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AMR posted a net loss of $142 million in April

According to a court filing made Thursday afternoon, AMR Corp. posted a net loss of $142 million in April, with half of the loss coming from bankruptcy restructuring items. During the bankruptcy process, AMR is required to file monthly financial reports with the court.

AMR also said that its mainline carrier, American Airlines, had passenger revenues of $1.5 billion with its regional affiliates, including American Eagle, bringing in $251 million in revenues. Total revenues for the month were $2.04 billion.

The company also spent $53 million on aircraft financing renegotiations and rejections and $22 million on professional fees during the month, according to the filing.

-Andrea Ahles

US Airways CFO: we have people knocking down the door to be part of our bid for American

On Wednesday, I was out at US Airways' Tempe headquarters talking with executives about their carrier and why they think a merger with American Airlines makes sense.

A substantial part of those interviews are going to appear in a Sunday story that I'm working on about US Airways, but sometimes when news breaks, issues that were discussed just can't wait for the weekend to see the light of day.

When Reuters reported this morning that US Airways may be teaming up with private equity firm TPG, I went back and looked at the comments that US Airways chief financial officer Derek Kerr said about financing a potential bid for American. Here are Kerr's words:

"No. 1, we've said if we make an offer it would not be contingent on financing. We have worked through the models and we're not sure we need to raise any more cash. We want to negotiate with the creditors' committee to see what they want. Whether they want cash, whether they want stock or whether they want debt. We need to go figure out what they want in terms of a proposal to see whether or not we need to go out and raise any more cash. But we have people knocking down the door trying to be a part of this transaction, if we need to raise cash for the transaction. But right now as we look at it and as Doug said we haven’t done due diligence. We haven’t gone through all of their debt instruments and things like that. So in the case today we don’t believe we have to go out and raise cash but if we do have to go out and raise cash we do have a fair amount of people that will come forward and be a part of the transaction," Kerr said.

When I pressed Kerr and US Airways chief executive Doug Parker on who was knocking down their door, they responded generally, saying investors and firms who are interested in getting a return on their money. They did not mention any specific firms by name.

And today, US Airways declined to comment specifically on TPG and the Reuters story.

-Andrea Ahles

US Airways and TPG considering joint bid for American, Reuters says

US Airways and private equity firm TPG are considering a joint bid for American Airlines, according to an article by Reuters.

"A partnership with TPG could boost a US Airways bid for its larger rival in several ways. It could give the carrier more financial flexibility, including the ability to pay some AMR creditors in cash. The addition of TPG, which has invested in several airlines before, could also serve as third-party validation of the proposed combination....

"The sources, however, cautioned that the discussions between US Airways and TPG are not exclusive and partnering with each other is one of many options each party is considering," the article says.

TPG declined to comment on the article that quotes unnamed sources. US Airways also declined to comment on the article.

US Airways has expressed interest in bidding on American Airlines' parent company, AMR Corp., which is currently in bankruptcy. Last month, the Tempe-based carrier announced that it had reached conditional labor agreements with American's three largest unions who are supporting a possible merger.

TPG, which has offices in Fort Worth, has also surfaced as a possible financing source for either American's standalone restructuring plan or as possible bidder on the carrier, according to media reports. TPG was founded in 1993 when partners Jim Coulter and David Bonderman purchased Continental Airlines out of bankruptcy.

Here is a link to the full article.

-Andrea Ahles

American Eagle plane clipped by large cargo jet at O'Hare

A large 747 cargo plane clipped the tail of an American Eagle plane on the ground at Chicago O'Hare airport on Wednesday.

The FAA said the incident occured around 1 p.m. as an EVA cargo plane was taxiing and its wing touched the rudder of American Eagle flight 4265 that was pulling into its gate at the G terminal.

There were 18 passengers on board the Eagle plane which had three crew members. No one was injured, according to this report from the CBS affiliate in Chicago.

Photo courtesy of AP.

-Andrea Ahles

 

 

Houston city council approves Hobby international expansion plan for Southwest

In a 16-1 vote, the Houston City Council approved a deal with Southwest Airlines, allowing the carrier to add international service and expand the terminal at Houston's Hobby Airport.

Southwest agreed to fund the $100 million terminal expansion project and customs facility and in exchange will pay no rent for four of the five international gates and for use of the customs area. Construction on the project will begin in 2013 with international service launching in 2015.

"This is a big win for Houston and the traveling public," said Mayor Annise Parker. "Competition will lead to jobs, lower fares and a positive economic impact for the city. My goal is a strong international presence at Hobby and a continued strong international presence at Bush Airport. We will also continue our commitment to ensuring there is adequate customs and immigration staffing at Bush and at Hobby when international service begins there in 2015."

United Continental said it expects to cut 1,300 jobs and 10 percent of its operations at Houston's George Bush Intercontinental Airport with the new international competition, according to this Houston Chronicle blog post.

"I can guarantee you that our fares are going to be lower than our competition," Southwest chief executive Gary Kelly told the Chronicle. "It's all about competition. It's all about lowering fares, and more traffic means more jobs."

-Andrea Ahles

Horton tells American workers that mediated talks will start this week

American Airlines must fix its cost structure immediately and will move forward with mediated union contract talks starting this week, CEO Tom Horton told employees in a memo today.

Horton said the company has made big strides in its restructuring since filing for Chapter 11 bankruptcy court protection six months ago, on Nov. 29, citing improvements in revenue and customer service. Executives plan to hold open meetings with employees in the coming weeks to hear what employees have to say.

Not surprisingly, there is no mention of US Airways or a merger. Here is the full memo:

 

Dear American Team:

We are now six months into our restructuring and it's a good time to reflect on our progress and consider the road ahead as we restore the new American to industry leadership. We have made big strides in all aspects of the restructuring, but most of all we have been doing a great job for our customers and for that I thank all of you.

The strategy for the new American is strong and is already gaining altitude. We have hubs in the most important markets, the best international alliance partners around the world, a host of new products and services including plans for the most modern and growing fleet in the U.S. industry. We have about 550 new aircraft on order - more than all legacy airlines combined, and options for hundreds more, which provides flexibility to add more or renew as is prudent. We have plans to take up to 100 Boeing 787 Dreamliners and we're the first and only U.S. airline to order the state of the art 777-300, arriving later this year.

Our hub and alliance strategy, fortified by our joint ventures with BA/Iberia, JAL and Qantas, is producing strong revenue gains across the board. Our revenue performance has been consistently outpacing the industry this year, and people are starting to take note. And our operational and customer service performance has been the best in many years - a testament to our other great strength - the best people in the business.

Everywhere I go I see our folks working very hard to put American back on top. I hear it from our customers and see it in the results. The new leadership team is also working very hard with the same goal as we take American forward. Our new team was selected to bring new energy, drive, and innovation to everything we do. One of the changes you'll see is the new team spending more time out and about engaging with and listening to you and our customers as I have been doing for many months. In fact, in the coming weeks, the new leadership team will be holding open sessions to hear your views on the path forward for the new American. I hope you'll be involved and I know you won't hold back. And I also hope you'll bring an open mind, because you may hear the beginning of something new and better.

As we move forward, we are committed to sharing more details about our plan for success and answering your questions. The key message for all of us is that, after a decade of survival and shrinking, we are poised to grow our flying by 20% over the next five years. Nearly 70% of this new capacity will be flown by our American mainline jets, with the vast majority of that growth being international flying. Clearly, this will open up a lot of new opportunities for career progression among our people.

Of course, all of this is predicated on our ability to earn sufficient and consistent profits after emerging from our reorganization. While we see a path to substantial revenue growth, the other important component to profitability is fixing our cost structure, which we must do immediately.

As you know, we are in the midst of the court supervised process which will lead to new generation labor contracts consistent with a profitable, successful airline. This is a difficult process, but as I've reminded our team and the union teams, the objective remains consensually agreed new contracts. To achieve that goal, both sides have been encouraged to be thoughtful and creative. It is in that spirit that American and the TWU made deals which were approved by five of seven of their represented workgroups involving nearly 11,000 of our people. Through good faith negotiations these deals met our restructuring objectives in a manner best suited to each individual TWU workgroup.

As the formal court proceedings come to a close, we've yet to make the same progress with the other union groups. And it would be an understatement to say that this has created uncertainty all around. In the spirit of driving to fair, consensual agreements, the bankruptcy court has offered the assistance of another bankruptcy judge to serve as a mediator to help conclude the process. The mediated sessions will begin this week and I believe these will be constructive. Again, I've urged all sides to work diligently and creatively to find the best outcome for our company and our people and I hope you will too.

I am confident this can be done, just as it was with several of our union workgroups already. Once we achieve new contracts and finalize our plan, American will be on a clear path to completing a very successful restructuring. We have a powerful global network, the best alliance partners, a robust fleet plan, renewed investments in the products and services, and of course, the best team in the business. With all of that, the new American is poised to once again lead the way.

Thanks for all you do.

 Sincerely,

 Tom

 

-- Steve Kaskovich

Former TWA pilots sue American, pilots union over labor negotiations

Former TWA pilots have sued American Airlines and the pilots union over contract negotiations that could mean the closing of the pilot base in St. Louis.

In the lawsuit, filed in the U.S. District Court for the Eastern District of Missouri, the pilots allege that a possible new contract between the Fort Worth-based carrier and the Allied Pilots Association would treat former TWA pilots in "a discriminatory and unfair manner."

"APA, in collusion with American, agreed that American can close the St. Louis base, and that if it does, an arbitrator will decide what if any protection should be afforded the former TWA pilots, but that under no circumstance may the arbitrator modify the former TWA pilots' seniority at American," the suit said.

In this St. Louis Post-Dispatch article, the APA said the assertions in the lawsuit are "simply false." American could not be reached for comment late Tuesday afternoon.

Click here to Download American TWA suit.

-Andrea Ahles

American, Sabre anti-trust trial moved to October

A Texas district judge has moved the anti-trust trial between American Airlines and Sabre Holdings to October.

Southlake-based Sabre said that the trial, which was supposed to occur this summer, is now set to begin on Oct. 3.

"AA's claims are without merit. We continue to believe that our shared stakeholders would be better served by negotiations, rather than litigation, between the companies. To that end, we hope that AA will end this wasteful process. However, since AA continues its litigious course, we will continue to mount a vigorous defense," said Sabre spokesman Nancy St. Pierre.

At issue are the fees American and other airlines pay the big travel reservation systems to display flights and make bookings. American wants more of its travel partners, such as travel agencies and websites, to connect directly to American's own reservations system, which would save the airline booking fees.

"We respect the court's decision and look forward to pursuing our legal rights and seeking compensation for the harm done to our company as a result of Sabre's antitrust law violations. American's current distribution agreement with Sabre will remain in effect until 14 days after the conclusion of the Texas antitrust trial," the Fort Worth-based carrier said in a statement.

-Andrea Ahles

Monday Midday Must-Reads

It's Memorial Day and I hope Sky Talkers are enjoying some barbecue, lounging pool side and most importantly, remembering those who gave their lives in service to our country.

And for those of you checking the blog on this holiday, here's a few must-reads.

-Elite frequent fliers are not happy with airlines these days and in the case of George Lagen, he's mad enough at United Airlines, to sue the carrier. According to the Chicago Tribune, Lagen says United breached a contract with him when the airline combined its frequent-flier program with Continental Airlines and lowered his benefits as a Million Miler.

-A few United Airlines pilots showed off their RV park at a Los Angeles airport parking lot on Friday saying that they can't afford to return home or stay in a hotel between shifts since they have not had a new contract in three years. “This is an affordability issue, so that’s how I ended up here,” said Pat LaClair, United Airlines First Officer, told this NBC affiliate.

-Starting up an airline is harder now than in the past, even if you have billionaires investing in your new carrier, according to this New York Times article. "Getting an airline off the ground has become a lot more treacherous. High oil prices these days mean carriers must fly full planes to turn a profit, and smaller airports just do not provide enough passenger traffic. At the same time, the major domestic carriers are more entrenched than ever in their own hub airports, making it harder for a new entrant to wrangle gates there. And investors have become more cautious about lending to just any airline project," the article says.

-Andrea Ahles

Two runways closed at DFW Airport due to grass fire, operations still normal

A grass fire on the far east side of DFW Airport has not delayed flights, although two runways have been closed as firefighters contain the blaze, airport officials said Friday.

Units from the airport's Department of Public Safety are working alongside the Irving Fire Department to put out the fire, which was reported just before 3 p.m. near Valley View Lane and Carbon Road, just north of Walnut Hill Lane.

The airport initially closed Runway 17-Left in Irving as a precaution and then closed Runway 13-Left as firefighter moved equipment across the runway, said airport spokesman David Magana.

The fire area includes part of northwest Irving as well as airport property.

Flight operations continue normally on the airport's other five runways, Magana said, as the two closed runways are the least frequently used.

-Andrea Ahles

Read more here: http://www.star-telegram.com/2012/05/25/3987063/grass-fire-prompts-runway-closure.html#storylink=cp