| To: joseffy who wrote (70) | 9/9/2008 10:57:08 AM | | From: Glenn Petersen | | | | | Based on the available facts, it would appear that there was a problem with the bot. Let's hope for a quick investigation. Given its current financial health, United can ill afford to be the subject of inaccurate rumors. |
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| To: joseffy who wrote (71) | 9/12/2008 1:48:11 PM | | From: Glenn Petersen | | | | The SEC has gotten involved:
From Times Online
September 12, 2008
Probe into how Google mix-up caused $1 billion run on United
Mike Harvey, Technology Correspondent
The US Securities and Exchange Commission has opened a "preliminary inquiry" into how an outdated bankruptcy story sparked a $1 billion run on an airline’s stock value.
The article about how United Airlines filed for bankruptcy in 2002 was revived when it showed up on a newspaper site’s “most viewed” section on Monday.
From there it was picked up by Google News and later seen by alarmed stockholders. The stock plunged from around $12 to just $3 a share before trading was halted.
The Chicago-based company’s shares did not fully recover once trading resumed on Monday, and were still down at just over $11 dollars at close of trading yesterday.
With the possiblity of legal action in the air, those involved have been hotly disputing who was to blame.
The errors provide a salutary lesson for investors of the power and perils of computer automation and throw a spotlight on Google’s News search technology which, using “Googlebot” algorithms, scours web pages in search of news articles.
To many, the episode has been a reminder that computer programs, no matter how sophisticated, can be a poor substitute for human beings.
The comedy of errors began with just one reader who went to the South Florida Sun Sentinel’s website and viewed a 2002 article on United Airlines’ bankruptcy.
That single visit in the early hours of Sunday morning, a period of low traffic, apparently bumped it into a "Popular Stories" in the business section.
At 1:37am, an electronic Google program swept through the paper’s website for new stories and spotted the link.
Google says its program scanned the piece and, seeing there was no 2002 dateline, indexed the article for inclusion on its news pages.
Three minutes and two seconds later, Google News readers started viewing the story on the Sun Sentinel’s Web site.
A Florida investment firm found the story on Monday morning with a Google search and posted a summary on the Bloomberg financial information service.
That visibility - Bloomberg is seen by thousands of investment managers and traders - sparked the run on United shares.
What is in dispute between Tribune, the owners of the Sun Sentinel, and Google is whether the Googlebot should have known it was an old story.
Tribune said the story was not republished, and the link was simply a link to the archive version of the story.
Google spokesman Gabriel Stricker said that the only date the automated Google News software found on the Sun Sentinel site was from early Sunday eastern time.
“In the same way that the reader was unable to determine the original date, our search algorithm was similarly misled by that date," Mr Stricker said.
Tribune spokesman Gary Weitman said other clues would have made it clear to a human reader that the story was old, including a reference to UAL’s 97-cent share price (it was trading around $12 on Monday) and comments from readers further down the page that were posted in 2002.
"It appears that no one who passed this story along actually bothered to read the story itself,” he said.
“Despite the company’s earlier request and the confusion caused by Googlebot and Google News earlier this week, we believe that Googlebot continues to misclassify stories," Tribune said.
The investment newsletter that posted a summary of the story to Bloomberg, Income Securities Advisors Inc. in Florida, has also said there was nothing on the Sun Sentinel website to indicate that the story was old.
The page also fooled Bloomberg. Bloomberg News staffers posted headlines noting first the UAL share price drop, and then, at 11:06 a.m. EDT, a bankruptcy denial from United.
A different Bloomberg News staffer working the story found the bankruptcy story on the Sun Sentinel site and, at 11:07a.m., posted a headline about the bankruptcy.
Investors then dumped the stock at a huge rate and here algorithms again played their part.
Experts said the automated trading programs were applied to the trading of shares based on market-moving information trawled from the internet.
Last year, algorithms handled some 30 percent of all equity trading volume, according to a recent study by Aite Group.
The study projected that algorithms would grow to handle half of equity trading by 2010, and noted similar growth in derivatives and other asset classes as a hunger for faster trading grows.
The lack of confidence investors have in the troubled US airline industry also undoubtedly played its part in the stock drop.
Investors mistakenly figured that United Airlines, having filed for bankruptcy once, was more likely to do it again.
United is still considering what, if anything, to do about the affair.
technology.timesonline.co.uk |
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| From: Glenn Petersen | 5/2/2010 7:03:02 PM | | | | | | United finally finds a partner:
United and Continental Said to Agree to Merge
By MICHAEL J. de la MERCED and JAD MOUAWAD
New York Times
Published: May 2, 2010
United Airlines and Continental Airlines agreed Sunday to a $3 billion merger that will create the world’s biggest airline, people familiar with the discussions said.
The boards of both companies approved the all-stock transaction, these people said. A deal is expected to be announced on Monday. The transaction is expected to close in the fourth quarter.
The combined company will keep the United name and will be based in Chicago. It will be run by Continental’s top executive, Jeffery A. Smisek. United’s chairman, Glenn F. Tilton, will be nonexecutive chairman for two years. After that, Mr. Smisek will become the executive chairman.
Jean Medina, a spokeswoman for United, declined to comment. A Continental representative could not be immediately reached for comment.
The combination would jump ahead of Delta Air Lines, which became the top airline after its purchase of Northwest Airlines two years ago. The carriers will have a leading presence in the top domestic markets, including New York, Chicago, and Los Angeles, along with an extended network to Asia, Latin America and Europe.
A combination of United and Continental will have 21 percent of the domestic market share, in terms of available-seat miles, a industry measure of capacity that represents one seat that is flown one mile.
That puts it ahead of Delta, which currently has a 20 percent domestic market share, American Airlines and Southwest Airlines, which both have 15 percent, and US Airways, with 10 percent.
The combination will also account for 7 percent of global capacity, ahead of Delta, the current leader with 6 percent, and American, with 5 percent. United is currently the fourth largest domestic airline by capacity and Continental the sixth.
nytimes.com |
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| From: Glenn Petersen | 8/27/2010 8:32:55 PM | | | | | | The United-Continental merger is one step closer:
U.S. Approves Merger of United and Continental
By JAD MOUAWAD
New York Times
August 27, 2010
The Justice Department said late Friday that it had approved the planned $3 billion merger between United Airlines and Continental Airlines, lifting the biggest regulatory hurdle to the creation of the world’s top airline.
United and Continental, which announced their merger in May, now expect to complete the deal within a few weeks, after shareholders of both companies vote on the proposal on Sept. 17.
In a statement posted on its Web site, the Justice Department said it had “closed its investigation” into the proposed merger after United and Continental agreed to give take-off and landing slots to Southwest Airlines at Newark Liberty International Airport.
“United and Continental entered into the arrangement with Southwest in response to the department’s principal concerns regarding the competitive effects of the proposed United/Continental merger,” the Justice Department said in its statement.
After that, the airlines will be owned by a single entity, called United Continental Holding Inc., though they will continue to operate as separate airlines for another year until the Federal Aviation Administration issues a single operating certificate.
Although some analysts had warned that the merger could raise antitrust concerns, particularly in the New York area, where Continental has a dominant hub in Newark, the government’s approval has come at record speed.
The all-stock deal will form a coast-to-coast giant with a leading presence in the top domestic markets, including Chicago, Los Angeles and New York, and an extended network to Asia, Europe and Latin America.
The combined company will keep the United name and will be based in Chicago. Jeffery A. Smisek, Continental’s chief executive, will run the company. The merged airline would replace Delta Air Lines as the country’s largest air carrier.
Combined, United and Continental have 21 percent of the domestic capacity, in terms of so-called available seat miles, or one seat flown one mile. Delta has a market share of 20 percent. Globally, the merged companies would have a 7 percent market share.
The deal itself was completed in a remarkably swift two weeks in May, after United’s talks to seek a merger with US Airways prompted Continental to move in and propose a tie-up. The airlines said that the merger would allow them to fend off low-cost rivals at home and to take on foreign carriers abroad.
To obtain government approval, Continental and United agreed to give up take-off and landing rights at Newark to Southwest to assuage antitrust concerns about competition in the New York area.
The deal is an opportunity for Southwest to increase its small presence in the New York region, something it has been trying to do for years. Southwest currently has eight pairs of landing and take-off slots at La Guardia Airport. It also operates some flights out of Islip.
Under the deal, Continental would lease 18 pairs of take-off and landing slots, or round-trip flights, during peak and off-peak travel times to Southwest. The transaction is contingent on the closing of the merger between Continental and United by Nov. 30.
“Even though it is only 18 daily departures, which is a small number, it is enough of a presence for us to provide a lot of low-fare, customer-friendly competition that does not exist today,” said Robert E. Jordan, Southwest’s executive vice president for strategy and planning.
nytimes.com |
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| To: Glenn Petersen who wrote (76) | 9/28/2010 12:10:06 AM | | From: John Vosilla | | | | Southwest-AirTran deal means more options for some
Southwest's AirTran buy will expand options for some, but fares could rise in Northeast
NEW YORK (AP) -- Southwest's decision to buy AirTran will mean more routes and fewer delays and cancellations in small cities but higher fares in the Northeast and perhaps the end of the super-low sale fare.
Southwest Airlines, which has built a loyal following with its tongue-in-cheek ads and refusal to charge for checked bags, said Monday it planned to buy AirTran for $1.4 billion.
The deal will move Southwest into 37 new cities, expand its presence in cities like New York and Boston and move it into Atlanta, the busiest airport in the nation.
finance.yahoo.com
Who is next Glen? I might swap my Air Tran in coming days for American Airlines or Hawaiian Holdings or a pullback in Jet Blue. Maybe a AMR and LCC merger or RJET and JBLU coming? |
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| To: John Vosilla who wrote (77) | 10/9/2010 8:54:11 AM | | From: Glenn Petersen | | | | Finally, some discipline:
Flying Fewer Planes, Airlines Find Stability
By JAD MOUAWAD
New York Times
October 8, 2010
VICTORVILLE, Calif. — For the first time since their industry was deregulated in the late 1970s, airlines in the United States have managed to hold the line on the number of planes they fly.
Evidence of this discipline can be seen at airports around the country, where empty seats are increasingly difficult to find and fares have jumped. It can be seen at a former military base here on the edge of the Mojave Desert, where a record number of airplanes are stored, awaiting better days. And it is reflected in the airlines’ bottom line as the industry returns to profitability.
The airlines tried repeatedly in the past to maintain such capacity restraint, but each time, their efforts fell apart as new competitors sprang up and vied for market share. But this time has been different because of a unique set of circumstances — a result of both the weak economy and the repeated shocks the industry has suffered in the last decade.
The steep jump in oil prices, starting three years ago, forced the airlines to slow orders of new planes. Then, as the recession hit, more than a dozen airlines went out of business, and higher financing costs made it harder to establish new ones. A string of mergers among the big carriers further shrank the number of players. And even low-cost airlines, which once provided the most feisty competition, lately have shown signs of caution.
“It’s a discipline based on fear, and that’s basically what makes it so effective,” said Hunter K. Keay, an airline analyst at Stifel Nicolaus, who said he expected that the number of scheduled flights in the United States would remain essentially flat this year compared with last. “It’s the first time airlines have done this voluntarily, outside of bankruptcy proceedings.”
The result has been less a case of anticompetitive behavior and more an instance of self-interest on a broad scale. It also reflects a more timid — and perhaps chastened — industry than in previous decades when aggressive executives competed fiercely with each other.
Airlines trimmed their capacity in recent years by grounding planes, reducing the number of flights they offered between cities and flying smaller planes, said Richard L. Aboulafia, an analyst at the Teal Group, a consulting firm in Fairfax, Va.
At 7 percent, last year’s cuts in capacity (measured by the industry in units of one seat flown per mile) were the deepest since 1942, as demand for air travel plummeted in the depths of the recession. And while the airlines have reversed some of the deepest cuts this year, they have not kept up with the growth in demand. According to the International Air Travel Association, demand has risen by 6.1 percent so far this year, yet airlines added just 1.5 percent more seats.
“American carriers have done a stellar job of holding the line on capacity over the past two years, and they show no sign of giving up,” Mr. Aboulafia said.
For passengers, the result is pretty obvious: ticket prices have risen, although airline experts point out that the comparison may be skewed because last year’s fares were especially low in the depths of the recession.
Still, midweek direct flights can often run up to $1,000 these days. Round-trip flights between New York and Portland, Ore., now start at $700. Flights between Chicago and San Francisco over the Thanksgiving weekend will cost at least $440 round-trip if bought today, and fares are expected to rise even more as the holiday season gets closer.
Instead of adding more planes as demand has risen, the airlines have put more people onto their scheduled flights. Airlines now routinely fill more than 80 percent of their seats — an exceptionally high level for an industry that traditionally sells 70 percent of its seats.
“The idea of 90 percent load was insane 20 years ago,” said Andy Golub, an airline expert at Ascend, an aviation consulting firm. “Now, it’s a target for the peak season.”
The decline in capacity began when oil prices spiked in 2007 and 2008. The airlines grounded many of their least fuel-efficient planes, rethought their growth plans and ended up delaying or canceling orders for new planes to save cash.
Airlines in the United States have 167 wide-bodied airplanes on order, including 38 scheduled for delivery by 2015, said Craig Jenks, the president of Airline/Aircraft Projects, a consulting firm in New York. By contrast, the 14 largest foreign carriers expect 627 wide-bodied planes to be delivered in the next five years, many going to the fast-growing airlines in the Middle East.
“There is very little growth in their outlook,” said Mr. Jenks, who pointed out that many of the new orders in the United States were aimed at replacing existing aircraft. American Airlines, for instance, is planning to replace its entire fleet of older McDonnell Douglas MD-80s over the next decade with new more fuel-efficient Boeing 737s.
The airlines have also benefited from delays with the new Boeing 787s; American, Continental, Delta and United all have the planes on order.
At the same time, fewer airlines are competing after bankruptcies culled the field. Now, with the mergers of Delta and Northwest, United and Continental and Midwest and Frontier, and Southwest’s planned purchase of AirTran, the number of existing airlines is shrinking even further.
The low-cost carriers, too, are behaving more like the long-established airlines. While some, including Allegiant Airlines and Virgin America, have added new routes and flights, Southwest and JetBlue Airways are not growing as aggressively as they were just a few years ago.
Airline executives argue that they need to manage their capacity much more closely now than in the past.
“The marketplace is not seeing a flood of capacity back into the market where demand doesn’t warrant it,” said Hank Halter, the chief financial officer of Delta Air Lines. “All the airplanes in the desert indicate the significant capacity restraint that carriers have undertaken.”
At the nation’s largest desert storage facility, in Victorville, some 200 airplanes are parked side by side, their wings nearly touching.
Aircraft of all makes and sizes, from Boeing 747 jumbo jets to single-aisle planes like Airbus A320s, are stored here waiting to be called back to action.
“They come here because of the dry air,” said Jeff A. Lynn, the general manager at Southern California Aviation, a subsidiary of Pratt & Whitney that runs the place. He said that planes were particularly susceptible to humidity and corrosion.
Planes stored here are handled with care. Special fluids are pumped into the engine to lubricate internal parts, windows and open gauges on the fuselage are covered to protect them from dust, and the wheels are wrapped in plastic to prevent damage.
On one side of the airport, a few planes, including venerable Lockheed L-1011 TriStars, are scheduled to be cut up, stripped of their equipment and sold as scrap metal. But the vast majority of planes just sit there, a vignette of commercial aviation. Mr. Lynn said that the number of stored aircraft hit a peak of about 250 in February.
Airlines may not be able to hold on to their strategy, however, once the economy regains momentum.
Mr. Lynn has already noticed a rebound in the business. “Most of these planes will come back into service,” he said. “Once the economy turns around, no one wants to store a plane.”
nytimes.com |
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| To: John Vosilla who wrote (79) | 5/19/2011 7:07:09 AM | | From: Glenn Petersen | | | | Interesting, thanks.
The Minutiae of an Airline Merger
By JAD MOUAWAD
0New York Times
May 18, 2011
ATLANTA — How many chimes should pilots ring to signal the plane is about to land — two or four? Should flight attendants first pour drinks into a cup or just hand over the can?
Airline mergers are complex and tough to pull off — witness the troubled marriage of People Express and Continental Airlines in the 1980s or the continuing problems in integrating America West and US Airways six years after their merger. So when Delta Air Lines acquired Northwest three years ago, executives knew they would have to resolve major labor, technology and financial issues.
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How to Merge Two Airlines
Delta and Northwest announced their merger in April 2008. They immediately began planning for what turned out to be an 18-month sprint to integrate 1,200 systems across the two airlines — everything from customer loyalty programs to aircraft operations, all without interrupting service. Managers built this master guide to break down when these systems would need to start working together. Each note represents a project that could involve thousands of tasks.
What they had not fully anticipated were the thousands of tiny details that go mostly unnoticed by passengers but can make the difference between a successful merger and a failed one.
All airlines have their own way of doing things, developed over time and through labor negotiations. All have specific working rules, flying procedures, maintenance schedules and computer programs. And all have their own cultures. Delta always thought of itself as the gracious host. Hence its flight attendants poured the requested drinks. Northwest was the practical carrier; its attendants just handed over the can.
“It was like Noah’s ark out here,” said Peter Wilander, an executive at Delta responsible for in-flight services. “We had two of everything.”
Delta executives agreed earlier this month to discuss the minutiae of the Northwest merger to make the broader point that combining two airlines is an incredibly difficult task. The Delta-Northwest tie-up is now widely seen as a success, and that view laid the groundwork for two other, more recent mergers: United Airlines with Continental last fall and Southwest Airlines and AirTran, which was completed just last week.
“If you look at the history of mergers, the assumption was that you couldn’t do them successfully,” said Richard Anderson, Delta’s chief executive. “Everybody had come to the conclusion that these things are too big, too complex and too unwieldy to manage.”
Delta’s merger with Northwest was announced in April 2008 and closed in October of that year after receiving regulatory and shareholder approval. And yet it still took 14 more months for the airlines to fly as a single carrier, in January 2010.
Delta scored a major point by getting its pilot unions to agree to a common contract by the time the merger closed. Many analysts said this gave the airline a critical advantage by getting a crucial labor group on board from the start.
But that did not put an end to Delta’s labor issues. Flight attendant representatives accused the airline of using intimidation tactics after they lost a bid to unionize the carrier’s work force in November. The matter is under review by the National Mediation Board, which could call a new election.
Meanwhile, flight attendants from Delta and Northwest continue to work under separate contracts, each with their own work rules, and cannot be scheduled to fly on the same airplanes.
And some merger-related work is still going on. The last Northwest plane was repainted only six weeks ago. Delta expects to spend another year completing an inventory of all airplane parts and maintenance procedures into a new database.
Each airline has hundreds of different technologies that book seats, print tickets or dispatch crews that need to be integrated. Failure here can leave thousands of travelers without a seat if bookings are misplaced.
Delta’s chief information officer, Theresa Wise, said the airline had to merge 1,199 computer systems down to about 600, including one — a component within the airline’s reservation system — dating from 1966.
The challenge, she said, was to switch the systems progressively so that passengers would not notice. Ms. Wise, who has a doctorate in applied mathematics, devised a low-tech solution: she set up a timeline of the steps that had to be performed by pinning colored Post-it notes on the wall of a conference room.
A major switch happened when the new airline canceled all Northwest’s bookings and transferred them to newly created Delta flights in January 2010. It required computer engineers to perform 8,856 separate steps stretched out over several days.
More than 140,000 electronic devices, including printers, had to be replaced. The size of the paper at airport kiosks was even checked to make sure it could print boarding passes for Delta’s new flights.
“This sounds insane,” Ms. Wise said. “But each reservation system has its own personality.”
Financially, the merger provided a big boost to Delta’s bottom line. Delta posted its highest profit in a decade last year. But even as the integration into a single carrier was hitting its stride, Delta’s operations struggled.
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.
When United and Continental announced their own tie-up, in May 2010, they picked a hybrid approach to emphasize that the combination was a merger of equals: the new airline would keep its headquarters in Chicago but would be led by Jeff Smisek, Continental’s chairman, who was a driving force behind the merger. The carrier’s new livery combines Continental’s globe on the tail with United’s name on the fuselage.
United and Continental continue to operate as separate airlines until they receive a single operating certificate from the Federal Aviation Administration by the end of the year. At that point, the new United will overtake Delta as the nation’s largest carrier.
Unlike Delta, however, United has not secured a new contract for all its pilots yet, some of whom recently picketed in front of nine major airports across the country, including Los Angeles International Airport. Mr. Smisek said during a recent conference call that the airline had made some progress in the merger. Passengers can now print boarding passes from either airline at all United and Continental kiosks, and loyalty programs are getting more closely aligned.
“I remain committed to reaching agreements that are fair to our co-workers and fair to the company,” Mr. Smisek said on the call. “And I want to reach those agreements promptly.”
Likewise, Southwest closed the purchase of AirTran on May 2, and quickly appointed a new leadership team to handle the combination.
“All good things take time and change won’t be immediate, many important decisions are ahead, many questions still need answers,” Gary Kelly, the chief executive of Southwest, said in a video statement after the deal closed. “Once integration is complete, we will have one brand, one customer experience, one livery, one operation under a single operating certificate and one mission.”
If Delta’s experience is any indication, it will be a long road for Southwest and United, littered with seemingly trivial questions.
Pilots at Delta, for instance, used to ring the cabin bell four times as they began their final approach, while those at Northwest rang it twice. The merged airline now signals just two times.
Likewise, the food catering operations of both airlines had 8,000 pages of one-line codes describing everything from soda orders to the price of strawberries. Each airline had different codes, however, and paid different prices for everything.
No decision, seemingly, was too small. Before the merger, Delta used to cut its limes in 10 slices while Northwest cut them 16 ways. The lime debate was even mentioned at a meeting attended by Mr. Anderson, the chief executive, who was told it saved Northwest about $500,000 a year. In the end, Delta stuck with its 10 slices. But the airline also realized that it had been loading more limes on its flights than it needed. So it is now carrying fewer limes.
Delta, based in Atlanta, used to serve the hometown drink, Coke. Northwest, Pepsi. “That was an easy one,” Mr. Anderson recalled. The airline stuck with Coke but adopted Pepsi snacks.
One other issue has apparently stumped everyone. Delta and Northwest each used different trash bags in their cabins. Northwest’s was large, held up better and was easy to use. Delta’s was smaller, like a high-end shopping bag. The airline is still working on finding the perfect bag.
“The amount of work is boring beyond belief,” Mr. Wilander said. “It is also critical to the airline.”
nytimes.com |
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