Sky Talk

Senate drops airline pension measure

It looks like the Senate has stripped language that would have boosted pension costs for American and Continental from the FAA reauthorization bill. That's a big win for the airlines, who were looking at hundreds of millions in additional pension costs under the measure.

- Trebor Banstetter

BA confirms American, Continental alliance talks

We've been reporting in the Star-Telegram about a potential alliance between American, Continental and British Airways since Continental rebuffed a proposal to merge with United on Sunday. Today, British Airways confirmed that negotiations among the three carriers are indeed under way.

But the airline didn't say much more. Here's British Airways' full statement:

British Airways is exploring opportunities for co-operation with American
Airlines and Continental Airlines. Further details will be announced when appropriate.

We should note that this seems to involve an alliance, not a merger, and the airlines would continue to operate as independent companies.

- Trebor Banstetter

Airlines continue to match Delta's fare hike

Continental Airlines, Northwest and US Airways have matched the airline industry's latest attempts to hike fares, this one a $10-$40 roundtrip raise initiated by Delta Air Lines, Rick Seaney of farecompare.com reports this morning.

But at the same time, Delta has now trimmed back its $10 fare hike on about 4,000 city pairs, leaving the $40 increase on 10,000 pairs, Seaney said.

"A quick check of this partial rollback shows that it doesn't seem to overlay low-cost airlines nor is it mileage-based," Seaney said. "This mini rollback does not represent enough city pairs to make a significant overall difference."

-- Scott Nishimura

AA allies fighting Senate pension proposal

Sen. Kay Bailey Hutchison is fighting a Senate proposal that could cost American, Continental and other carriers millions in pension costs. It's the latest twist in a drama over pension regulation that's played out over the past few years.

The new proposal would require airlines to fully fund pension benefits each year accrued by employees during that year. The airlines says the bill would punish them for keeping their pensions intact, rather than freezing them.

According to Hutchison, the change could cost American up to $1 billion over three years.

- Trebor Banstetter

AA pilots hire investment banking firm

The Allied Pilots Association has hired Miller Buckfire, an investment bank with airline industry experience as well as merger and acquisition expertise, to provide advice and guidance as industry consolidation moves ahead.

Apparently the firm recently met with American's finance department to review the airline's budget, finances and strategy, including non-public information. The firm is going to make a presentation to the union's board in June.

Readers may recall that Gerard Arpey, AA's CEO, met with union leaders a few months ago to solicit their support for potential merger explorations. No details were provided at the time, and union leaders told Arpey they would need more specific information before signing off on any acquisition or merger.

- Trebor Banstetter

AA, Delta raise fares

FareCompare.com is reporting that American has matched a Delta round-trip fare increase of $10 to $40, depending on the type of fare and the route.

"In typical fashion American’s matching skirts around highly competitive low cost airline city pairs and also the cheapest of leisure airfares for those traveling on off peak days," said Rick Seaney, FareCompare's CEO. "This leaves three remaining legacy airlines yet to match this increase including Continental, Northwest and US Airways."

He predicts that there will be at least two more price increases before the end of May.

- Trebor Banstetter

Report: Perry to help woo MD Helicopters

Grayson County officials have persuaded Gov. Rick Perry to join the effort to convince MD Helicopters to move its manufacturing and assembly operations to North Texas Regional Airport, according to a report by KXII Channel 12.

It seems Grayson County Judge Drue Bynum, who has led effort to woo MD owner Lynn Tilton to the Sherman-Denison area, had been trying without success to get in touch with Perry. Then they just happened to end up on the same airline flight together and Bynum bent the gov's ear.

The two politicos now plan to seek a meeting with Tilton to let her know just how delighted Texas would be host her company. Stay tuned.

- Bob Cox

AMR concessions, five years later

It's hard to believe that it was five years ago that the unions of American Airlines approved $1.6 billion in concessions, saving the airline from bankruptcy. We have an article in today's Star-Telegram marking the anniversary (which technically was last week), and it includes a look ahead to how labor might react if put in a similar situation in the next year or so.

Given the pressures from fuel prices and the weakening economy, many believe American could be pushed to the brink again at some point, although the airline's sizeable cash cushion is likely to keep it aloft until at least 2009. And a lot can happen between now and then.

- Trebor Banstetter

So long, Eos, we hardly knew ya

Eos, the startup carrier that offered all-business-class service between JFK Airport in New York and Stansted Airport in London, has called it quits. It's the fourth airline to shut down this year, following Aloha, Skybus and ATA.

Fuel was a huge factor, of course, but Eos also found itself in a battle with American Airlines, which began its own service between the two airports to keep those lucrative international business travelers from defecting.

- Trebor Banstetter

AA changes checked bag policy

Well, we knew it was pretty much inevitable, but American finally pulled the trigger on its checked bag policy. The airline said this morning that it would begin charging $25 for checking a second piece of luggage, following most of the major airlines in adding the fee.

- Trebor Banstetter