Silicon Investor - Airline Discussion Board

[OldAIMGuy] Fly the Friendly Skies with JETS......................... Purchased some replac...

OldAIMGuy — 3/16/2026 12:46:57 PM

Fly the Friendly Skies with JETS.........................

Purchased some replacement inventory for the Equity Warehouse today.................

There's still plenty of cash in reserve should the price fall further with Oil and Mid-East conflict still brewing......

(Cash Reserve = Red; Fund Value = Blue - Stacked Bar histogram)

Best wishes,
OAG

Buy from the Scared; Sell to the Greedy.....

[OldAIMGuy] I've continued to sell into Airline strength with JETS. Here's the latest three ...

OldAIMGuy — 2/2/2026 3:33:48 PM

I've continued to sell into Airline strength with JETS. Here's the latest three years of history:

Generally, the method I use sells into strength and buys into weakness. Each trade then generates the new trade buy and sell targets (see Line Graph).

The account's up nicely even if it looks like a roller coaster ride.

Best wishes,
OAG

[Sam] Flight Disruptions Mount As Shutdown Drags On -- Barrons.com Dow Jone...

Sam — 11/9/2025 6:19:21 PM

Flight Disruptions Mount As Shutdown Drags On -- Barrons.com

Dow Jones Newswires November 09, 2025 01:54:00 PM ET

The number of flight cancellations and delayed jumped this weekend, as the longest-ever federal government shutdown stretched into its 40th day.

More than 1,654 flights into and out of U.S. airports had been canceled by 1 p.m. Eastern time on Sunday, including hundreds of flights at Newark Liberty International in the NYC area and Hartsfield-Jackson International Airport in Atlanta, according to FlightAware.com flight-tracking site.

Hartsfield-Jackson is also a major Delta Air Lines hub, and Delta canceled 489, or 14% of its daily flights on Sunday, while Southwest Airlines canceled 147 flights and delayed 1,256 flights, or 29% of its flights, according to FlightAware.

About 4,940 flights have been delayed on Sunday. That brings the number of flights canceled since Friday to more than 4,200, while the number of cancellations is above 19,500.

Thousands of air traffic controllers, Transportation Security Administration officers, and other federal airport workers are continuing to show up for work, despite not having been paid since Sept. 30.

The Federal Aviation Administration is reporting flight delays at Newark, New York's LaGuardia, Chicago O'Hare, Teterboro Airport in New Jersey, and Southwest Florida airport in Fort Myers.

Adverse weather is also exacerbating flight conditions, with both Detroit Metropolitan and Akron-Canton Airport deicing planes on Sunday.

Transportation Secretary Sean Duffy, who had ordered commercial flights to be cut by up to 10% starting Friday because of ongoing staffing issues, told CNN's State of the Union that about 15 to 20 air traffic controllers are retiring every day, up from four ATCs a day before the shutdown.

Duffy also said Defense Secretary Pete Hegseth had offered to help, telling Duffy in a text that military reservists trained as air traffic controllers could step in. "'If you could use them, I'm going to offer them to you.,' Duffy told CNN about what the text said.

But Duffy added he wasn't certain they could step in. "They're not certified in the airspaces that we need them," he said. "But if I can, I'm going to use them."

The National Air Traffic Controllers Association union couldn't immediately be reached.

Separately, Sen. James Lankford (R, Okla.) told NBC's Meet the Press that the government shutdown "absolutely needs to" end by Thanksgiving, when air travel volumes soar.

Write to Janet H. Cho at janet.cho@dowjones.com

[Sam] Delta Air Lines is scheduled to report third-quarter results before the market o...

Sam — 10/8/2025 3:32:10 PM

Delta Air Lines is scheduled to report third-quarter results before the market opens on Thursday. Here's what you need to know.

PROFIT: The airline is expected to post a profit of $990.2 million, or $1.49 a share, according to the consensus estimate of seven analysts polled by FactSet. That would be down from $1.27 billion, or $1.97 a share, in the same quarter a year earlier.

EARNINGS: Stripping out one-time items, adjusted earnings are expected to be $1.52 a share, according to the projections for 17 analysts surveyed by FactSet.

REVENUE: Quarterly operating revenue is expected to rise to $15.94 billion from $15.68 billion a year earlier, according to estimates from seven analysts polled by FactSet.

The stock has risen 16% since the third quarter started and was recently changing hands at $56.90, down about 6% from where it started the year.

WHAT TO WATCH

--Traffic volumes in September grew faster than seat supply did, a positive indicator for forward pricing trends, TD Cowen analysts said in a recent research note. These positive demand dynamics bode best for Delta and top competitor United Airlines, they said. Investors will be looking to see how those trends are playing out for Delta and its year-end forecasting.

--Overall consumer spending remains strong among higher-earning consumers, which is great for Delta, given that it targets high-end customers, Deutsche Bank analysts said in a recent research note. Those customers, and their outsized wealth creation in recent years, should produce solid profits and generate meaningful free cash flow for Delta, allowing it to make investments and widen its competitive lead, the analysts said.

[Sam] United and Delta Are S&P 500's Top Stocks Today. Thank the Inflation Report. -- ...

Sam — 8/12/2025 12:40:40 PM

United and Delta Are S&P 500's Top Stocks Today. Thank the Inflation Report. -- Barrons.com

Dow Jones Newswires August 12, 2025 12:36:00 PM ET

United Airlines Holdings and Delta Air Lines were the top performers in the S&P 500 Tuesday as an unexpected pickup in airfares lifted airline stocks.

Airline fares increased 4% month over month in July, according to the release Tuesday of the consumer price index, marking a sudden reversal after five consecutive monthly declines. It was the largest seasonally adjusted change in airfares since May 2022, according to the Bureau of Labor Statistics, which publishes the data.

The news seemed to boost airline stocks on Tuesday. United was up 9.9%, Delta gained 9.1%, American Airlines Group was climbing 11%, and Southwest Airlines was up 4.1%.

Shares of smaller players such as Alaska Air Group, JetBlue Airways, Allegiant Travel, and Frontier Group Holdings also traded sharply higher.

Investors badly needed this kind of rally. Airline stocks have tumbled this year amid disappointing second-quarter earnings and jitters over consumer demand. Coming into Tuesday, the U.S. Global Jets exchange-traded fund, which holds various airlines, plus travel and aerospace companies, had declined 7.3% in 2025.

The spike in airfares may indicate travel demand has been growing stronger or that airlines have been slashing capacity to find a better balance. In July, Omair Sharif of Inflation Insights projected potential airfare inflation due to capacity cuts and a resulting reduction in discounts, as Barron's reported at the time.

Air travel prices contributed to an acceleration in overall services inflation last month. Services prices rose 0.4% in July, up from a 0.3% gain in June.

This jump "seems to reflect a normalization after a weak period earlier this year rather than a durable pick-up in spending," Elyse Ausenbaugh, head of investment strategy at J.P. Morgan Wealth Management, wrote in a note Tuesday.

[Art Bechhoefer] Sam -- The airline profit forecast claims that ". . . profitability is still exp...

Art Bechhoefer — 6/2/2025 11:12:08 AM

Sam -- The airline profit forecast claims that ". . . profitability is still expected to improve over 2024 due to lower fuel prices and record passenger numbers. . ." What they left out was that the record passenger numbers were due at least early to lower fare prices. This doesn't sound like an improving profit forecast.

I've been seeing a lot of lower seat prices, but that is mainly restricted by limitation on checked bags and carry-on luggage. Higher prices for essential living costs – food, electricity, clothing (no matter what the country of origin is), education, and healthcare – are curtailing demand for non-essential services that include air fares for vacations.

Art

[Sam] IATA cuts airlines' profit forecast, flags 'thin buffer' against future shocks J...

Sam — 6/2/2025 7:12:57 AM

IATA cuts airlines' profit forecast, flags 'thin buffer' against future shocks
Jun. 02, 2025 5:44 AM ET

The airline industry has lowered its forecast for net profits this year amid global headwinds, but profitability is still expected to improve over 2024 due to lower fuel prices and record passenger numbers.

The International Air Transport Association expects airlines' net profits to reach $36B this year, up 11% Y/Y but slightly lower than its previous forecast of $36.6B.

"Earning a $36B profit is significant. But that equates to just $7.20 per passenger per segment," IATA's director-general Willie Walsh said. "It's still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry's resilience to the test."

Total airline revenues are expected to hit a record $979B in 2025, up 1.3% Y/Y but below the IATA's previous forecast of $1T. Total traveler numbers are projected to reach a record 4.99B, up 4% Y/Y but lower than the prior estimate of 5.22B.

Walsh noted that the biggest positive driver is the price of jet fuel, which has fallen 13% Y/Y. Jet fuel is expected to average $86/barrel in 2025, well below the $99 average in 2024.

"We anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence," Walsh added.

Fleet expansion and modernization remains challenging amid supply chain issues, which could potentially persist to the end of the decade.

"Manufacturers continue to let their airline customers down. Every airline is frustrated that these problems have persisted so long. And indications that it could take until the end of the decade to fix them are off-the-chart unacceptable," Walsh said.

IATA members include United Airlines ( UAL), American Airlines ( AAL), Delta Air Lines ( DAL), Southwest ( LUV), JetBlue ( JBLU), Alaska Airlines ( ALK), FedEx Express ( FDX) and UPS Airlines ( UPS).

seekingalpha.com

[Sam] Airline stocks are on watch after Southwest, American, and Alaska Air warn on so...

Sam — 4/24/2025 9:17:20 AM

Airline stocks are on watch after Southwest, American, and Alaska Air warn on softer demand trends
Apr. 24, 2025 7:41 AM ET

seekingalpha.com

[OldAIMGuy] Hi Sam, I just followed my plan and added more shares when the price went down....

OldAIMGuy — 4/15/2025 1:42:24 PM

Hi Sam,
I just followed my plan and added more shares when the price went down.

My Business Plan is:
Buy from the Scared, Sell to the Greedy!

It's worked pretty well since starting my equity warehouse almost 40 years ago. Covid really rocked the boats and planes, however. Everyone was Scared, and so I started my JETS position at $13.96/sh and a small reserve of cash in 2020. The markets got happier and I was able to sell into that recovery rally. It eventually used up about 1/3rd of the initial inventory of shares with the last sale in that rally being at $27.14/sh. Since then it's been more about rebuilding share inventory at discount prices. The share price is up around 38% from the start, and through judicious inventory management, my JETS position is up 56% at the present time. It's near its original share count again now.

Best wishes,
OAG Tom

[Sam] Travel Stocks Are No Ticket to Paradise -- WSJ Dow Jones Newswires ...

Sam — 4/15/2025 12:08:11 PM

Travel Stocks Are No Ticket to Paradise -- WSJ

Dow Jones Newswires April 15, 2025 10:51:00 AM ET

This is an online version of our new Markets A.M. newsletter by Spencer Jakab. Get investing insights in your inbox each weekday by signing up here-it's free.

Travel stocks face a triple whammy this year. The bad news has hit their shares, but only a few look tempting.

What's happening? American consumers are nervous, sacrificing wants for needs. We all want a week on the beach but, with sentiment near a multidecade low, a trip closer to home or a shorter stay in more-modest lodgings is a common tradeoff. Anecdotes are piling up.

Employers get nervous too. Combine a hint of corporate thrift with mass federal firings and that important leg of travel is slowing, with worse to come.

And finally, foreign tourists are avoiding the U.S., some due to horror stories about overzealous border agents and others as a form of protest. Some 32% fewer Canadians visited by land and 14% fewer by air last month, according to Oxford Economics. Overseas visitor numbers fell by 11.6%, with European arrivals dropping sharply.

The picture has darkened close enough to the quarterly "quiet period" that many travel-related companies have yet to quantify the impact, but airlines Delta and Frontier pulled financial guidance. All eyes are on United, which reports this afternoon.

With their fixed costs, airline stocks are especially sensitive to sudden drops in demand. Lower oil prices help, but their shares have been hardest-hit, falling nearly 40% on average since Inauguration Day. That comes after hefty gains in the previous year, so no carriers are obvious bargains yet.

Cruise lines, down 31% on average, could be a different story. Like airlines, they benefit from cheaper fuel. Unlike flights, cruises book well in advance, and passengers often prepay for experiences too.

Cruises also have become a relative bargain compared with land-based vacations since Covid-19. And, except for the pandemic itself, a near-death event for the industry, bookings have been surprisingly resilient during recessions. Norwegian told a Truist analyst of "choppiness" in recent weeks, but a nearly one-third-off sale on cruise shares might be enough of a margin of safety.

Timeshare stocks, down by a quarter, are trickier. They depend heavily on sales of prepaid vacations averaging around $24,000. Failing to convince enough people in those 90-minute presentations could hurt them: Industry revenue fell by 35% during the financial crisis, according to Hilton Grand Vacations.

Timeshare operators have diversified revenue sources like resort management fees, financing for those vacation purchases and, going back to their hotel roots, rentals of vacant units.

Hotel stocks themselves have gotten off lightly. Goldman Sachs analysts see pressure on revenue-per-available room from a simultaneous drop in business, government and leisure travel and downgraded Hyatt, Hilton and Marriott shares this week. Most still sport optimistic valuations.

Least-affected so far are online middlemen Expedia, Booking and Airbnb, which makes sense-they are asset light and braced for turbulence. Sadly, the same can't be said for every travel-related stock.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

[Sam] Air travel has dropped notably across the ten busiest U.S. airports over the pa...

Sam — 4/14/2025 10:18:44 AM

Air travel has dropped notably across the ten busiest U.S. airports over the past two months, according to Apollo Asset Management, as both consumer sentiment and business travel weaken. Daily arrival data since late February points to a consistent and rapid decline in traffic.

“This is likely a mix of declines in business travel, tourism, and government travel,” Torsten Sløk, Apollo’s chief economist stated.

See the below chart that Apollo Asset Management provided:

continues at seekingalpha.com

[OldAIMGuy] I can't resist a good Sale. JETS offered at a 27% discount from my last selling ...

OldAIMGuy — 4/3/2025 3:54:42 PM

I can't resist a good Sale. JETS offered at a 27% discount from my last selling price.

Best wishes,
OAG

Buy from the Scared; Sell to the Greedy.....

[Sam] Airline stocks lose altitude as consumer sentiment worsens Mar. 28, 2025 12:40 ...

Sam — 3/28/2025 11:01:48 PM

Airline stocks lose altitude as consumer sentiment worsens

Mar. 28, 2025 12:40 PM ET Delta Air Lines, Inc. (DAL) Stock, AAL Stock, LUV Stock, ALK Stock, UAL Stock, JBLU Stock, JETS
By: Amy Thielen, SA News Editor

Deteriorating consumer sentiment, fears of a return of problematic inflation, and concerns surrounding a boycott of U.S. tourist destinations are all weighing on the airline sector, causing shares of major players in the sector to lose altitude Friday, driving down the U.S. Global Jets ETF (NYSEARCA: JETS) by 2%, in the red for a fourth consecutive day.

As one of the sectors most vulnerable to economic shocks, airlines have been struggling over the past several weeks as investors digest soft economic data. This includes bad news on consumer spending, an uptick in a key inflation indicator, and a downward revision to the University of Michigan’s consumer sentiment index reflecting American’s heightened worries about the “potential for pain amid ongoing economic policy developments.” This has raised expectations for the Federal Reserve to cut interest rates twice this year to tamp down inflation and avert a recession.

continues at seekingalpha.com

[Stock Puppy] United Says Government Travel Down 50% Scott Kirby says leisure bookings will o...

Stock Puppy — 3/16/2025 9:25:13 AM

United Says Government Travel Down 50%

Scott Kirby says leisure bookings will offset the drop in government spending

airlinegeeks.com

[Sam] Bags Will No Longer Fly Free on Southwest Airlines -- WSJ Dow Jones New...

Sam — 3/11/2025 12:23:32 PM

Bags Will No Longer Fly Free on Southwest Airlines -- WSJ

Dow Jones Newswires March 11, 2025 06:35:00 AM ET

Southwest Airlines plans to start charging for checked bags, a seismic shift that will boost revenue but potentially give its fiercely loyal passengers a reason to shop around.

"Bags fly free" was a policy so sacrosanct that Southwest trademarked the phrase and devoted a section of a book celebrating its 50th anniversary to it.

For bookings made on or after May 28, only customers with the airline's top loyalty status and those buying its priciest tickets will be allowed to check two bags free. Travelers with the airline's next level of status or a Southwest credit card are allowed one free checked bag.

Others should prepare to pay. Southwest didn't say how much travelers will pay to check bags.

The checked-bag fees were among several changes that the nation's largest carrier of domestic passengers announced Tuesday. Southwest is adding a bare-bones fare similar to its rivals' basic economy tickets, with restrictions galore, including no advance seat assignment.

And flight credits will now have an expiration date. The airline eliminated expiration dates during the pandemic and has frequently touted the policy.

"I'm not trying to spin it as a very big positive for everybody, but we did try to protect our engaged customers here," Chief Operating Officer Andrew Watterson said.

Checked bag charges and basic economy tickets have been standard at other airlines for years, but Southwest resisted them as too punitive. As recently as September, executives were steadfast in defending their bag policy, describing it as a critical "moat" that set Southwest apart from rivals.

The company's capitulation reflects how industry dynamics have shifted: The airline that once upended industry norms is now facing pressure to adopt them.

Southwest has lagged behind competitors and promised investors it will deliver stronger financial performance. A tussle last year with Elliott Investment Management gave the activist's chosen directors a significant presence on Southwest's board.

The airline has already been whittling away at some of its most distinctive features, last year saying it would ditch open seating and redesign plane cabins to sell some with extra legroom. Its vaunted employee-first culture suffered a body blow last month when the carrier slashed 1,750 corporate jobs in its first mass layoff.

Sticking to its values

Last year, as it worked to fend off Elliott's campaign, Southwest executives argued that customers flocked to the airline specifically because they can check their luggage, golf bags, skis and musical instruments for no charge.

Executives cited an analysis by a consulting firm that determined bag charges would bring in at most $1.5 billion in revenue a year, but cost the airline $1.8 billion in lost market share. Free bags ranked just behind price and schedule among the top reasons travelers pick Southwest, executives said then.

"Changing our bags policy would be value destructive," said Ryan Green, who was then in charge of the airline's transformation strategy, at the airline's investor day in September.

Board members were skeptical of that conclusion, according to people familiar with the matter. Some of them had experience at airlines that charged for bags. And where else would customers go, they reasoned?

Executives recognized they needed to speed up financial improvements and everything had to be on the table.

Airline tickets generally used to include checked bags. That changed by 2008 as major airlines looked for a way to cover soaring fuel costs.

Prices vary but checking two bags now costs at least $75 each way on most major airlines. That has been a windfall for the industry, which raked in $7.1 billion from baggage fees in 2023, according to the latest government data.

Southwest's bag policy became central to its identity. Its ads often needled competitors over their pesky charges. One ad from 2010 featured ramp workers flashing "Bags Fly Free" spelled out in body paint on their stomachs at another plane. The "belly brigade" later made an appearance at Southwest's annual shareholder meeting.

Bob Jordan, when he became CEO in 2022, said he had no intention of changing course. Southwest renewed its trademark as recently as 2023 and promoted the policy in ads and marketing materials in recent months.

"You cannot be stubborn about change," Jordan said last summer. "At the same time, we're going to stick to our values."

Fishing in 'new ponds'

In recent months, executives have acknowledged that the airline has been missing out on opportunities to make more money from premium features.

It has also been losing bargain hunters. Southwest allowed its flights to be displayed on Google Flights last year and this month started selling tickets on travel booking giant Expedia, reversing its yearslong policy of directing travelers solely to its website. Travelers can easily see how Southwest's prices stack up against competitors.

"We went fishing for new customers in new ponds," Watterson said. "They did not react to the bundled pricing."

Some loyal Southwest customers thought the airline had already gone too far, even before the latest changes were announced.

"Assigned seating and seat-based pricing makes you just like all the others who are no fun at all," said George Jones, a retiree who has flown Southwest for decades. Referencing the company's stock ticker, he asked: "What happened to the LUV?"

Write to Alison Sider at alison.sider@wsj.com and Dawn Gilbertson at dawn.gilbertson@wsj.com

[Sam] Major U.S. airlines plummet as recession fears add to woes Mar. 10, 2025 11:12 ...

Sam — 3/10/2025 12:06:53 PM

Major U.S. airlines plummet as recession fears add to woes

Mar. 10, 2025 11:12 AM ET Delta Air Lines, Inc. (DAL) Stock, UAL Stock, AAL Stock, ALK Stock, LUV Stock, JBLU Stock, ULCC Stock, SNCY Stock, SKYW Stock, JETS SP500, COMP:IND, DJIBy: Ahmed Farhath, SA News Editor

seekingalpha.com

[Sam] Airline Stocks Decline as Economic 'Soft Patch' Dampens Domestic Demand D...

Sam — 3/4/2025 3:15:28 PM

Airline Stocks Decline as Economic 'Soft Patch' Dampens Domestic Demand

Dow Jones Newswires March 04, 2025 12:18:00 PM ET

Economic uncertainty is creating turbulence for airline stocks as concerns about demand for domestic air travel loom.

"Our attention has shifted to what appears to be an emerging economic 'soft patch," said analysts at Deutsche Bank Research as they downgraded JetBlue Airways and Frontier Group Holdings on Tuesday. "To what extent and duration are not clear at the present, however, we do think it will likely weigh on demand for air travel, particularly the domestic discretionary segment."

Shares of JetBlue are down about 7.5% at $5.98, while Frontier retreated 5.6% to $6.55. United Airlines tumbled 7.2% to $85.09, while Delta Air Lines declined 6.5% to $54.68. American Airlines edged down 5.1% to $13.17.

The analysts say consumers could hold off on travel and certain purchases as President Trump enacts policies that are expected to raise prices.

Full-service carriers are better positioned to weather the effects of trade actions, say the analysts, who maintain their buy ratings on American, Delta and United. Price targets for Frontier Group, parent company of Frontier Airlines, and JetBlue were lowered as the analysts see economic uncertainty having a disproportionate impact on low-cost and ultra-low-cost carriers.

[Sam] American Airlines Stock Snags an Upgrade. Why Legacy Carriers Are Flying. -- Bar...

Sam — 2/26/2025 5:00:15 PM

American Airlines Stock Snags an Upgrade. Why Legacy Carriers Are Flying. -- Barrons.com

Dow Jones Newswires February 26, 2025 03:14:00 PM ET

When it comes to airline stocks, the skies have rarely been friendly to investors.

The current environment is an exception.

"The U.S. airline industry is entering a goldilocks period," Redburn Atlantic analyst James Goodall wrote Wednesday.

He and other analysts are heralding boom times for carriers' stocks because a rational competitive environment and ongoing travel demand should bolster the industry. The main beneficiaries of those trends are the Big Three legacy airlines -- American Airlines, Delta Air Lines, and United Airlines.

Goodall upgraded American stock to Buy from Neutral on Wednesday, raising his price target to $24 from $18. He also reiterated Buy ratings on Delta and United, with ratings of $80 and $135, respectively.

Other strong operators like Alaska Air Group have also gotten analyst endorsements. These players have more flexibility, the thinking goes, than their budget-oriented peers, who struggle to attract valuable business travelers.

The thesis for Goodall and other airline bulls is that there are legitimate, if temporary, disruptions to the cyclicality that made airlines so hard to invest in for much of their history. In other words, it's different this time. (Famous last words?)

In the past, airlines tended to order new planes when they were flush with cash; when those planes were delivered, it caused a spike in capacity, forcing them to lower fares to the detriment of margins. Once that eventually corrected overcapacity, the cycle could begin again. But supply chain constraints have caused this cycle to break down, and the resulting dynamic is why airline stocks are a good investment right now, Goodall says.

"Massive issues within the aerospace supply chain -- from Boeing's well publicized production line shortfalls, new engine technology teething issues and a shortage of parts...have resulted in a substantial shortfall in deliveries since the pandemic," he writes.

It appears there will be a multiyear period when capacity is constrained as airlines deal with an older fleet of planes and have to wait longer for new ones. That limited supply, along with demand that has yet to wane, is a recipe for stronger prices.

"Capacity discipline -- something most airlines struggle with in normal periods -- should, therefore, be forced upon the airline industry in the medium to long term."

Delta and United have already seen big runs -- up 49% and 117% respectively over the past year, outperforming the Roundhill Magnificent Seven ETF's 36%. But Goodall sees more gains ahead for the two, as well as for American stock, thanks to stronger earnings and free cash flow. His American upgrade also takes into account its new lucrative credit card deal with Citi.

By contrast, Goodall has a Sell rating on Southwest Airlines and lowered his price target by $1 to $28. That's perhaps not surprising given all the problems at that airline. Southwest announced the first corporate layoffs in its history last week, and was hit with a government lawsuit in January related to late flights.

Even with Southwest stock's 8% losses year to date, it is still trading at a level that "implies a much larger margin recovery than we foresee."

Certainly, investors may be skeptical of airlines' long-term potential, and worried that multiple recent crashes and close calls are a headwind for the group.

However for now, a broader updraft seems intact. The stocks may no longer be selling for peanuts, but they still don't look as pricey as luxuries like extra leg room.

Write to Teresa Rivas at teresa.rivas@barrons.com

[Selectric II] BOOM Supersonic first supersonic test flight starting now. Watch live: boomsup...

Selectric II — 1/28/2025 11:09:49 AM

BOOM Supersonic first supersonic test flight starting now.

Watch live: boomsupersonic.com

[Sam] American Airlines Stock Gets 3 Upgrades to Buy. Here's Why. -- Barrons.com Dow J...

Sam — 1/6/2025 1:25:02 PM

American Airlines Stock Gets 3 Upgrades to Buy. Here's Why. -- Barrons.com
Dow Jones Newswires January 06, 2025 12:55:00 PM ET

American Airlines stock was rising Monday as analysts at Jefferies, TD Cowen, and Melius Research upgraded shares of the carrier to Buy from Hold.

Shares of American Airlines climbed 4.8% to $17.79, on track for the highest close since July 19, 2023, according to Dow Jones Market Data. The gains came after the three firms also raised their price targets. The S&P 500 was up 1% at midday.

Jefferies' upgrade was included in the firm's 2025 Airlines Outlook, where analyst Shiela Kahyaoglu increased the price target on the stock to $20 from $12.

Kahyaoglu pointed to lower capital expenditure and a 10-year card deal with Citi, writing that these factors could drive "significant surprise to the upside in 2025 against a rationalizing industry backdrop."

The carrier's focus on medium and small markets that can be serviced by its regional fleet marks a "stark bifurcation from network peer strategies" centered on larger coastal hubs, the analyst wrote. Kahyaoglu anticipates a continued increase in total revenue per available seat mile, or TRASM, in 2025.

TD Cowen analyst Tom Fitzgerald raised the price target to $25 from $17, over eight times the airline's 2025 earnings per share estimate.

"In hindsight, we were too early with our upgrade a year ago," Fitzgerald wrote, adding that the bank "failed to appreciate" the transitory nature of headwinds when downgrading the stock to Hold from Buy in July 2024.

"We view consensus estimates as too low given tailwinds and favorable comps through 2025," Fitzgerald wrote, citing better domestic pricing and improved credit card economics as two examples.

The analyst also cited potential upside to the carrier's Latin American franchise in 2025 as ultralow cost carriers continue to slash capacity in those markets.

Melius Research analyst Conor Cunningham increased the price target to $23 from $18 as part of the firm's Travel & Transports 2025 Outlook.

"Our bull call on American is pretty simple: given our positive view of the U.S. airlines in 2025, we are broadening the stocks we like," Cunningham wrote.

The analyst nodded to American's credit card extension with Citi and efforts to regain corporate travel market share that was lost when the carrier shifted to a new distribution strategy. These levers "should lead to above-industry unit revenue improvement and margin expansion," Cunningham said.

Although the analyst would prefer a more balanced international footprint, American is poised to benefit from continued strength in the Atlantic as well as "an improving Latin American setup," Cunningham wrote.

As American Airlines stock snapped a three-day losing streak on Monday, competitors were also on the rise.

United Airline Holdings and Delta Air Lines saw the biggest gains, rising 5.2% and 2.6%, respectively, while Alaska Air Group and Southwest Airlines were up 1.8% and 1.6%.

[Sam] Airline sector jolted by Spirit Airlines' bankruptcy Nov. 18, 2024 12:09 PM ET F...

Sam — 11/18/2024 12:32:59 PM

Airline sector jolted by Spirit Airlines' bankruptcy
Nov. 18, 2024 12:09 PM ET Frontier Group Holdings, Inc. (ULCC) Stock, SAVE Stock JBLU, LUV, ALK, ALGT, DAL, UAL, AAL, JETSBy: Amy Thielen, SA News Editor

seekingalpha.com

The long-anticipated bankruptcy of ultra-low-cost carrier Spirit Airlines (NYSE: SAVE) is reverberating through the airline sector, with rival Frontier Group Holdings (NASDAQ: ULCC) also suffering a double-digit loss in sympathy with an 18% drop in Spirit ( SAVE).

After years of losses, months of speculation and unsuccessful attempts to remain afloat with several cash infusions, Spirit Airlines ( SAVE) declared bankruptcy on Sunday, having already hammering out a debt restructuring agreement with a majority of its bondholders. The Chapter 11 reorganization, with commitments for a $350M equity investment and $300M debtor-in-possession financing arrangement from current bondholders, is expected to be complete in Q1 2025.

Although the last major airline bankruptcy was 13 years ago, the budget airline industry has been plagued recently by competition from legacy carriers, rising labor costs, reduced aircraft capacity, and overcapacity in coveted routes along the east coast and Caribbean.

Spirit’s ( SAVE) low-cost business model was predicated on travelers’ preference for à la carte booking, which typically translates into increased revenue for ancillary charges. However, in the most recently reported quarter, Spirit’s ( SAVE) non-ticket revenue fell 9.6% while fare revenue was down 22.2%, resulting in total revenue per passenger flight segment dropping 15.3%. At the same time, the adjusted cost per available seat mile (“CASM”) increased 2.9%, largely blamed on Spirit’s reduced aircraft utilization.

By comparison, Frontier ( ULCC) uses a similar business model as Spirit ( SAVE), but with a “bundled” approach to add-on costs. So, while both carriers realized a decline in non-ticket revenue, Frontier’s ( ULCC) fare revenue was down just 1% while costs, or CASM, were also down 6%.

Frontier's ( ULCC) cost efficiency is supported by its use of larger aircraft. Spirit ( SAVE) uses smaller Airbus aircraft like the A319NEO while Frontier ( ULCC) relies on the larger A321NEO, making it more difficult for Spirit ( SAVE) to achieve the same cost savings as Frontier.

To compete with carriers like JetBlue ( JBLU) and Southwest ( LUV), and to address the decline in ancillary revenue, Spirit recently launched tiered ticket pricing enabling passengers to pay a bundled fare for tickets, seat assignment, and baggage.

These measures are designed to redefine Spirit ( SAVE) as "high value low-cost carrier," CEO Ted Christie said on the company's latest earnings call.

"We are not abandoning our low-cost position, but rather we are leveraging it," Christie added.

Unfortunately, the bankruptcy filing proceeded any data whether this new strategy resonates with customers.

Shares across the airline sector are in the red with Frontier Group ( ULCC) down 13%, JetBlue ( JBLU) -7%, Allegiant Travel ( ALGT) -2.4%, Alaska Air Group ( ALK) -2.3%, Southwest ( LUV) -0.7%, Delta Air Lines ( DAL) -0.8%, United Airlines ( UAL) -0.4%, American Airlines ( AAL) -0.6%. The U.S. Global Jets ETF ( JETS) is down 1.4%.

[OldAIMGuy] My Three year trading history: [graphic] Last purchased at $15.82 in late 2022,...

OldAIMGuy — 11/7/2024 11:15:58 AM

My Three year trading history:

Last purchased at $15.82 in late 2022, it's been a long wait for a round trip trade. Yesterday's sale of 10% of the holding at $24.119 turns in a healthy 52% LIFO gain on those shares. There's still plenty of share inventory left to sell if the rally continues and now there's also a nice bit of reserve cash on hand should the price drop back toward the mid $16s.

StockCharts 3 Year History
schrts.co

OAG

Buy from the Scared; Sell to the Greedy.....

[JubilationT] Can anyone shed some light on the "breakthrough feature" in premium shades spoke...

JubilationT — 10/1/2024 6:13:17 PM

Can anyone shed some light on the "breakthrough feature" in premium shades spoken about at the bottom?

Solar protection systems expert, Vision Systems has engineered three SPD (suspended particle device) dimmable windows with distinctive characteristics adapted to each cabin class. These windows eliminate shades that block the view and require regular maintenance, while protecting passengers from unwanted daylight or glare, and include innovative features such as multizoning, lighting, electroluminescent touch control and information displays.

Vision Systems’ SPD (suspended particle device) dimmable windowsVision Systems has also created a smart partition that can display videos. This divider can remain transparent or opaque when no content is being displayed.
The company also says that a “breakthrough feature” in premium shades will be unveiled this year. All these innovations can be synchronised and controlled using in-house developed cabin management systems, via individual panels, IFE tablets or flight attendant panels.

[Sam] The World Opens To Alaska Airlines With Its Merger Approval Sep. 19, 2024 12:01 ...

Sam — 9/20/2024 8:00:30 AM

The World Opens To Alaska Airlines With Its Merger Approval
Sep. 19, 2024 12:01 PM ET

Tim Dunn

Summary

Alaska Airlines completed its acquisition of Hawaiian Airlines and expects to integrate operations while maintaining the Hawaiian brand and ensuring significant operations in Hawaii.
The merger is expected to generate $250 million in synergies, with integration costs estimated at twice that amount, enhancing Alaska Air's network and operational efficiency.
ALK aims to avoid past merger mistakes by leveraging Hawaiian's assets and expanding its international presence, particularly in Asia and the South Pacific.
The merger positions Alaska as a strong mid-tier airline, benefiting from favorable macroeconomic conditions, including lower fuel prices and increased consumer spending.

Alaska Airlines, a subsidiary of Alaska Air Group, Inc. (NYSE: ALK), completed its purchase of Hawaiian Airlines (delisted) on July 18, 2024. While the U.S. Dept. of Justice recently objected to two previous airline transactions, both involving JetBlue Airways Corporation ( JBLU), the DOJ previously allowed its review of the Alaska-Hawaiian merger to end on August 20 without comment. The Dept. of Transportation took another month before issuing its approval based on several conditions, most of which are viewed as pro-consumer and not significantly impacting the operation of Hawaiian as a subsidiary of ALK or negatively impacting the value ALK expected from the transaction. The State of Hawaii obtained assurances from ALK that it would continue to maintain significant operations and employment in Hawaii, including for existing international Hawaiian Airbus SE ( OTCPK:EADSY) A330 aircraft, continuation of interisland service including in codeshare relationships with other airlines, and maintaining loyalty program benefits, all of which ALK expected it would need to provide. The next step in the process is for the FAA to allow Alaska and Hawaiian's operations to be integrated; although ALK has committed to retaining the Hawaiian Airlines brand, it will merge the operations of the two carriers under a single operating certificate.

Alaska Hawaiian merger summary (alaskaair.com)

A Fast Timeline for An Airline Merger

Alaska Airlines announced its merger with Hawaiian on December 3, 2023, so it completed the transaction in just over nine months which is rather speedy for airline mergers and faster than its estimates at the time the merger was announced. While Alaska Airlines has repeatedly sought to grow beyond its traditional northwest U.S. presence (the airline is headquartered in Seattle where it operates its largest hub), it saw an opportunity not just to improve on how it handled its previous acquisition of Virgin America during the last ten years but also to help out a fellow legacy airline which has struggled mightily since Covid. In contrast to Virgin America which was a short-lived domestic airline startup that was part of bringing discounted domestic premium cabin services to U.S. transcontinental markets, Hawaiian Airlines was one of the nation's oldest airlines, founded 30 years before Hawaii became a state in 1959. As is the case in the state of Alaska, aviation has played a key role in Hawaii as a result of the geographic expanse of the state, its military importance to the country, and its attractiveness as a tourist destination for people not just from the mainland but from other countries. The airplane became essential to connect the Hawaiian islands and to extend Hawaii's position as the largest economy in Polynesia. Hawaii was a key stop on some of the earliest air routes from the mainland U.S. to the South Pacific and to Asia.

continues at seekingalpha.com

[Sam] Southwest Airlines is experiencing one of the biggest shakeups in its 53-year hi...

Sam — 9/13/2024 10:50:46 AM

Southwest Airlines is experiencing one of the biggest shakeups in its 53-year history [The Dallas Morning News]
TRIBUNE CONTENT AGENCY 11:59 PM ET 9/12/2024

Symbol Last Price Change

LUV	29.1	+0.23 (+0.7967%)
AAL	11.025	+0.145 (+1.3327%)
QUOTES AS OF 10:48:28 AM ET 09/13/2024

Southwest Airlines (LUV) is entering a new era, whether its shareholders, customers and leaders like it or not.

The Dallas-based air carrier won’t have its longtime open seating policy. It’s adding new premium options in the cabin and creating overnight flights.

Soon enough, the company’s longest-serving CEO and current executive chairman Gary Kelly won’t be leading its board of directors.

On Tuesday, Southwest(LUV) announced Kelly would not run for reelection for his role with the board after the 2025 annual shareholders meeting. Kelly, alongside Southwest(LUV) CEO Bob Jordan, was pressured by activist investor Elliott Investment Management to exit the airline. Jordan will remain at the company and Kelly said he supports Jordan’s leadership.

“It’s time to shake things up, not just stir them a bit,” Kelly wrote in a letter to shareholders announcing his departure. “The wisdom comes in knowing what to change and what not to change. We know that changes are required to some of our historic business practices. We know we will need to continually bring in new talent — in leadership and on the board.”

What’s changing at Southwest(LUV)?

Southwest (LUV) is in a different atmosphere today than five decades ago, when it grew roots in Dallas.

According to the company, 80% of Southwest(LUV) passengers and 86% of potential customers prefer an assigned seat. In August, Southwest(LUV) took those statistics and changed its open-seating policy, the first step away from a tradition the airline had started with.

“Our team does view this as a strategic transformation of the company,” Jordan said July 25 during the company’s second-quarter earnings call.

New seat configurations require Federal Aviation Administration approval, Jordan said. That can take several months. Southwest(LUV) has a fleet of roughly 800 aircraft that will see updates, including new seat designs and cabin interiors announced earlier this year. Jordan said the carrier needs to finish designing the seat layout. Then comes the long certification process.

The airline will also add premium, extended legroom rows to the cabin. Southwest(LUV) expects roughly one-third of seats across the fleet to have extended legroom, the same amount as competitors that fly similar narrowbody aircraft.

Southwest (LUV) also announced the addition of red-eye flights. The flights will begin on Valentine’s Day with five initial nonstop routes: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.

“Continuing to evolve is core to our success, and we’re moving with urgency to restore our industry-leading financial position while staying true to who we are,” Jordan said in a video message Sept. 10. “As you know, we have plans to introduce assigned seating and premium seating options and offer red-eye flights. We will have more details to come at our investor day later this month.”

Southwest (LUV) has struggled financially since the pandemic. The changes are expected to create a profitable airline, one that Elliott has been pushing for in order to make money for shareholders.

However, Kelly, the company’s longest-serving leader, who has seen the airline go through many challenges, is leaving.

Kelly, 69, notified the board and company Sept. 9 of his plan to not stand for reelection at Southwest’s 2025 annual shareholders meeting and retire immediately afterward. His retirement comes alongside the departures of nearly half of Southwest’s 15-person board, including David Biegler, Veronica Biggins, Roy Blunt, William Cunningham, Thomas Gilligan and Jill Soltau, who each submitted resignations on Sept. 9, effective after the company’s scheduled board meeting Nov. 21.

Sept. 9 was also the day Southwest(LUV) and Elliott met at Elliott’s offices in New York to discuss changes the investment firm has called for, which focus on three main asks: enhance the board of directors, upgrade leadership and conduct a business review. Kelly, who attended the meeting with two independent directors, left unnamed in his letter to shareholders, said in the letter he believes discussions were productive.

Jordan thanked Kelly in a letter on Sept. 10 for his time at Southwest(LUV). During Kelly’s tenure, the company extended its streak to 47 years of profitability until the pandemic upended every hospitality business.

With the departure of seven directors, Southwest(LUV) will be left with 12 directors after the 2025 annual meeting and Kelly’s retirement.

Questions still remain

Southwest (LUV) customers have a lot of unanswered questions as to how these changes will impact them.

Some worry removal of the open-seating policy won’t be the only change and that more could follow, such as to bag policies and unique perks that Southwest(LUV) has developed over its history.

Meryl Evans, 54, a traveler who lives in Plano, said she always checks Southwest(LUV) first when she flies. Evans was born deaf and finds traveling with the airline the easiest experience for her. However, she’s concerned about not being able to choose her seat.

“It’s not about getting to sit near the front,” Evans said in an email. “It’s about being close to the staff for anything that comes up. I’m also concerned they’re taking the LUV out of Southwest(LUV). The actions and strategy feels cold, corporate. I know it’s part of doing business and making a profit, but LUV is the soul of what makes Southwest(LUV), well, Southwest.”

Customers are also seeking clarity on assigned seating. Southwest(LUV) has said more information will come at the airline’s investor day Sept. 26.

With the departures of Kelly and the six other board members, there’s much uncertainty as to who will come next. Elliott has named 10 candidates it believes have the experience to lead Southwest(LUV) to profitability.

The airline said it will fill four vacant spots and consider up to three of the 10 candidates Elliott proposed in August.

Southwest’s board of directors can hold its executives accountable, a key part of keeping the airline functional.

Rob Britton is an adjunct faculty member at Georgetown University’s McDonough School of Business and also spent 25 years at Fort Worth-based American Airlines(AAL).

“I’m not sure that new board members will make much of a difference, but Southwest(LUV) absolutely needs to commit to doing some things differently and some things better,” Britton said.

The hot seat

That raises a question: What will happen with Jordan?

“The board and corporate governance changes announced today will enhance our focus on returning to the high level of financial performance that we — and our shareholders — expect,” Jordan said in a video message.

There’s no time like the present, many analysts have said regarding Southwest’s need to change.

Brett Snyder, who writes aviation industry blog Cranky Flier, said investors may like the changes Elliott is proposing. But if the changes don’t pay off, that puts all eyes on Jordan.

“Ultimately it’s, ‘Let’s see where this goes,’ and if it doesn’t improve revenue performance soon, then, yeah, he could absolutely be in the hot seat,” Snyder said.

Andrew Watterson is another executive at Southwest(LUV) who would be held accountable if things don’t change, he said.

Watterson is Southwest’s chief operational officer and defended the airline when operations crumbled over the holidays in 2022. He stood before a U.S. Senate committee and fielded questions from lawmakers about what went wrong and how Southwest(LUV) would make changes.

“The two of them are the ones that have to be thinking, ‘We have to do this fast. We have to do it well. We have to show results quickly so that people think we’re the right people to be doing this,’” he said.

Immediately after the Sept. 10 departure announcements, Elliott put out a short statement calling the exits “unprecedented.”

“The need for thoughtful, deliberate change at Southwest(LUV) remains urgent, and we believe the highly qualified nominees we have put forward are the right people to steady the board and chart a new course for the airline,” Elliott wrote.

Keith Gottfried, managing member of Gottfried Shareholder Advisory, called the response “interesting.”

“What’s interesting about Elliott’s response yesterday was that it was short and it did not mention Bob Jordan,” he said.

What does the future entail?

After the moves on the board, there’s still more to come from the airline. Board vacancies are coming soon and an investor day is scheduled for the end of the month at Southwest’s Dallas headquarters.

Southwest (LUV) can appoint new directors, but there are other ways board vacancies could be filled. Gottfried pointed to two options: a settlement agreement could be negotiated or a proxy contest could start.

With a settlement, or cooperation agreement, he explained, Southwest(LUV) could say to Elliott that it likes up to three of the candidates Elliott proposed and wants to interview and hire them. Southwest(LUV) has already said it will consider some of Elliott’s candidates.

In a proxy contest, Elliott, with 10% commons shares in Southwest(LUV), could call a special shareholders meeting and potentially remove the entire board. This would require support from more shareholders. However, Gottfried explained that a special shareholders meeting isn’t likely until 2025 due to the planning involved.

More is still to come regarding Southwest(LUV), whether it be changes to leadership or operations. Company leaders think the airline is headed in the right direction.

“Southwest has a great plan,” Jordan said

[Sam] Southwest Airlines Overhauls Board Amid Activist Pressure - Update Dow Jones New...

Sam — 9/10/2024 10:34:38 AM

Southwest Airlines Overhauls Board Amid Activist Pressure - Update
Dow Jones Newswires September 10, 2024 09:18:00 AM ET

Southwest Airlines Executive Chairman Gary Kelly will step down next year in a big board shake-up as the airline faces pressure from an activist investor to overhaul its leadership and business strategy.

Kelly has worked at Southwest for nearly 40 years. He served as Southwest's chief executive for 18 years and has been its board chairman since 2008. He left the CEO role in 2022 to become executive chairman.

Elliott Investment Management earlier this summer announced it had built a big position in Southwest with the aim of revamping what it said was the airline's entrenched leadership -- including Kelly. Elliott has said the airline needs swift changes to address what it has said is an outdated strategy and lackluster results.

The fund last month announced its intention to launch a proxy fight at Southwest, including plans to nominate 10 directors to the airline's 15-member board.

Six other Southwest directors intend to retire in November as the airline looks to refresh its board. Southwest said it would appoint four new directors in the near future, and will consider filling as many as three of those spots with candidates from the slate Elliott put forward last month.

Elliott didn't immediately respond to requests for comment Tuesday.

Kelly wrote Tuesday in a letter to Southwest shareholders that his role as executive chairman was always meant to be transitional. He said he had intended to consider retiring next year but opted to expedite his plans in an effort to address questions about the airline's governance and demonstrate his confidence in the airline's other leaders.

"Now is the time for change. It's time to shake things up, not just stir them a bit," Kelly wrote.

But Southwest and its board continued to defend Chief Executive Bob Jordan, another of Elliott's targets.

"Bob has a proven track record over decades and, most importantly, he has what it takes to lead Southwest through a significant transformation and usher in a new era of profitable growth, innovation, and industry leadership," Kelly wrote in his letter.

The announcement comes after Kelly and two other independent directors met with Elliott at its New York office on Monday. Kelly acknowledged in his letter that the airline's emergence from the Covid-19 pandemic has fallen short of its expectations, but said the airline is taking bold steps, including making sweeping changes to its business model by assigning seating, offering more premium options, and operating red-eye flights.

-Dean Seal contributed to this article.

Write to Alison Sider at alison.sider@wsj.com

[Sam] Elliott Confirms Southwest Airlines Stake Amid Push for Change -- Market Talk Do...

Sam — 8/5/2024 7:51:51 PM

Elliott Confirms Southwest Airlines Stake Amid Push for Change -- Market Talk
Dow Jones Newswires August 05, 2024 07:46:00 PM ET

1946 ET - Elliott Investment Management disclosed its 7% beneficial ownership stake in Southwest Airlines, according to a Monday filing with the Securities and Exchange Commission. Its 11% investment size hasn't changed since it was first mentioned in June, when the hedge fund said it had built a $1.9 billion stake in Southwest and demanded the airline oust its chief executive, overhaul its board and consider big business-model changes. In response, the low-cost airline last month adopted a shareholder-rights plan that would kick in if an investor acquires at least 12.5% of the company, giving all other shareholders the right to buy stock at a 50% discount. Southwest shares rise 2.4% in after- hours trading. ( connor.hart@wsj.com ; @connorhart22)

[OldAIMGuy] Hi Sam, Re: Airline "outage" A lot of posturing going on with that mess. I'm su...

OldAIMGuy — 8/5/2024 10:03:16 AM

Hi Sam, Re: Airline "outage"

A lot of posturing going on with that mess. I'm sure the lawyers are very busy.

Some vacationers got to extend their stays! Some had to delay their vacations a few days. All in all, no harm, no foul............

However, this has opened up a chance to add shares of JETS for those who enjoy buying during dips.
schrts.co

JETS has proved to be a pretty good trader for many investors. For me, it's offered me several opportunities over the years to Trim and Backfill inventory of JETS shares. My current 'hold zone' is from $14.83 to $23.71. Today's price is moving quickly toward an accumulation target where I'll add 12% to my overall position. So far, so good. We started this position post-Covid and have done okay with it.

I'll see if I can grab some pics of the history......

Best wishes,
OAG

[Sam] CrowdStrike to Delta: Stop Pointing the Finger at Us -- WSJ Dow Jones Newswires ...

Sam — 8/4/2024 10:35:02 PM

CrowdStrike to Delta: Stop Pointing the Finger at Us -- WSJ
Dow Jones Newswires August 04, 2024 10:06:00 PM ET

CrowdStrike says it isn't to blame for Delta Air Lines' dayslong meltdown following the tech outage caused by the cybersecurity company, and it isn't responsible for all of the money that the carrier says it lost.

In a letter responding to the airline's recent public comments and hiring of a prominent lawyer, CrowdStrike said Delta's threats of a lawsuit have contributed to a "misleading narrative" that the cybersecurity company was responsible for the airline's tech decisions and response to the outage.

"Should Delta pursue this path, Delta will have to explain to the public, its shareholders, and ultimately a jury why CrowdStrike took responsibility for its actions -- swiftly, transparently, and constructively -- while Delta did not," wrote Michael Carlinsky, an attorney at law firm Quinn Emanuel Urquhart & Sullivan.

Delta didn't comment on the CrowdStrike letter.

The letter to Delta's legal team Sunday evening is the latest move in a growing conflict between the cybersecurity firm and the airline, which was thrown into several days of disarray following the outage.

Delta Chief Executive Ed Bastian said in an interview on CNBC last week that the outage cost the airline about $500 million, including lost revenue and compensation costs. The airline has alerted CrowdStrike and Microsoft that it is planning to pursue legal claims to recover its losses, and has hired litigation firm Boies Schiller Flexner to assist, according to a memo Bastian sent to Delta employees last week.

CrowdStrike said Sunday that its liability is contractually capped at an amount in the "single-digit millions." The company has said a bug in a quality-control tool that it uses to check system updates for mistakes allowed a critical flaw to be pushed to millions of machines running Microsoft Windows.

The cybersecurity company reiterated its apology to Delta for the initial disruption and said it had offered on- site assistance to Delta but was told it wasn't needed. It said Bastian didn't respond to outreach from CrowdStrike's CEO.

CrowdStrike said it would respond aggressively to any litigation and demanded that Delta preserve documents and records related to its response to this most recent outage as well as previous IT problems over the past five years and other information related to its technology systems and backup plans.

Most airlines were back on track within a couple of days after CrowdStrike's errant update. Delta continued to struggle well into the following week -- something CrowdStrike highlighted in its letter. The airline canceled more than 5,000 mainline flights over several days, far more than rivals. The U.S. Department of Transportation is investigating how the airline handled the disruption and its customer response.

Bastian has said Delta is heavily exposed to Microsoft and CrowdStrike and that was why it suffered so extensively. He wrote in his message to employees last week that the airline's IT, operations and customer care teams are conducting an intensive analysis of the event to see what lessons it can draw from it.

CrowdStrike's outage hit 8.5 million devices, the cybersecurity company has said, but the problems experienced within corporate information-technology systems widened the impact. The outage temporarily grounded activity across a range of businesses, organizations and institutions such as banks and restaurants, colleges and government agencies.

Write to Alison Sider at alison.sider@wsj.com

[OldAIMGuy] It's been a tough week for the Airlines. My daughter was delayed 48 hours atte...

OldAIMGuy — 7/26/2024 12:44:26 PM

It's been a tough week for the Airlines.

My daughter was delayed 48 hours attempting to return from Mexico.

Best wishes,
OAG

[Sam] Southwest Airlines is getting rid of open seating model, launches red-eye flight...

Sam — 7/25/2024 5:11:19 PM

Southwest Airlines is getting rid of open seating model, launches red-eye flights [The Dallas Morning News]
TRIBUNE CONTENT AGENCY 5:09 PM ET 7/25/2024

Symbol Last Price Change

LUV	28.08	+1.47 (+5.5242%)
QUOTES AS OF 04:10:00 PM ET 07/25/2024

Dallas-based Southwest Airlines(LUV) announced the end of its open seating model, one of the airline’s most high-profile policies.

For over 50 years, Southwest(LUV) has been known for open seats on its aircraft, but now will lean into models for seating like its competitors. According to the airline, Southwest(LUV) conducted research and 8 million simulation-based boarding trials to reach the decision. More detailed information about the company’s changes are expected at Southwest’s investor day in late September.

“It’s clear that the open seating model that served us well for so many years is no longer optimal for today’s customer,” said Bob Jordan, Southwest(LUV) CEO, to shareholders. “I want to stress that this decision was not made lightly.”

Southwest’s research found 80% of its customers and 86% of potential customers prefer an assigned seat. When customers choose a different airline, the open seating policy is the No. 1 reason cited for the change, Southwest(LUV) reported.

Ancillary products related to boarding, like early check-in, generate “just shy of a billion dollars” for Southwest(LUV), Jordan said. The changes to the seating model, he said, is “substantially north of that.”

New seat configurations require Federal Aviation Administration approval, Jordan said, which can take several months. Southwest(LUV) has a fleet of roughly 800 aircraft that will see updates, including the new seat designs and cabin interior announced earlier this year. Jordan said the carrier needs to finish designing the seat layout and then comes the long certification process.

With the new changes, Ryan Green, formerly executive vice president and chief commercial officer, will now serve as executive vice president of commercial transformation to shepherd the rollout.

The airline will also add premium, extended legroom to the cabin. Southwest(LUV) expects roughly one-third of seats across the fleet to offer extended legroom, the same as its narrowbody aircraft competitors.

Jordan also said, despite the changes to seating, he believes Southwest(LUV) can still board passengers with just a single gate agent.

“I’m comfortable that we’re moving towards the customer and that those customer desires will not shift on us,” Jordan said.

Jordan also said financial results for the second quarter were “impacted by both external and internal factors.” Southwest(LUV) had previously lowered its financial expectations for the quarter and reported a $7.4 billion operating revenue for the quarter, a 4.5% increase from the previous year. Unit revenue was slightly better than the company’s previous expectation of up to 4.5% for the quarter, which Southwest(LUV) attributed to the final days of June and “the resulting benefit from incremental bookings from other carrier cancellations.”

Analysts at Melius Research wrote the expectations for the product changes are now “very high” and there is some associated risk as a result.

“We won’t deny the potential of the change underway at Southwest(LUV), but again, change takes time and we still put that turnaround time at 3 years...” researchers wrote.

Southwest (LUV) also announced the addition of red-eye flights. The flights will begin on Valentine’s Day 2025 with five initial nonstop routes: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.

Overnight flights at Southwest(LUV) were rumored to begin in the next few years, but were rolled out ahead of expectations. Southwest(LUV) will phase in additional redeye flights in its upcoming schedules as part of its “multi-year transformation to a 24-hour operation,” the airline reported. It expects to provide incremental revenue and cost savings.

The changes come as activist investor Elliott Investment Management has called on Southwest(LUV) to make dramatic alterations to the airline’s business model to generate a return for shareholders.

On Thursday, Elliott published a statement on Southwest’s changes hours after the air carrier discussed its financial results, calling them “more than a decade late.”

“Today, Southwest(LUV) finally conceded that four out of five customers’ preferences went unmet in recent years,” the statement read. “These preferences did not emerge overnight; management simply was not doing its job.”

Elliott has disclosed a $1.9 billion stake in the air carrier and has called on the airline to implement some money-making changes and larger asks like a change in leadership to do right by its shareholders. Despite these pressures, Jordan said he will not step down.

Despite Southwest(LUV) changing the seating policy, it’s not looking to change its two-bags fly-free policy at this time, Jordan said. Jordan said he can’t speculate, but reported that Elliott hasn’t made an effort beyond sending the public letters to the board. Elliott said in Thursday’s statement they’ve been “engaged in direct dialogue” with Southwest’s board.

“So far, they’ve not shown any willingness to engage in any meaningful conversations with us,” Jordan said.

[Sam] FAA Launches Audit of Southwest Airlines After Close Calls -- 2nd Update ...

Sam — 7/23/2024 6:06:28 PM

FAA Launches Audit of Southwest Airlines After Close Calls -- 2nd Update

Dow Jones Newswires July 23, 2024 03:46:00 PM ET

U.S. air-safety regulators are launching a broad review of Southwest Airlines after a string of recent close calls and other incidents.

The Dallas-based airline has had a number of potential safety incidents in recent months, including flights that descended to low altitudes too early and a flight that took off from a closed runway.

Southwest acknowledged the Federal Aviation Administration's audit and said it has been working closely with the agency in reviewing recent episodes. The airline said it had already formed a team of experts and leaders from the airline, its unions and the FAA to take a close look at its safety system.

"This group is tasked with performing an in-depth, data-driven analysis to identify any opportunities for improvement. Nothing is more important to Southwest than the safety of our customers and employees," the airline said.

The FAA said it has increased oversight of Southwest to ensure it is complying with federal safety regulations, and that the timeline of the review will be driven by safety.

Southwest's most recent incident came earlier this month: A July 14 flight descended to as low as 150 feet over Florida'sTampa Bay -- miles from the runway, according to data from Flightradar24. An air-traffic controller alerted the pilots and they discontinued their planned approach to Tampa and diverted to Fort Lauderdale.

The FAA has opened investigations into individual instances, but the audit will go further, assessing Southwest's operations more broadly.

The audit is expected to be completed within three months, according to a government official and a person briefed on the matter. It is expected to focus on pilot training, various types of approaches for landing, and maintenance procedures related to opening and removing engine covers and panels, they said.

The review will also delve into the local FAA office that oversees Southwest, the government official said, and as part of its ramped-up scrutiny, the FAA is expected to assign a safety issue analysis team to examine Southwest's practices over a longer period.

Southwest's pilots union told members Tuesday that the FAA's Safety Analysis and Promotion Division intends to perform an in-depth examination of the airline's operations, covering everything from manuals to training and line operations.

"Expect increased scrutiny on ground events and safety, training on abnormals, turbulence safety, and aircraft maintenance," the union said in a message to Southwest pilots Tuesday.

United Airlines faced similar federal scrutiny earlier this year after its own operational mishaps. In March, one of the airline's 25-year-old jets was found to be missing a panel after landing, and another plane lost a wheel during takeoff in a separate incident that month.

At Southwest, a flight in June took off from a closed runway in Portland, Maine, after pilots overlooked a notice about the runway's status, according to the National Transportation Safety Board. Another flight that month descended to a very low altitude several miles away from an airport in Oklahoma City.

In April, a Southwest flight plunged within about 400 feet of the ocean near Hawaii in a mishap while the pilots attempted to redo a landing in bad weather. Another flight in March veered off course during an attempted landing in poor conditions and came within 800 feet of the air-traffic control tower at LaGuardia Airport in New York. There have been two Southwest flights that lost engine covers that were left unlatched.

Southwest's vice president of flight operations, Lee Kinnebrew, in May wrote to employees that the airline was examining whether there was a disconnect between its procedures, training and performance. He added that the airline was conducting focus groups in some bases to determine whether there were ways to improve and guard against complacency and distractions.

"We have more Captains and First Officers in new seats than ever before. We're adapting to an increasingly complex network with new tools and systems," Kinnebrew wrote.

Write to Alison Sider at alison.sider@wsj.com and Andrew Tangel at andrew.tangel@wsj.com

[Sam] Delta Air Lines Q2 Earnings: EPS Miss, Revenue Beat, Underwhelming Q3 EPS Outloo...

Sam — 7/11/2024 8:41:41 AM

Delta Air Lines Q2 Earnings: EPS Miss, Revenue Beat, Underwhelming Q3 EPS Outlook And More
BENZINGA 7:54 AM ET 7/11/2024

Symbol Last Price Change

DAL	46.86	0 (0%)
QUOTES AS OF 04:10:00 PM ET 07/10/2024

[mynote: pre-market, the stock is around 42.70]

Delta Air Lines, Inc. (DAL) shares are trading lower by ~9% premarket on Thursday following the release of its second-quarter 2024 results.

Delta reported second-quarter 2024 operating revenue growth of 7% year-over-year to $16.658 billion, beating the consensus of $15.452 billion. Adjusted operating revenue was $15.407 billion (+5.4% YoY).

Adjusted average fuel price of $2.64 per gallon, up 5% from last year’s quarter. Adjusted EPS was $2.36, missing the consensus of $2.37.

Total passenger revenue was $13.841 billion, a 5% increase YoY; Cargo revenue grew 16% YoY to $199 million, and Other revenue was $2.618 billion (+19% YoY).

Delta recorded an adjusted operating income of $2.269 billion, compared to $2.494 billion YoY, with an adjusted operating margin of 14.7%, down ~230 bps.

“Diverse revenue streams, including premium and loyalty, contributed higher growth and margins, underpinning Delta’s industry-leading financial performance and increasing our financial durability,” commented Glen Hauenstein, Delta’s president.

“We expect September quarter capacity growth of 5 to 6 percent and revenue growth of 2 to 4 percent, with sequential improvement in unit revenue trends through the quarter,” added Hauenstein.

Adjusted operating expenses increased by 8% YoY to $13.138 billion, and non-fuel costs were $9.808 billion (+9% Y/Y) for the quarter.

Delta generated an adjusted operating cash flow of $2.458 billion (-7% YoY). Adjusted net debt at quarter-end decreased ~3% Y/Y to $19.17 billion. Adjusted debt to EBITDAR of 2.8x, down from 3.0x at the end of 2023.

Total revenue per available seat mile decreased by 1% year over year. The passenger load factor was 87% vs. 88% in the second quarter of 2023.

DAL’s Air Traffic Liability ended the quarter at $9.4 billion, up $2.4 billion compared to the end of 2023.

“Growth continues to normalize and our teams are consistently running a great operation, enabling us to deliver efficiency. In the September quarter, we expect non-fuel unit costs to increase 1 to 2 percent year-over-year as capacity growth moderates,” commented Dan Janki, Delta’s chief financial officer.

“Debt reduction remains our top financial priority and we are progressing toward investment grade ratings, with gross leverage improving to 2.8x at the end of the first half,” added Janki.

Third-quarter 2024 Outlook: On a non-GAAP basis, Delta expects revenue growth of 2%-4%, EPS of $1.70 – $2.00 versus $2.06 consensus, and an operating margin of 11%-13%.

Reiterates 2024 Outlook: On a non-GAAP basis, DAL expects EPS of $6.00 – $7.00 versus the $6.58 consensus, free cash flow of $3 billion-$4 billion, and Adjusted Debt to EBITDAR of 2x – 3x.

Also Read: U.S. Airlines To Take Flight In Q2: Analyst Predicts Strong Results, 10% Operating Margin

Price Action: DAL shares are trading lower by 8.54% at $42.86 premarket at the last check Thursday.

[Sam] Southwest Changed Flying. Now It Can't Change Fast Enough. -- WSJ Dow Jones New...

Sam — 6/15/2024 12:04:33 AM

Southwest Changed Flying. Now It Can't Change Fast Enough. -- WSJ

Dow Jones Newswires June 14, 2024 09:00:00 PM ET

Southwest Airlines' headquarters is a monument to its history.

Herb Kelleher's office has been painstakingly reassembled behind glass for employees to view, down to the tape dispenser on his desk and the ashtrays on his coffee table. Press a button in another corner of the building and you can hear a recording of the legendary laugh of Kelleher, the airline's co-founder and former chief executive, who died in 2019.

Thousands of photos, news clippings, old advertisements and other memorabilia line the hallway walls of the airline's Dallas offices. Models of Boeing 737 jets decked out in Southwest colors hang from the lobby ceiling.

Elliott Investment Management, the influential New York hedge fund, says Southwest is stuck in the past. The activist investor says it has amassed a $1.9 billion stake, which amounts to an approximately 11% economic interest in the airline, making it one of Southwest's biggest shareholders -- and its most vocal critics. This past week it demanded Southwest oust its CEO, overhaul the board, and consider shaking up its business model.

Southwest became the biggest U.S. airline by domestic passengers by doing things its own way. Trouble is, that's no longer working so well.

Expenses have ballooned and profit margins lag behind some rivals'. The airline is on track to receive only a quarter of the new jets it was expecting this year from Boeing, leading to bloated overhead. It is backtracking on pieces of an aggressive expansion strategy at a time when Americans are booking more flights than ever.

For decades, Southwest and its unflinchingly loyal base of fliers and employees were the envy of the U.S. aviation industry. The plucky, innovative airline spawned legions of copycats mimicking its simple operation, inspired business- school case studies, and generated industry-leading profit margins.

Southwest is so serious about improving its finances the airline is contemplating radical changes to its hallmarks. It is studying whether to start assigning seats, shake up boarding or offer some rows with extra legroom for a fee to widen its appeal. It has started putting its fares in Google Flights, an airfare search site it long avoided because it preferred that customers book trips on its own website or app.

Sacrificing attributes that helped make Southwest a fan favorite, like free checked bags, is a no-go for now.

"You cannot be stubborn about change," CEO Bob Jordan said Wednesday at an industry event. "At the same time, we're going to stick to our values."

Elliott is a formidable opponent. The hedge fund founded in 1977 by billionaire investor Paul Singer is one of the biggest and busiest activist investors, and its campaigns can turn rancorous.

It is known for never going into an investment without having several ways to win and for forcing changes that include management shake-ups or outright sales. The hedge fund waged a 15-year crusade to get the nation of Argentina to make payments on defaulted sovereign debt, and won in a massively lucrative bet. Several companies in which Elliott has recently built positions have ultimately replaced their CEOs, including the big wireless-tower owner Crown Castle, NRG Energy and Goodyear Tire & Rubber.

Some activists avoid airlines because regulators and unions have hefty influence over company operations, making them especially unpredictable investments. But billionaire investor Carl Icahn struck a deal for two seats on JetBlue Airways's board after unveiling a big stake earlier this year.

Southwest finds itself in a new, uncomfortable position: trying to win over fliers who don't get what's so great about it. Fares aren't always cheapest, and Southwest's cabins lack in-flight amenities that travelers have come to expect, such as seat-back entertainment and extra-legroom options. It only recently began adding power outlets and upgrading Wi-Fi to higher speeds.

Mitch Berk, a salesman who lives in Belleair, Fla., became a big Southwest fan when he lived near its hub at Baltimore/Washington International Airport. He loved the nonstop flights and earned the airline's coveted companion pass for his frequent travels.

Today, he picks discounter Allegiant over Southwest on some business trips because Southwest has cut back on nonstop options.

Berk wishes Southwest would assign seats to make boarding less chaotic -- a suggestion he says he offered on a survey from the airline after a recent flight to New Orleans.

"I know the open seating was intended to turn the plane around faster," he says, "but I don't think that's benefiting them anymore."

Some investors are growing impatient. Shares are down nearly 24% over the last two years, while United Airlines is up 34% and Delta Air Lines is up 55% over that time.

The Artisan Partners Global Value Team, whose clients hold about 1.8% of Southwest shares, has raised its own concerns about the airline's performance and management with Southwest's board chairman since the start of this year, said Dan O'Keefe, lead portfolio manager. The investment firm also wants Jordan fired.

"Southwest's rigid commitment to an approach developed decades ago has inhibited its ability to compete in the modern airline industry," Elliott wrote in a letter to the airline's board this past Monday.

'No-frills' flying

In its early days, Southwest wasn't particularly interested in how other airlines had done things. Kelleher wore a bag over his head in a 1980s commercial, after a rival airline executive suggested travelers should be embarrassed to fly no-frills Southwest.

The strategy worked. Southwest grew fast and kept costs lower than anyone else. It posted profits for 47 straight years until the Covid-19 pandemic in 2020 -- an unparalleled streak in a notoriously boom-and-bust industry. Corporate restructurings grew so common that Kelleher once described bankruptcy court as a "health spa" for airlines. Southwest has never filed.

Southwest's entry into a city would send rivals into a tizzy. The discounter swiped customers from competitors by undercutting their fares, and found new ones by offering nonstop routes that others didn't and tempting travelers to ditch road trips.

Employees, known internally as "Cohearts," were encouraged to think of Southwest like a family, and its irreverent work-hard, play-hard culture engendered fierce loyalty. New hires receive a standing ovation from employees who line the hallways at company headquarters. Flight attendants ad lib during onboard announcements.

"I got to where I stopped questioning them, because their results were so much better than anybody else's," said Doug Parker, the former American Airlines CEO who went head-to-head against Southwest for years.

But cracks have emerged. A late-2022 meltdown resulted in nearly 17,000 canceled flights, tarnishing the airline's reputation.

The airline has stumbled in trying to repeat its playbook of aggressive expansion into new markets, including Cozumel, Mexico, and Syracuse, N.Y.

Southwest's lenient policies on flight changes represented a key advantage that eroded when rivals eliminated most ticket-change fees during the pandemic.

Elliott's Sunday-afternoon call

Elliott spent about 18 months studying the industry and Southwest. It came to see Southwest as the ultimate airline fixer-upper: a floundering company with good bones, including a storied brand and a sterling balance sheet.

The hedge fund thinks fresh blood is key to a turnaround, and is pushing to replace some board members and executives. Elliott hired a recruiting firm to scout candidates, people familiar with the matter said. The new personnel would review the airline's operating strategy with an eye on cutting costs, improving technology, and boosting revenue.

Elliott isn't aiming to impose specific policies or transform Southwest into a legacy airline, according to people familiar with its thinking.

Elliott approached the airline this past Sunday afternoon. It held a brief call with Southwest Executive Chairman Gary Kelly and Jordan, the airline's CEO.

The next day, it made public a letter to the company's board and a presentation in which it criticized leaders for not embracing potential revenue boosters, like the fees other airlines charge for checking bags and reserving seats.

The airline had been preparing for a potential attack: It had already hired advisers at Bank of America and law firm Vinson & Elkins, according to people familiar with the matter. David Hess, who sits on Southwest's board, has also offered guidance. Hess has faced Elliott before: he was appointed a director of Arconic while the parts maker was in the midst of a tough fight with the hedge fund, and served as Arconic's interim CEO after its top executive was ousted.

The airline has sought to project calm. Jordan told employees in a memo Monday that it's "not at all unusual" for shareholders to comment on corporate strategy, and that the airline would engage as it does with any other investor. He has no plans to resign, he told reporters at an event in Washington, D.C., on Wednesday.

"Elliott is not directing the company," he said, adding that the hedge fund's presentation was "fairly light" on specifics it would like to change. Some ideas Elliott mentioned in its presentation are things Southwest is already looking at, the CEO said. The airline is planning to unveil its own plans at an investor day in September.

Some investors, analysts and industry observers think that bringing in an outsider to run the company would be a disaster, and that it makes sense for Southwest to be cautious about changing its offerings.

The activists are "dismissing something really important: the culture," Parker said. "Bringing in someone from outside ends it. You break the chain. It's done."

Beyond fares

[John Koligman] American shares tumble 15% after sales strategy backfires; carrier cuts growth P...

John Koligman — 5/29/2024 12:54:55 PM

American shares tumble 15% after sales strategy backfires; carrier cuts growth
PUBLISHED WED, MAY 29 20249:44 AM EDTUPDATED 11 MIN AGO

KEY POINTS

American Airlines will slash its capacity growth in the second half of the year and consider a host of other changes to its operations, CEO Robert Isom said.
The carrier cut its revenue and profit forecast and is parting ways with Chief Commercial Officer Vasu Raja.
Pressure has been mounting on American’s leadership team after more upbeat results from rivals Delta and United.

An American Airlines’ Embraer E175LR (front), an American Airlines’ Boeing 737 (C) and an American Airlines’ Boeing 737 are seen parked at LaGuardia Airport in Queens, New York on May 24, 2024.
Charly Triballeau | AFP | Getty Images

American Airlines will slash its capacity growth in the second half of the year and consider a host of other changes to a sales strategy that backfired, CEO Robert Isom said Wednesday. The comments come a day after the carrier cut its revenue and profit forecast and said it is parting ways with its chief commercial officer, Vasu Raja.

American will grow capacity about 3.5% in the second half of the year compared with the year earlier, down from roughly 8% year-over-year growth in the first six months of 2024.

The company’s shares tumbled 15% on Wednesday while investors weighed the airline’s missteps as the peak travel season gets underway, with some analysts questioning how American can capitalize on what rivals expect to be a record summer.

Isom said American is weighing changes to a plan Raja led to drive direct bookings at the airline in lieu of third-party sites and travel agencies, a strategy that included gutting the airline’s sales department.

The changes angered some travel agencies who weren’t able to access some of the carrier’s fares as before, making it harder for them to sell tickets on American flights.

The chief commercial officer will leave the company next month.

“We’ve used a lot of sticks. We’ve got to put some more carrots in place and make sure that our product is available wherever customers want to buy it,” Isom said at the Bernstein Strategic Decisions conference on Wednesday.

American in February said it would limit some travel agency bookings from being eligible to earn AAdvantage frequent flyer miles. Isom said Wednesday that the airline would reverse that decision.

“That’s off,” Isom said. “We’re not doing that because it would create confusion and disruption for our end customer.”

Corporate bookings
Raja said last month American’s corporate booking growth was coming in behind big rivals Delta and United.

Corporate bookings are particularly lucrative for airlines especially when those travelers book at the last minute when fares are at their highest — so called close-in bookings. Airlines had struggled during the pandemic and shortly afterward when business travel was slow to return, but carriers have seen improvement lately.

“The weakness that you’ve seen in American is, I do believe, something that speaks to close-in bookings, the highest premium customers that, unfortunately, we haven’t made ourselves as available and easy to work with as we can,” Isom said.

On an earnings call last month, Raja said American’s corporate bookings were up mid-to-high single-digit percentage points in the first quarter compared with increases of around 14% touted by Delta and United.

“A significant miss driven in part by close in bookings puts AAL’s ability to reap the full value of a robust summer flying season in greater doubt,” Bernstein airline analyst David Vernon said in a note.

Revenue shortfalls
After the market closed Tuesday, American said its unit revenues could fall as much as 6% in the second quarter from a year earlier, down from its forecast last month of a no-more-than-3% decline. Airlines make the bulk of their money during the second and third quarters, but some areas have fared better than others.

Isom admitted Wednesday that the company has logged softer bookings than it expected and noted a supply and demand “imbalance” that has prompted carriers to discount tickets. He said industry capacity should come down in the second half of the year, while it slows its own growth.

United, minutes after American’s forecast adjustment Tuesday, reiterated its second-quarter earnings estimates, though it didn’t provide a revenue outlook.

“American’s diminished guide speaks far more to its flawed initial forecast than any broad-based shift in passenger demand,” JPMorgan airline analyst Jamie Baker said in a note Wednesday, adding United’s reiterated forecast was an encouraging sign for Delta.

American has also been prioritizing Sun Belt cities and its large hubs in Texas and North Carolina over coastal markets.

The Transportation Security Administration screened the most people ever over Memorial Day weekend, and executives from United and Delta have predicted a record summer, with very strong trans-Atlantic bookings.

[Sam] DOT forcing airlines to give full refunds for canceled and delayed flights Apr....

Sam — 4/24/2024 12:27:32 PM

DOT forcing airlines to give full refunds for canceled and delayed flights

Apr. 24, 2024 12:09 PM ET

By: Amy Thielen, SA News Editor

Airline stocks are under pressure after a new Department of Transportation rule will require passengers to receive a full refund for canceled, delayed, or changed flights.

“Passengers deserve to get their money back when an airline owes them – without headaches or haggling,” Transportation Secretary Pete Buttigieg said in a statement.

Passengers are now entitled to cash if they refuse other accommodations for a flight that has been canceled or “significantly changed.” This includes flights in which the departure or arrival times are three or more hours different than scheduled for domestic flights or six hours for international flights. The new rule also applies to situations where the airport is changed, or connections have been added.

Passengers are also entitled to a refund of their checked bag fee if their baggage is delayed by 12 hours after a domestic flight or 15-30 hours of an international flight arriving at the gate.

continues at seekingalpha.com

[OldAIMGuy] JETS shows good accumulation since last year's low point. That's after almost tw...

OldAIMGuy — 3/25/2024 1:23:19 PM

JETS shows good accumulation since last year's low point. That's after almost two years of distribution.

schrts.co

Best regards,
OAG

[Selectric II] I wonder whether that's really valid, given that government taxes and fees are a...

Selectric II — 3/17/2024 7:58:18 PM

I wonder whether that's really valid, given that government taxes and fees are always passed along to the customer anyway.

[S. maltophilia] Why do airlines charge so much for checked bags? This obscure rule helps explain...

S. maltophilia — 3/16/2024 12:17:22 AM

Why do airlines charge so much for checked bags? This obscure rule helps explain why

theconversation.com

[John Koligman] Southwest is getting screwed here. NOT a good idea to be totally dependent on on...

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.

[Sam] American Airlines Bumps Up Baggage Fees -- WSJ Dow Jones Newswires ...

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

[Sam] JetBlue Stock Is Soaring After Icahn Takes Stake. It's an Eventful Start for the...

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

[Glenn Petersen] Porter could consider IPO in the ‘mid-term’: CEO Bloomberg January 28, 2024 [...

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.

[Art Bechhoefer] Boeing will lose money and have to compensate airlines for bad product design. ...

Art Bechhoefer — 1/8/2024 2:21:47 PM

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

[Sam] The Boeing 737 Max 9 is grounded - what does that mean for airline stocks? Jan. ...

Sam — 1/8/2024 11:46:49 AM

The Boeing 737 Max 9 is grounded - what does that mean for airline stocks?
Jan. 08, 2024 10:11 AM ET

seekingalpha.com

[Glenn Petersen] How the "big five" airlines came to dominate the skies Rahul Mukherjee,Erin Davi...

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.

Yet adjusted for inflation, airfares have fallen by over 30% since 1999, per BTS.
That said, airline revenue from baggage fees and other penalties has soared since 2007 — so much so that lawmakers have begun scrutinizing the charges.

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)

[Sam] Why Everyone Hates Alaska Air's Hawaiian Airlines Takeover -- Even If They Think...

Sam — 12/5/2023 1:22:00 PM

Why Everyone Hates Alaska Air's Hawaiian Airlines Takeover -- Even If They Think It Makes Sense -- Barrons.com
Dow Jones Newswires December 05, 2023 09:12:00 AM ET

Alaska Air Group's surprise $1.9 billion deal to buy Hawaiian Holdings had investors rushing for the emergency exit -- and its stock in free fall. Some on Wall Street are also taking evasive action but others are staying on board.

The shares picked up downgrades from Deutsche Bank and Raymond James analysts -- both were bullish before the agreement was announced. Yet others, including J.P. Morgan and Seaport Research stuck to Buy ratings.

The consensus among investors has been less ambiguous. Alaska stock tumbled more than 14% Monday as shareholders digested the carrier's proposed tie-up with Hawaiian Airlines' parent company for a hefty 270% premium. The shares edged higher ahead of the open Tuesday.

Hawaiian stock, which soared 193% Monday, has been under pressure for much of 2023 as engine problems and the Maui wildfires hit earnings. Intense competition from Southwest Airlines in the Hawaiian market has also been a factor.

Despite all of that, Wall Street appears to be generally in agreement that the deal makes sense strategically, or at least in the long term -- -even those downgrading the stock said so.

"We believe this acquisition makes sense longer term and Alaska has the balance sheet and earnings strength to see it through," Raymond James analyst Savanthi Syth said. "However, given the current macro uncertainty, the complexity of executing the merger should weigh on sentiment and likely limits the near-to-medium term upside case," she added as she downgraded the stock from Strong Buy to Market Perform.

Deutsche Bank's Michael Linenberg took a similar view in downgrading the stock to Hold from Buy. While believing in the merits of the merger and long-term value creation for shareholders, he expects the stock to underperform the sector in the near-term "as a strong fundamental investment story is overshadowed by deal-related risks and issues." He lowered his target price on Alaska to $44 from $55.

One key benefit of the deal is that Alaska would have access to Hawaii, one of the 25 biggest U.S. markets. The Hawaiian market is worth $8 billion in annual revenue and Alaska CEO Ben Minicucci said the combined company would have more than $4 billion of that.

J.P. Morgan analyst Jamie Baker said the merger "appears to solve Alaska's uncertain growth trajectory." He, too, thinks the deal "makes sense", sticking to an Overweight rating in a note Monday.

Another, perhaps underappreciated, factor to consider is Hawaiian's agreement with Amazon to operate cargo flights for the tech conglomerate. Seaport Research'sDaniel McKenzie said the deal would "catapult Alaska into international widebody flying and turbo-charge its cargo business." He rates the stock Buy, with a price target of $48.

"Alaska would walk away with a stronger, more diversified, network, positioning it to compete more effectively against the Big 4," he added.

There is a regulatory risk to the deal, and a pretty big one at that. The Justice Department has shown an appetite to tackle airline mergers and alliances under President Biden. The DOJ has taken the proposed JetBlue Airways and Spirit Airlines merger to court, while also forcing the former to abandon its alliance with American Airlines in the Northeast.

Alaska and Hawaiian overlap on just 12 of the 14,000 flights they operate but the DOJ could still find reasons to sue to block the merger.

Perversely that would give Alaska stock a near-term boost, even if Wall Street thinks the deal is a long-term winner.

Write to Callum Keown at callum.keown@barrons.com

[OldAIMGuy] MESA had a big day today and briefly cracked the $1.00 price line. That was near...

OldAIMGuy — 12/4/2023 4:54:34 PM

MESA had a big day today and briefly cracked the $1.00 price line. That was nearly a 27% day gain for the stock. I've averaged down a number of times with the stock over the last twelve months so it's nice to see some upside movement. It's low altitude mark was $0.50/share in early November so today's price is essentially a double from then.

Best wishes,
OAG

[rdkflorida2] Just heard Blumberg follow up guest says JBLU merger/buyout with Spirit will be ...

rdkflorida2 — 12/4/2023 10:29:31 AM

Just heard Blumberg follow up guest says JBLU merger/buyout with Spirit will be ok's by govt. Mixed messages?

[rdkflorida2] From iHUB post....>> JBLU, just heard comment on Blumberg, Jblu to "combine" wit...

rdkflorida2 — 12/4/2023 9:51:42 AM

From iHUB post....>> JBLU, just heard comment on Blumberg, Jblu to "combine" with American Airlines? Anyone hear this?