Sky Talk

Bell ships first upgraded OH-58 cabin to Army

Bell Helicopter said Thursday it has delivered the first OH-58 “A2D” wartime replacement cabin for the OH-58 “Kiowa Warrior” helicopter to the Army. The cabin is being delivered 30 days ahead of the contract schedule.

The “A2D” conversion program is an Army initiative to replace war time losses suffered by the OH-58D Kiowa Warrior. This conversion program takes an existing “A” model OH-58 and upgrades them to “D” model.  The Cabin will now be shipped to Corpus Christi Army Depot tfor installation of avionics and dynamic components so it can be returned to the Army's active helicopter fleet.

The upgrade and rebuild process is an Army program to replace OH-58Ds lost in recent years due to ac cidents or combat operations in Afghanistan and Iraq.

- Bob Cox

 

Lockheed's Aero unit to cut 1,500 jobs

Lockheed Martin Aeronautics, the Fort Worth-based military aircraft arm of Lockheed Martin Corp., said it plans to cut as many as 1,500 jobs from its 28,000 positions in nine states.

About 15,000 people of the division's total workforce are employed in Fort Worth working on the F-35, F-16 and other programs.

Lockheed spokesman Joe Stout said the job cuts will largely come from the ranks of salaried, non-manufacturing workers and will probably fall more heavily at the company's larger operations in Fort Worth, Georgia and Palmdale, Calif.

About 4,500 of the company's Fort Worth employees are union-represented manufacturing workers who are less likely to be affected by the upcoming cuts.

Stout said the expected job cuts are part of Lockheed's effort to improve efficiency and lower its costs to meet the demands of the Defense Department.

The company will immediately begin an in-depth "thorough organizational assessment" of its operations wth the goal of determining by mid-August how many positions to cut and where, Stout said.

The company will initially offer voluntary layoffs and then follow up with involuntary layoffs as needed.

Affected employees will receive severance packages equal to two weeks' pay plus an additional one week's pay for every year of service up to a maximum of 26 weeks.

- Bob Cox

 

 

 

 

 

Passenger traffic up 6.8 percent globally for May, IATA says

Passenger traffic rose 6.8 percent in May worldwide, according to the International Air Transport Association.

International load factors were up 0.8 percentage points to 75.8 percent and passenger volumes were up 1.8 percent, the trade group said.

"These will help alleviate some of the pressure on profits from continued high fuel prices," said Giovanni Bisignani, IATA's chief executive. "But there are risks associated with political unrest in the Middle East and the European currency crisis. We still expect the industry to make $4 billion this year."

North American carriers continue to cut capacity even as passenger traffic as improved. The region had the highest load factor, 81.8 percent, among the major regions, IATA said.

To see all of IATA's May traffic data, click here.

-Andrea Ahles

 

Analyst predicts American will continue to buy Boeing jets

One veteran Wall Street aerospace analyst thinks American Airlines will likely stick with Boeing jets to upgrade its fleet despite reports the Fort Worth-based airline may also be seriously negotiating with European rival Airbus, as reported in today's Star-Telegram.

Peter Arment of Gleacher & Co. writes that "while the high stakes order drama is interesting, we do not believe AMR will become an Airbus A320 customer.  Airbus will be very aggressive on price, but so can BA(Boeing) for existing 737NG’s plus the ability to provide launch orders for the NSA (Boeing's New Small Aircraft) — which would flow very seamlessly with the expanding 737-800 fleet."

American's ongoing purchases of Boeing 737-800 aircraft will total more than 200 by the end of 2012 or so. Over the next decade American will need to replace 124 Boeing 757s and 218 more MD-80s. Switching to a non-Boeing aircraft "can add significant training costs" that cash-strapped American would prefer to avoid, Arment said.

- Bob Cox

 

American interested in buying up to 250 planes from Airbus and Boeing, WSJ report says

American Airlines may be considering replacing a significant portion of its domestic fleet with more fuel-efficient planes.

According to The Wall Street Journal, the Fort Worth-based carrier is in negotiations with Airbus and Boeing Co. to buy at least 250 aircraft at a cost of about $15 billion and expects to have terms of the deal completed this summer.

American, which currently operates only Boeing aircraft, is interested in Airbus’ narrow-body A320 aircraft and a new engined version of the A320 as well as Boeing 737-700 and 737-900 aircraft, the WSJ says.

American Airlines spokesman Andrew Backover declined to comment on the report.

The carrier has been in the process of replacing its aging MD-80 and Boeing 757 fleet. As of Dec. 31, American had 224 MD-80s that were an average of 20 years old and 124 Boeing 757-200 aircraft that were an average of 16 years old.

American has already received 86 Boeing 737-800 aircraft in the past two years as it retired dozens of MD-80s, which are not as fuel-efficient. The carrier has another 54 Boeing 737-800s on order through 2013 and six Boeing 777-300 aircraft on order for delivery in late 2012 and 2013.

However, if American is planning a large fleet purchase, the carrier would likely have to finance the deal either through leasing companies or from the manufacturers themselves as it does not have enough cash on its balance sheet to pay for the purchases on its own.

American has not reported an annual profit since 2007 and has lost over $4 billion in the past three years.

-Andrea Ahles

Gates: F-35 could face budget cuts

It's stating the obvious, but Defense Secretary Robert Gates told Bloomberg News today, his final day in office, that the Pentagon's plans for buying 2,457 F-35 Joint Strike Fighter jets could well be significantly altered by future defense budgets.

“The issue will be less ‘whether’ we go forward with the plane than how many we ultimately buy,” Gates said, “potentially, one of the issues could be the size of the buy.”

“Obviously, if you reduce that, the price per airplane is going to go up. People have to bear that in mind. But, there is no question in my mind we have to have the airplane if we are looking out 10, 20, 30 years,” he said.

Full story in Thursday's Star-Telegram.

-Bob Cox

 

Norway on board with the F-35, so far

Ok, so while I was on vacation last week they had a little event called the Paris Air Show. It's a massive confab, an opportunity for everyone that's anybody in aviation and the world military-industrial-complex to go to Paris to have all their important meetings in one place over French wine and food.

It's also an opportunity for the world's military and civil aircraft manufacturers try to garner lots of media and political attention with carefully staged events, scripted press conferences and announcements that may or may not contain any real news.

Since I was on vacation (no money in the Star-Telegram budget for air shows these days) and am still cleaning out 10 days worth of emails, I did miss a couple of things of interest to the aviation industry and economy of the greater Fort Worth area (also known as D/FW).

One of those was a step by Norway towards actually ordering its first F-35 Joint Strike Fighter jets, after years of political wrangling and backtracking amongst the Norwegians and pleas from neighboring Sweden to vote Nordic and buy Saab Gripens instead.

Norway's Parliament, according to a Lockheed Martin announcement, has approved funds to purchase four F-35 "training jets" that would be delivered to a U.S.-based pilot training center in 2016.

“We’re very pleased with the announcement and are committed to supporting the Norwegian government in moving forward with the F-35,” said Tom Burbage, Lockheed's executive vice president and manager of F-35 political relationships at home and abroad. “The Lightning II will help ensure Norway's national security, and also brings substantial opportunities for Norwegian industry.”

But as reported in the Dew Line blog, the Norwegians may still be hedging their bets. In a press conference, Rear Adm Arne Røksund, head of Norway's defence policy, made a plea for the U.S. government to commit to integrating the Norwegian Kongsberg Joint Strike Missile into the F-35 weapons system.

Inclusion of the missile is one of Norway's top priorities for its industrial participation in the F-35 program and possibly a condition to any commitment to buy dozens more F-35s starting in 2018, Røksund said.

- Bob Cox

 

With apologies made, Southwest flight attendants union says it will not file EEOC complaint

With both Southwest Airlines and the pilot who said the offensive rant apologizing, the Southwest flight attendants union said it does not plan on filing an Equal Employment Opportunity Commission complaint.

The Transport Workers Union, which represents 9,500 flight attendants at Southwest, had initially said it was considering an EEOC complaint when it was revealed that the pilot had spoken dispargingly about Southwest flight attendants over an open microphone broadcasting over air traffic control channels.

Here is the full statement released by TWU Local 556 president Thom McDaniel.

“When insults and slurs towards flight attendants broadcast over air traffic frequencies and were made public, our union spoke out immediately.  At Southwest Airlines there is no place for such unprofessional conduct in any workplace – on the ground, or at 30,000 feet.”

“Southwest Airlines and the pilot involved in this incident have now apologized to our members.  We are prepared to move forward working with our company to ensure that we support a culture where this type of behavior is not acceptable and if it does happen, it is dealt with appropriately.”

“Disrespect towards co-workers is never acceptable, and must be an immediate concern for any employer.  We have recognized that while this incident is not consistent with Southwest culture, it is not an isolated incident and should not be swept under the rug. I am pleased to report that Southwest has engaged with our union and with other employee groups to turn this negative incident into a teachable moment.  Our company has committed to work with our union to guarantee respect and fair treatment for all employees, regardless of who we are or what our role is at the airline.”

“From the beginning of this incident, our union has expressed a desire to resolve this issue with our company with the ultimate goal of making sure that all employees are respected and accepted in the workplace and we are on the way to doing that.  Our union will not file an Equal Employment Opportunity Commission (EEOC) complaint.  We hope we never have to deal with this type of incident again – and we intend to remain vigilant in advocating for a culture of fairness and respect throughout our company.  Southwest Airlines and TWU have a history of working together to solve hard problems and we are committed to ensuring that we provide the best possible workplace for our employees and an airline that upholds the principles that our customers deserve.  Mistakes have been made and by working together, we will make it better. ”

-Andrea Ahles

 

Wall Street analysts lower Q2 earnings estimates for carriers

Following investor reports made by American, United and Delta in the past week, several Wall Street analysts have lowered their second quarter earnings estimates for the carriers.

American Airlines' parent company, AMR Corp., is currently estimated to report a 49 cents per share loss for the second quarter, according to analysts surveyed by Thomson Financial. Just last week, the estimate was a 40 cents per share loss.

"AMR's revenue underperformance was coupled with higher non-fuel cost guidance due to weather and weather-related capacity cuts," wrote WolfeTrahan analyst Hunter Keay in a research note where he lowered his AMR' earnings estimate from a 36 cents per share loss to a 78 cents per share loss for the second quarter.

United Continental Holdings is still expected to post second quarter profits by analysts. However, analysts are currently estimating a second quarter profit of $1.54 a share, instead of $1.69 a share a week ago.

Although J.P. Morgan analyst Jamie Baker revised several airline quarterly earnings estimates downward on Wednesday, he is still positive about the larger economic picture for airlines.

"Cost convergence, fare unbundling, widespread consolidation, diminished new entrant activity and return-oriented management teams have combined to form an industry that is actually managing itself for the first time we can recall," Baker wrote  in a note to investors on Wednesday. "This stands in sharp contrast to the historical tendency to wage wars of attrition. As a result, we believe the industry will continue taking the steps necessary to ensure profitability and continued balance sheet repair."

-Andrea Ahles

 

 

Southwest pilot apologizes for offensive rant

In a memo that went out to Southwest Airlines employees, Capt. James Taylor apologized for his offensive rant that was picked up by an open microphone broadcasting over an air traffic control channel in March.

Taylor, who had not been previously identified, said he deeply regrets the comments and remarks he made about his co-workers, calling them "grannies" and "grandes."

"It was truly insensitive of me and I would like all of you to know that from now on, I will show nothing but the utmost respect during my interactions with all employees," the letter said. "Please know that this event has forever changed me and I hope that others can learn from my mistake."

Southwest had suspended the pilot who has since been reinstated. In a voice message sent to employees last week, Southwest Airlines chief executive Gary Kelly said he was personally disappointed with the pilot's behavior but that the discplinary punishment has already been carried out. The audio was first reported by the Dallas Voice.

"The matter was resolved already legally, and it would serve no purpose to reopen that now, even if we could. And I know that many of you do not like that decision. While there will be a complete and thorough review with management of this entire episode, it is important to understand that the discipline was rendered in April, and it cannot be reversed."

Here is the full letter sent by Taylor:

To All Southwest Airlines Flight Attendants and all Employees:

Because of the impact of my comments, I wanted to communicate with you directly. Please accept my most sincere apology for the inappropriate and disrespectful remarks I made in March with an open microphone. I deeply regret the derogatory remarks I made and the hurt I have caused — I take full responsibility for those comments. It was truly insensitive of me and I would like all of you to know that from now on, I will show nothing but the utmost respect during my interactions with all employees. In addition, I would like to extend a special apology to all Flight Attendants, and especially those of Houston. I hope you will allow me to maintain a working relationship with all of you that will provide me the opportunity to extend an individual, personal apology to each one of you whenever we fly together. Please know that this event has forever changed me and I hope that others can learn from my mistake. I have learned a much-needed lesson to be more sensitive of others and I hope you will see me as a more tolerant and considerate person. I am proud to be employed by Southwest Airlines and I am committed to representing our Company, and its employees in the most professional way possible.

With My Sincere Regards,

Captain James Taylor

-Andrea Ahles