American Airlines' (AMR +4.1%) spinoff of American Eagle will be delayed until 2012 after the regional carrier's pilots hold off on signing a new contract. It's viewed as bad news for AMR, as it looks to realize operational savings from a divestiture as soon as possible.
Dahlman Rose raises its rating on American Airlines (AMR +1.1%) to Hold from Sell as analysts at the firm see light at the end of the tunnel with the carrier's labor dispute with pilots. S&P isn't nearly as charitable, dropping AMR's corporate credit rating a notch to CCC+ on concerns it won't be able to "secure labor contracts that materially narrow its labor cost disadvantage."
After a dizzying week of orders for aircraft rung up by Airbus (EADSY.PK) and Boeing (BA), Aviation Week tallies up the haul (full scorecard): Airbus announced firm orders for 166 A320NEOs and 16 A321NEOs with over 1K additional orders it says are in the pipeline. Boeing says it has deals for 700 aircraft with 9 different customers, with 3 deals announced publicly accounting for 336 planes.
More airliner labor headaches (AMR's plight): Delta Air Lines (DAL -5.1%) draws some uncomfortable comparisons to Occupy Wall Street's target of the "1%" elite after it successfully denies a bid by Northwest Airlines flight attendants to equalize pay and takes on sharp criticism for its efforts to add labor provisions to a FAA bill.
Shares of American Airlines (AMR -8%) head south again - now down 39% over the last month - after the company confirms it failed to reach a labor agreement with its pilots union, only saying that it plans to meet again on an undisclosed date. Insiders say the two sides will wait two weeks before meeting again to attempt to bridge a "wide disparity," a stretch of time that isn't likely to cool off bankruptcy chatter from analysts.
American Airlines' (AMR -5.1%) board meeting has broken up with no major announcement filed yet. A blog covering the industry from top to bottom reports that AMR employees are bristling with the decisions of current management, begging for a change in a letter sent to the board: "You are the last line of defense. We implore you to make the difficult decisions to remove these executives from the company..."
Passengers flying between Europe and Asia could see as much as $100 lopped off tickets prices if Russia follows through on a pledge to drop fees for carriers who fly over Siberia. The Cold War-era surcharge stands as a sticking point for Russia's hopeful entry into the WTO.
Spirit Airlines (SAVE +0.1%) announces that it's entered a non-binding agreement with Airbus (EADSY.PK) to buy up to 75 A320 aircraft. The company says the new jets will help it serve growth markets in the domestic United States, Caribbean and Latin America.
A document from United Airlines (UAL) pilots criticizing the carrier's "inadequate" training and "compromised safety" is making the rounds in Washington, D.C. Though UAL calls the allegations a tactic to sway contract negotiations, the vivid description of the company's lax procedures could stir up a hornet's nest of trouble: "United's training regime is the equivalent of the Ringling Brothers Circus introducing a new trapeze routine and training the artists via computer."
Reps for American Airlines (AMR +1.5%) meet again with the pilot union as it seeks to bridge a "wide gulf" to work out an agreement. Avondale Partners' Bob McAdoo notes if a struck is deal it could be the first domino to fall with contracts for flight attendants and mechanics still unresolved. "If pilots and management can work together and agree on something, other labor groups will probably say it must be time for us to do one."
Citigroup weighs in on Southwest Airlines (LUV +1.7%), maintaining a Buy rating and a healthy 1-year price target of $11 on shares. Analysts with the firm point to the carrier's 6% Y/Y Oct. revenue gain against a tough comparable, as well as its proven ability to outperform in down cycles.
American Airlines (AMR) turns to a somewhat unusual source for turnaround help after hiring Academy Award-winner Kevin Spacey to star in 4 edgy advertisements (video) aimed at rebranding its image and appeal to a younger demographic. For an unexplained reason, the ads are only running in the U.K. at the moment.
Though airliners have started to use biofuels on select flights (I, II), execs say production isn't quite at scale to make the greener fuel alternative price competitive. For now the flights are more symbolic than cost-savers notes Alaska Airlines' (ALK -1.1%) Megan Lawrence: "We believe it is important to highlight our interest to show the biofuel industry there is demand."
Jetstar (QUBSF.PK) announces it will be the first airline in the world to offer iPads (AAPL +1.4%) on board after it launches the service on select domestic and international flights. The Australian low-fare carrier says the iPads will be stocked with games, music, e-magazines, and the latest movies.
Republic Airways (RJET +19.1%) pops after smashing estimates with its Q3 results, boosted by a big revenue gain at its Frontier Airlines unit. The company says it has achieved "substantially" all of its restructuring goals for Frontier under a $120M improvement plan.
The push of U.S. airliners into biofuels (I, II) could put a brighter spotlight on firms that produce aviation fuels from algae, cooking oil, or other biodegradables - as carriers start to realize cost savings from the transition to the "Wild West" aviation fuel market to a "stable" agriculturally-based fuel source. Biofuel producers looking to benefit: SYNM, TSN, HON.
The Guggenheim/NYSE Arca Airline ETF (NYSE:FAA), the "Fund", seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the NYSE Arca Global Airline Index (the “Airline Index” or the “Index”). The Fund will at all times invest at least 80% of its total assets in common stock, American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that comprise the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of the component securities that comprise the Index. Guggenheim Advisors, LLC (the "Investment Adviser") seeks a correlation over time of 0.95 or better between the Fund’s performance and the performance of the Index. A figure of 1.00 would represent perfect correlation. The Fund, using a low cost “passive” or “indexing” investment approach, will seek to replicate, before the Fund’s fees and expenses, the performance of the Airline Index. The Airline Index is a modified equal-dollar weighted Index designed to measure the performance of highly capitalized and liquid U.S. and international passenger airline companies identified as being in the airline industry, as defined below, and listed on developed and emerging global market exchanges. The Fund’s Index Provider, Archipelago Holdings Inc. (“Arca” or the “Index Provider”), an affiliate of NYSE Euronext, Inc., defines “developed markets” as countries with western-style legal systems, transparent financial rules for financial reporting and sophisticated, liquid and accessible stock exchanges with readily-exchangeable currencies.
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