Sky Talk

A look at the week ahead

With quarterly earnings wrapped up this week for the airlines, we move on to other topics next week.

-First off, the board for the Dallas-Fort Worth International Airport are scheduled to have their monthly committee and full board meetings on Tuesday and Thursday. The board will hear updates on the airport's performance, its fiscal year 2010 debt and a corporate aviation briefing.

-American Airlines will be in mediated talks with two of its unions. On Monday, talks resume with the Allied Pilots Association and then on Tuesday, the company continues talks with the Transport Workers Union, who are planning on rejecting the contract proposal American made last time.

-Speaking of the pilots union, the APA is holding elections this spring for new leadership and on Thursday, nomination ballots are due back to the union headquarters in Fort Worth.

-Andrea Ahles

American denies latest rumor of JAL defecting to Delta's SkyTeam

More leaks are coming out of Tokyo but these days it's hard to tell what is true anymore.

A news report on Thursday said Japan Airlines will announce on Monday that it is moving to Delta Air Lines' SkyTeam alliance, leaving its partner in American Airlines behind.

But then another report on Friday said that executives from both carriers met with incoming JAL chief executive Kazuo Inamori and that JAL will decide next month who it will partner with. Of course, next month (February) is next week.

American Airlines, which is trying to keep JAL as part of its Oneworld alliance, maintains that it is still working with JAL.

"These speculative reports about Japan Airlines making a decision are inaccurate," said American spokesman Charley Wilson. "American Airlines remains in active conversations with all parties involved. We are puzzled as to why misinformation continues to be leaked and why this misinformation continues to receive attention."

We'll keep SkyTalk readers posted if we get a Delta media advisory Sunday night about an announcement coming from across the Pacific.

-Andrea Ahles

Textron reports 4th quarter loss; Bell revenues, profits lower

Textron Inc., the parent company of Bell Helicopter, reported a fourth quarter loss of $63 million or 23 cents per share, a significant improvement over the same period a year ago when it lost $289 million or 86 cents per share.

 

Textron’s performance over the past year has been severely impacted by the economic recession and credit crisis, which resulted in dramatically lower sales of Cessna business jets and forced the company to liquidate much of its Textron Finance loan portfolio to raise cash.

 

Cessna revenues during the quarter were $855 million, down 43 percent from a year ago. Cessna operating profit was just $28 million, compared to $198 million a year ago.

 

Bell revenues were $802 million, down 6 percent from 2008, largely reflecting declines in commercial helicopter sales due to the economy. Bell’s operating profit was $84 million, compared to $94 million a year ago.

 

Textron officials predicted rising sales and operating profits at Bell in 2010 as the company’s deliveries of military aircraft increase. Bell should deliver 28 V-22 Osprey aircraft in 2010, up from 20 in 2009, and 20 H-1 helicopters, up from just 9.

 

- Bob Cox

Lockheed 4th quarter sales rise 13 percent

Lockheed Martin Corp. reported a fourth quarter profit of $827 million or $2.17 per share, both figures modest improvements over 2008. The quarterly profit was impacted by a $114 million cost for pension expenses.

 

Sales for the fourth quarter of 2009 were $12.5 billion, a 13 percent increase over $11.1 billion in 2008. The company generated $3.2 billion of cash for all of 2009, after making a $1.5 billion pension contribution in the fourth quarter.

 

Lockheed “remains strong, healthy and well-positioned for future growth,” Chief Executive Robert Stevens said in a statement.

 

Revenues at Fort Worth-based Lockheed Martin Aeronautics Co. increased 13.4 percent to $3.25 billion in the quarter and the division’s operating profit increased 15.4 percent to $426 million.

 

- Bob Cox

 

 

 

A Marine critiques his own kind

I found this brief but interesting post on the Foreign Policy "The Best Defense" blog about the comments on a battle tested Marine on the difference between Army helicopter pilots and their Marine brethren. Short and sweet, "but our pilots and aircraft suck in comparison to the Army and Air Force."

CWO2/Gunner Keith Marine said: "The Army guys will come in and land at the grid you give them, with very limited dispersion between birds -- allowing you to link up with your other elements, and will set the thing right down on the deck in the inbound flight appearing not to lose much speed. In comparison, Marine pilots will bring in their aircraft and attempt several flaring techniques and then wave off.  Sooner or later they will land in the midst of a brown out and probably a few hundred meters off target with dispersion of about ½ click between aircraft is the norm. Luckily the Army and Air Force guys will drop right where you want them to pick up casualties, we are lucky to have them.

And this: "Like most of you, I love the Corps and it hurts me to say it but I think we have been chasing the wrong aircraft. We don't need to create a capability; the other branches already have it in the aircraft they use. We need that capability for when they aren't there. You just can't fit a 46 or 53 and definitely not an Osprey where these things will land."

- Bob Cox

 

Look out below. Brit at the controls

Since our old buddies the Brits are the second biggest investor in the F-35 program, the folks at Lockheed Martin want to make sure they get a little ink -- or at least internet electrons.

Lockheed released this picture today of F-35B test aircraft BF-2 flying Tuesday at Patuxent River with a active duty Royal Air Force Squadron Leader Steve Long at the controls. It was the 18 flight of the test aircraft.  Long departed at 9:55 a.m. EST and flew the aircraft to 20,000 feet, before landing 1.3 hours later. 

Long's countryman, BAE Systems test pilot Graham Tomlinson, has flown numerous test flights. Both the RAF and the Royal Navy, at this point,expect to fly the F-35B model with its short-takeoff and vertical-landing capabilities to replace existing Harrier squadrons.

- Bob Cox

American, Delta and Alaska add more "peak travel days" that have $10 surcharge

We may be expecting freezing temperatures in North Texas tomorrow, but summer travel is already on the minds of airline executives.

American Airlines, Delta Air Lines and Alaska have all added more "peak travel days" during their summer season where customers will pay and extra $10 to fly on those days, according to FareCompare.com.

These charges, which first popped up last Thanksgiving as a holiday surcharge, have now been extended through the spring break time frame and into the summer travel season.

And based on the chart that FareCompare's Rick Seaney has put together, it looks like if you don't want to pay the extra fee, you will only be able to travel on Tuesdays and Wednesday between mid-June and mid-August.

-Andrea Ahles

2009 "worst year the industry has ever seen", IATA says

In case you didn't know, 2009 was a bad year for the airline industry.

On Wednesday, the International Air Transport Association said passenger demand for 2009 was down 3.5 percent with an average load factor of 75.6 percent. Freight demand was down 10.1 percent with an average load factor of 49.1 percent.

"In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen," said IATA chief executive Giovanni Bisignani. "We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business."

The industry trade group went on to say that 2009 had the largest passenger demand decline since World War II.

Carriers in North America reported a 5.6 percent decline in passenger demand in 2009. However, by December, carriers were reporting only a 0.4 percent drop in passenger demand when compared to the same month in 2008.

"The industry starts 2010 with some enormous challenges," Bisignani said. "The worst is behind us, but it is not time to celebrate. Adjusting to 2.5.-3.5 years of lost growth means that airlines face another spartan year focused on matching capacity carefully to demand and controlling costs."

For the full chart on international passenger demand, click here.

-Andrea Ahles

Delta posted $25 million fourth quarter loss, talks a little about JAL

On Tuesday, Delta Air Lines reported a fourth quarter loss of $25 million, which was improved from the $1.4 billion loss in the same quarter in 2008. Revenues rose slightly to $6.8 billion, up from $6.7 billion last year in the fourth quarter.

What was interesting about the conference call that Delta had with its analysts was the limited discussion on the Japan Airlines situation. Delta is trying to lure JAL to its SkyTeam alliance, away from JAL's current partner, American Airlines' Oneworld alliance.

Unlike American's chief executive Gerard Arpey, who spoke passionately about how un-consumer friendly an anti-trust immunity venture between JAL and Delta would be, Delta's executives spoke of a "cool objective view" on the issue.

When asked how Delta would pitch the Department of Transportation on an ATI application between JAL and Delta and its possible consumer benefits, Delta chief executive Richard Anderson said this:

"It’s important to recognize the Dept of Transportation has a very capable group of professionals who have been handling these sorts of ATI applications since we filed the first one in 1993 at Northwest-KLM. So there is a long body of precedent that governs ATI applications and there is a significant number of decisions both from Republican and Democratic administrations.

The second point is, you really have to go into the data. This is a legal and factual analysis, and the legal and factual analysis would show very clearly that the market shares in this instances are substantially below market shares that have been previously approved in ATI applications most notably Lan Chile,
the ATI application that Skyteam had for the Paris market, the German market.

"So, It’s really more a matter of just sort of coolly and objectively evaluating the law that has been fairly well settled by DOT over the last twenty years and then taking the econometrics that come from the market shares that carriers have. And the ones that I cite to you were all situations where there were single carriers in the market.

"In this instance the Star alliance (United, All Nippon Airways) is actually the largest alliance between the U.S. and Asia and will continue to be between the U.S. and Asia.

"From a consumer perspective, the benefits of alliances have been very well established over the past twenty years and those benefits come from seamless networks that provide many more travel choices, much more effective routing and an increase, a significant increase in output by the carriers that are in these alliances all of which drive significant consumer benefit. So I think it’s really a matter of a cool objective view of the law and the facts in this case.

-Andrea Ahles

Navy official: F-35 ownership costs under thorough review

Two weeks after an alarming Navy report leaked out that warned the cost of owning and operating several hundred F-35s could badly squeeze the service's aviation budget, the Navy finally issued an official statement Monday that did not disavow the study or its findings.

"All elements of operating and support costs are under thorough review, including those driven by program requirements as well as the effects of global industry changes," Sean Stackley, assistant secretary of the Navy for weapons acquisition said in the statement.

The Jan. 4 briefing on F-35 "Total Ownership Costs" prepared by the Naval Air System Command predicted that the Navy's cost for flying F-35B (STOVL) and F-35C (carrier-based) models would exceed the costs of today's F/A-18 aircraft by 40 percent and total program costs would be much higher than Pentagon officials have predicted. A copy of the study is included in our previous post.

"Throughout design, production, test & evaluation, and operations & support planning, a key tenet of the F-35 program has been to reduce Total Ownership Cost (TOC) for this fifth generation aircraft," the carefully worded statement said.

"As is the case with all major programs, the opportunity to improve on total ownership costs decreases with program maturity.  Our experience with legacy aircraft points to the criticality of properly addressing TOC on the front end of a program or be confronted with unanticipated maintainability and obsolescence issues on the back end as the aircraft age.  Accordingly, and similar to other aviation TOC analysis efforts, the Department is taking an aggressive approach to addressing TOC risks as the F-35 program proceeds to this next important phase prior to fleet introduction."

- Bob Cox