlines and Southwest Airlines — have gobbled up 42 others since 1960.
Why it matters: If Alaska's proposed Hawaiian merger is to become reality, the companies must first convince skeptical regulators that an even more concentrated industry should be allowed.
- That's a tall order. The Justice Department is already suing to prevent a planned $3.8 billion merger between low-cost rivals JetBlue and Spirit Airlines, arguing that it would harm working- and middle-class travelers.
- The JetBlue-Spirit trial wrapped up on Dec. 5; a decision is expected soon.
- Earlier this year, DOJ won a separate case aiming to break up the "Northeast Alliance" partnership between American Airlines and JetBlue.
The big picture: The number of airline mergers annually spiked in the 1980s, with a peak of six in 1986.
- Delta and American have acquired or merged with the most airlines since 1960, at 15 and 11 respectively. Alaska carries the historical DNA of another five.
- Currently, four airlines — American, Delta, United and Southwest — together control over two-thirds of U.S. domestic air travel, according to the Bureau of Transportation Statistics (BTS).
Yes, but: Several new budget carriers, like Avelo Airlines and Breeze Airways, have popped up in recent years, adding fresh competition into the mix.
Between the lines: Those opposed to airline mergers often argue they result in reduced service and higher fares.
Yes, and: Americans have spent more on flying than ever before in recent years, in part because the total number of annual domestic airline passengers has increased by over 200 million — helping airlines to post record profits.
- U.S. airlines raked in a combined $21.2 billion in net income from domestic flights alone in 2015, $13.3 billion in 2016 and $17 billion in 2017.
- Of course, airlines posted huge losses during the Great Recession, while the COVID-19 pandemic cost U.S. carriers almost $31 billion, leading the federal government to prop up the industry with a massive $54 billion bailout.
Of note: Consolidation hasn't translated into more flights getting to their destinations on time.
- The country's on-time performance for domestic flights has stagnated over the past two decades, with roughly 20% of domestic flights annually arriving late, according to BTS data.
- Issues within airlines' control caused around 5% of delays. But air carriers weren't the leading cause for holdups, as problems with the National Aviation System — meaning, air traffic control — accounted for around 6%.
How the "big five" airlines came to dominate the skies (axios.com) |
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| To: Sam who wrote (1826) | 1/8/2024 2:21:47 PM | | From: Art Bechhoefer | | | | Boeing will lose money and have to compensate airlines for bad product design. Airbus will increase sales that otherwise probably would have gone to Boeing. The main cause appears to be a management decision to shift its corporate office away from Seattle in order to be closer to South Carolina, where a new, non-union factory was built. The farther removed management is from day to day manufacturing problems, the more likely these mistakes will occur. Best example: When Xerox moved its management from Rochester, NY to Stamford, CT in order to be closer to financial centers, and lost a substantial part of its copier business.
Art |
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| From: Glenn Petersen | 1/28/2024 10:27:56 PM | | | | | | Porter could consider IPO in the ‘mid-term’: CEO
Bloomberg
January 28, 2024
The president and CEO of Porter Airlines said his company is fully financed for now, but could consider an initial public offering (IPO) as it grows.
In an interview with BNN Bloomberg, Michael Deluce said an IPO is a “potential avenue” for the airline as it looks to expand further as part of its growth strategy.
“We’re fully financed,” he told BNN Bloomberg in a television interview on Friday. “We are executing on a growth plan and so we don’t have need for public capital. Having said that, Porter is the fastest growing airline in North America by a significant margin.”
“It’s something that there’s a conversation about, but again, fully financed growth plans. It’s not a necessity today but something for the midterm,” he added.
Porter is in the process of adding 100 Embraer E195-E2 aircraft into its fleet. It added 29 in 2023 and expects to add another 21 in 2024.
The addition has allowed the airline to add several domestic and international destinations to its network, including Vancouver, Los Angeles, and Tampa Bay.
“We’ve seen very, very strong demand and support within the leasing community to complete sale lease facts on all of our original deliveries,” Deluce said.
“As we move forward, we’ll look at a mix of debt financing and cash purchasing of aircraft, but there is significant capital consumption over the next few years as we deploy these aircraft.”
Earlier this month, Deluce told Bloomberg News that a Porter IPO could be in the “in the two to five-year range.”
“I don’t think it’s a next year, or this year, type item,” he said at the time.
The airline planned an IPO for May 2010 in a bid to raise $120 million, but ultimately decided against it following a downturn in the stock market.
With files from Bloomberg News
The post Porter could consider IPO in the ‘mid-term’: CEO appeared first on Bloomberg. |
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| From: Sam | 2/13/2024 8:30:42 AM | | | | | | JetBlue Stock Is Soaring After Icahn Takes Stake. It's an Eventful Start for the New CEO. -- Barrons.com
Dow Jones Newswires February 13, 2024 05:08:00 AM ET
It's been quite the start for Joanna Geraghty as the new CEO of JetBlue Airways.
Barely 24 hours into her tenure, the first woman to run a major U.S. airline is facing up to an activist investor campaign from Carl Icahn.
Billionaire Icahn disclosed a 9.9% in the low-cost carrier in a filing late Monday, describing the stock as an " undervalued" and "attractive" investment opportunity. JetBlue shares were surging 14% in premarket trading Tuesday and looked set to continue their recent comeback -- they have risen 24% over the past month as of Monday's close. The shares remain around 30% lower over the past year.
While Icahn said he doesn't have any plans or proposals for the company, he's in discussions over possible representation on the carrier's board.
A spokesperson for JetBlue said in an emailed statement to Barron's: "We are always open to constructive dialogue with our investors as we continue to execute our plan to enhance value for all of our shareholders and stakeholders."
If that wasn't enough for Geraghty's first day in the job, the carrier has also canceled close to 20% of its daily flights scheduled for Tuesday as airlines prepared for a winter storm along the East Coast. JetBlue has canceled the most flights any major U.S. airline as of 4 a.m. Eastern time as it's heavily exposed to the Northeast of the country.
Geraghty's in-tray, after succeeding Robin Hayes, also includes preparing to appeal a federal judge's decision to block the company's proposed merger with Spirit Airlines. The Court of Appeals will consider JetBlue and Spirit's arguments in June ahead of a deadline of July 24 for the deal to be closed.
The carrier has begun planning for a future without Spirit, though, in the event of the appeal being unsuccessful. Geraghty, who previously served as the company's chief operating officer, said on JetBlue's fourth-quarter earnings call last month that she would take "aggressive action" to return the company to profitability.
That includes initiatives expected to add $300 million in revenue, and plans to reduce costs by deferring $2.5 billion worth of capital expenditure on aircraft to beyond 2027.
Other airline stocks were mixed ahead of the open, as United Airlines fell 1%, Delta Air Lines fell 0.7%, American Airlines rose 0.2% and Southwest Airlines was 0.4% higher.
Write to Callum Keown at callum.keown@barrons.com
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| From: Sam | 2/20/2024 11:18:58 AM | | | | | | American Airlines Bumps Up Baggage Fees -- WSJ
Dow Jones Newswires February 20, 2024 10:01:00 AM ET
A much-hated airline fee is starting to creep up again.
American Airlines will now charge $40 to check a bag at the airport for domestic flights or $35 for those who pay in advance online. Previously, the airline charged $30 for the first checked bag. A second bag will now cost $45, up from $40.
The price increase follows similar bumps at other airlines. Alaska Airlines raised the charge by $5 early this year to $35 for a first checked bag and $45 for a second. JetBlue Airways this month started charging $45 to check a bag at the airport, with a $10 discount for paying in advance.
Scott Chandler, American's senior vice president of revenue management and loyalty, said Tuesday that the fee increase was driven by inflation as airlines have been battling rising costs for fuel and labor.
"Fuel is a big component -- obviously the more bags we carry, the more fuel you're burning," he said in an interview. "The cost of handling bags across the board, from real estate, machinery, et cetera, has gone up. This is trying to match that," he said.
On American Airlines flights between the U.S. and Canada and Mexico, a first bag will cost $35 and a second will cost $45 regardless of whether they are purchased at the airport or in advance.
Airlines have done away with some pesky charges, like flight-change fees. But other charges for things such as better seats have proliferated, and airlines often rely on fees to offset rising costs.
While airline ticket prices have been volatile in recent years, surging in 2022 and then easing off last year, luggage fees have been relatively stable. American and other airlines last raised bag fees in 2018 -- to $30 for a first bag and $40 for a second. JetBlue and United Airlines in 2020 raised the fees for checking bags at the airport by $5 but allowed passengers to avoid the increase by paying in advance.
JetBlue said it boosted bag fees most recently to battle rising costs of wages, fuel and other inflationary pressures while keeping base fares low and avoiding charges for popular services like Wi-Fi.
"While we don't like increasing fees, it's one step we are taking to get our company back to profitability and cover the increased costs of transporting bags," a JetBlue spokesman said.
Charging for luggage started as a page in the budget airline playbook over 15 years ago. But most bigger airlines, which once included bags in the price of a ticket, quickly embraced the idea as they sought to tap in to new sources of revenue and offset expenses. Those fees have stuck around even as costs have ebbed and flowed.
In 2022, U.S. airlines brought in nearly $7 billion from checked-bag fees, 17% more than in 2019, before the Covid- 19 pandemic. Last year's figure was on track to outpace that, with nearly $5.5 billion in revenue from checked-bag fees in the first three quarters of the year. Southwest Airlines has stuck to its policy of allowing two free checked bags.
The rising fees can also help steer travelers into airline loyalty programs or toward pricier premium tickets that still include baggage fees. At American, for example, customers with the airline's co-branded credit card or who have status will still receive complimentary bags, as will those who buy seats in premium cabins.
Chandler said less than half of American's customers check bags, and most don't pay for them. One reason: The airline has been adding bigger bins to its planes that can accommodate more carry-ons.
The carrier on Tuesday also said it is lowering fees for some oversize items that are just a few pounds heavier or a few inches larger than standard bags. Previously, items anywhere between 50 and 70 pounds could be subject to a $100 to $200 fee, often setting off panicked scenes at check-in counters. Starting in April, items that come in up to 3 pounds overweight will only cost an additional $30.
American has been trying to drive more customers to its website, where bookings tend to be more profitable for the airline. It said Tuesday that starting in May, customers will only earn miles and loyalty points when they book directly with American, unless they are under a corporate contract or booking using a preferred travel agency.
Write to Alison Sider at alison.sider@wsj.com |
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| From: John Koligman | 3/12/2024 12:32:53 PM | | | | | | Southwest is getting screwed here. NOT a good idea to be totally dependent on one aircraft produced by one vendor.
Southwest Airlines cuts capacity, and rethinks 2024 financial forecast, citing Boeing problems
PUBLISHED TUE, MAR 12 20247:17 AM EDTUPDATED 2 HOURS AGO
Leslie Josephs @LESLIEJOSEPHS
KEY POINTS
- Southwest said it would reevaluate its 2024 financial forecast because of Boeing’s delivery delays this year.
- Airline CEOs have been frustrated by repeated setbacks at Boeing that have delayed deliveries of new planes.
- Boeing is facing a quality control crisis in the wake of a blown fuselage panel on an Alaska Airlines flight earlier this year.
Boeing 737 MAX airplanes are seen parked at a Boeing facility on August 13, 2019 in Renton, Washington.
David Ryder | Getty Images
Southwest Airlines said Tuesday that it will have to trim its capacity plans and reevaluate its financial forecasts for the year, citing delivery delays from Boeing, its sole supplier of airplanes.
The Dallas-based airline said Boeing informed Southwest’s leaders that it should expect 46 Boeing 737 Max 8 planes this year, down from 58. Southwest had expected Boeing to deliver 79 Max planes, including some of the smallest model, the Max 7, which hasn’t yet won certification from the Federal Aviation Administration.
Because of the delays, Southwest said in a filing that it is “reevaluating all prior full year 2024 guidance, including the expectation for capital spending.”
Southwest’s statements, ahead of a JPMorgan industry conference on Tuesday, are the latest sign of how Boeing’s quality control crisis and production problems — both before and after a door plug blew out of an Alaska Airlines flight in January — are weighing on some of its best customers.
“We all need Boeing to be better,” Southwest CEO Bob Jordan said at the conference.
Alaska Airlines said in a filing Tuesday that its 2024 capacity is “in flux due to uncertainty around the timing of aircraft deliveries as a result of increased Federal Aviation Administration and Department of Justice scrutiny on Boeing and its operations.”
Last week, United told staff that it would have to pause pilot hiring this spring because of late-arriving aircraft from Boeing, CNBC reported. Southwest said it has stopped hiring pilots, flight attendants and other employees this yearand expects to end 2024 with lower headcount than last year.
Southwest shares were down more than 12% in morning trading. The airline said leisure bookings in the first quarter were weaker than expected and forecast unit revenue to be flat to up no more than 2% compared with a year earlier, down from a January estimate of a rise of as much as 4.5%.
Boeing didn’t immediately respond to a request for comment. |
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