Sky Talk

LATAM choses Oneworld alliance

LATAM Airlines announced on Thursday that it will join the Oneworld Alliance, which includes American Airlines.

The South American carrier, which was created from the merger of LAN Airlines and TAM Airlines last year, said it chose Oneworld for its 950 destinations, adding the alliance will increase access to South America.

“We evaluated all the existing possibilities and chose the alliance that offers the best benefits to our passengers, in addition to the best connectivity and products, as well as the greater synergies for LATAM Airlines Group. We are very happy with the decision” said Enrique Cueto, CEO, LATAM Airlines Group.

LAN Airlines is already part of Oneworld, however, its merger partner TAM Airlines, was a member of United Airlines' Star Alliance. TAM will withdraw from Star Alliance during the second quarter of 2014, the carrier said.

Other oneworld airlines include British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas, Royal Jordanian and S7 Airlines.

-Andrea Ahles

American signs codeshare agreements with LATAM

In a move to bolster its Latin America and South America presence, American Airlines announced on Monday that it has signed codeshare agreements with LATAM Group's TAM Airlines and LAN Colombia.

The Fort Worth-based carrier added that it will add a new Dallas/Fort Worth to Bogota, Colombia route in late 2013 and new service from Miami to Curitiba and Porto Alegre, Brazil.

"As we continue to expand our presence in Latin America, the new routes to Brazil and Colombia are a direct response to the increasing customer demand for travel between the U.S. and Latin America," said American's chief commercial officer Virasb Vahidi.

American previously had a codeshare agreement with LAN as the airline is part of its Oneworld alliance but did not have a codeshare agreement with TAM. LAN and TAM completed their merger to create LATAM earlier this year.

-Andrea Ahles

Southwest to add Wichita, Kan. to its route map

From personal experience I know that residents of Wichita, Kan., particularly business people, have been wishing and hoping and praying for Southwest Airlines to serve the self-proclaimed Air Capital of the known universe for a very, very long time.

It's finally going to happen.

Southwest announced at a press conference Monday that beginning in June it will operate five departures daily out of Wichita Mid-Continent Airport. The routes will include two to Dallas Love Field, two to Chicago Midway and one to Las Vegas. The Wichita Eagle has the story.

“Folks, the wait is over,” said Bob Montgomery, Southwest’s vice president for airport affairs, during the news conference, which included state and local dignitaries.

The five flights will utilize 143-seat Boeing 737s to Dallas and Chicago, Southwest officials said, and a 137-seat 737 to Las Vegas. One-way rates will range between $94 and $178 to each destination.

The addition of Southwest is a boon to the city’s economic development and tourism efforts, Mayor Carl Brewer and Sedgwick County Commission Chairman Tim Norton said following the announcement.

“As far back as 1980, when I moved here with Target, affordable, dependable air service has been a need of this community,” Norton said. “We’ve had air service, but when I flew to Denver years ago and the cost was so prohibitive that we drove to Kansas City to fly, that’s a dynamic we knew we had to change.

“And in talking with Pizza Hut, Rent-A-Center, the companies that left here, part of the conversation was that airfares are too high here for companies that travel a lot. Fast forward to today, and a dependable, affordable carrier that changes the dynamic of our air travel, our businesses and certainly our community.”

Wichita has long been a spoke in a number of airlines systems and leisure travelers booking well in advance could get pretty good fares most of the time. But for business people travelling on short notice the fares were typicaly very high, a situation that has only gotten worse with airline economics and mergers. A 21-day advance purchase round trip fare on American Airlines from Wichita to Dallas-Fort Worth is $629.60 today

Southwest officials indicated they may initially take advantage of subsidies that Wichita and the state of Kansas had get low cost Air Tran service to Atlanta, which is going away. But they also said there Wichita routes would not be based on receiving a subsidy.

“We are here with no conditions, no demands," Montgomery said. “We ask that y’all fly Southwest, because this is a tough business.”

- Bob Cox

 

 

 

 

British Airways CEO reiterates his willingness to invest in American

British Airways chief executive Willie Walsh reaffirmed his carrier's willingness to take an equity stake in American Airlines if it helps the bankrupt carrier.

In an interview with The Associated Press on Monday, Walsh said his company was prepared to purchase a minority stake, if American's chief executive Tom Horton asks.

AP reporter Scott Mayerowitz writes:

"If American asks for it, I think that would be a big step," said Willie Walsh, CEO of International Consolidated Airlines Group, the parent of British Airways and Iberia. He noted that American doesn’t necessarily need the money but his company would invest to help cement their existing partnership.

"We think an investment in a restructured American will be a good investment. That’s why we said we’d be very happy to look at it if the opportunity presented itself and if Tom welcomed it," Walsh said. Foreign investors are prohibited from owning more than 25 percent of a U.S. airline.

"We’ve never put a figure on it but I can’t see anything above 10 percent to be honest with you," Walsh said. "But again I’m speculating because we haven’t done any formal analysis. But we’re not looking for a significant minority stake."

-Andrea Ahles

Qatar Airways to join Oneworld alliance

Qatar Airways will join American Airlines' Oneworld alliance, the carriers announced on Monday.

It will be the second Middle Eastern carrier in the alliance, along with Royal Jordanian. Qatar Airways serves 120 destinations in 70 countries, increasing the number of destinations available to Oneworld's international travelers, the alliance said.

"Adding Qatar Airways will significantly improve our connectivity between many of the destinations that are most important to those customers, so today's agreement with Qatar Airways will enable us to offer even more value," said American chief executive Tom Horton in a statement.

It will take 12 to 18 months for Qatar to become a full-member of Oneworld, the alliance said.

Qatar Airways does not currently serve American's hub at Dallas/Fort Worth Airport. Its competitor, Emirates Airways, offers non-stop service from DFW to Dubai and recently signed an alliance agreement with Oneworld member Qantas Airways.

-Andrea Ahles

Blog: The sad, "downward spiral of American Airlines"

A strong blog post this morning at Leeham, the site of longtime airline industry observer Scott Hamilton, on the dismal state of affairs at American Airlines.

We’ve been watching with dismay the downward spiral of American Airlines.

This once-great carrier is hardly recognizable any more. It is perplexing to us how a management team that got its training under Robert Crandall and helped create such a great carrier could have gone so wrong.

It's a well written, point-by-point critique of American's strategic errors under Crandall's successors. And it closes with a vote of no confidence in CEO Tom Horton's leadership.

Horton is firm that American won’t merge while in Chapter 11 and it’s pretty clear he doesn’t want to merge at all.

We have no confidence in Horton at the helm, nor in American’s management. If American is to survive, they have to go.

- Bob Cox

 

 

 

 

 

Flight attendants union chief applauds buy out response

A message sent by Laura Glading, president of the Association of Professional Flight Attendants, to the union's membership Friday about response to the buy out program offered by American Airlines:

As you know, bidding for the VEOP closed late last night. A total of 2,205 flight attendants chose to take advantage of the voluntary early out.

The tremendous response from those electing to leave the company with the $40,000 that accompanies their exit will benefit the entire membership. In the coming year, flight attendants will be moving up the seniority list and off reserve. And not only will furloughs now be avoided completely, but the VEOP participants will finally be able to enjoy a well-deserved retirement.

Since 1999 when I first started negotiating for APFA, I pushed the company for a dignified path to retirement for our most senior members. And in 2008 as President, it became a top priority for the negotiating team and me. Many of you will remember how long and hard we fought for an early out package worthy of our membership. Too many flight attendants have been living in career limbo for too long.

I am happy these 2,205 will now have the security they need to enter the next chapter of their lives. Thank you for your patience!

Please join me in congratulating our 2,205 colleagues. We thank you and we wish you only the best.

In Unity,
Laura Glading
APFA President

- Bob Cox

Judge oks AMR paying fees for hedge funds that may provide financing

This from Dow Jones:

A judge on Thursday said AMR Corp. (AAMRQ) can pay the legal and professional fees incurred by a group of hedge funds negotiating to provide financing for the American Airlines parent in the event it doesn't merge with another airline upon exiting bankruptcy.

Judge Sean H. Lane of the U.S. Bankruptcy Court in Manhattan gave AMR the right to pay the fees of the bondholder group and many other parties in AMR's case, but was careful to tell the company that it's expected to keep other financing options open.

"It's not to the exclusion of any other parties," Judge Lane said of the negotiations. Weil, Gotshal & Manges LLP's Harvey Miller, AMR's lead bankruptcy lawyer, confirmed that the talks aren't exclusive.

Last month, AMR requested to pay the fees and disclosed it is in talks with the hedge funds about financing that would help the company exit bankruptcy. The investors, who hold about $900 million in several types of AMR bonds, are negotiating exit financing in the $1 billion to $2 billion range, sources familiar with the talks said last month. The bondholders would also backstop the offering, sources said. Getting fees paid by the estate is common for parties in bankruptcy, as long as they make a "substantial contribution" in the case.

- Bob Cox

2,205 flight attendants volunteer to leave American Airlines

American Airlines reports that 2,205 of its flight attendants have volunteered to take a severance package and leave the company, which should eliminate the need for flight attendant layoffs.

Indeed, American says it will begin recruiting additional flight attendants later this year.

As part of the renegotiated contract with the Association of Professional Flight Attendants that was approved by the union membership last month, American offered $40,000 severance payments to flight attendants with at least 15 years of employment. That is in addition retirement and other benefits they may have earned.

American spokesman Bruce Hicks issued the following statement:

“We are happy to report that given the 2,205 Early Out volunteers we have, and the staffing projections looking forward, we don’t anticipate furloughing any flight attendants as a result of the near-term restructuring changes. We will also begin recruiting new flight attendants later this year.

“In October, our flight attendants who signed up for the voluntary exit will be able to request a desired month of departure, and we will then stagger departures over the next year, based on seniority and operational needs.

“Providing this voluntary Early Out incentive for our flight attendants is another positive step forward in our restructuring.”

- Bob Cox

 

American Airlines comments on cause of flight cancellations and delays

American Airlines put out a statement late Thursday in response to the earlier post by the APA. 

"We are confident in the causes of the recent operational challenges of flight cancellations and delays. Prior to the recent issues, American had been running a good operation, with on-time performance and reliability measures at their best levels in many years The recent disruptions are primarily due to the significant increase in maintenance write-ups by our pilots, many right at the time of departure. Additionally, continued higher-than-normal sick usage by pilots, which has been up more than 20 percent year over year and has been elevated for months, impacts the availability of reserve pilots, which can ultimately lead to cancellations. Our pilot staffing - without the recent actions regarding maintenance write-ups and the continued increase in sick time - is adequate to meet our scheduling needs and recalling pilots from furlough would not be needed.

First, we apologize to all of our customers for the inconvenience this has caused. We understand how irritating and unfortunate this is in interrupting or delaying their travel plans. We appreciate their patience and hope for their understanding. We also appreciate very much the extra and difficult work this has caused so many of our people and especially appreciate the fabulous job our maintenance crews have been doing in taking care of these additional write-ups and getting planes back on schedule as fast as possible. In addition, our inventory of spare parts is at the highest level in years.

American has taken significant steps to try to limit the impact on our customers. We have carefully selected some 300 flights this week to pre-cancel to allow us to re-accommodate passengers in advance. And, through October we have reduced our schedule 1 to 2 percent as well. In addition, we have increased staffing in all other areas to assist in re-accommodating customers and are reaching out to customers proactively to notify them of the options available and the ability to standby for earlier flights at no charge.

We remain committed to doing all we can to serve our customers to provide safe, reliable transportation, just as they have always expected and received from American Airlines."

 Bruce Hicks, American Airlines spokesman

-Bob Cox