hokieincanecountry

Philip Morris Pays Up: Something's Not Right

This tends to demonstrate a number of negative trends in the USA that we need to reverse:

1. An entitlement mentality among the citizens (and "non-citizens").

2. Redistribution of wealth.

3. Lack of tort reform; lawyers and verdicts "out of control." Can we channel that dead child, Senator Edwards?

4. The end of the citizen legislator; too many lawyers in these offices. We need term limits.

Allegiant: October Year-Over-Year Comps Are Strong

Andrew,

What is your source for "non-revenue" passengers for the month? What portion (of the difference between Total System and Scheduled) is represented by "contract" flights? What analysis have you done to support the charge that you have made, that ALGT has been able to "...goose load factors...?"

Does it depend upon what the definition of "is is"?

Airlines: Some Costs They Can't - And Shouldn't - Cut

Vote TL,

You are guilty of gross plagiarism, as you posted two of my paragraphs (which I posted this morning) as your own without any attribution.

hokie...


On Nov 02 01:44 PM Vote TL wrote:

> People are overlooking the reason that Southwest currently has better
> pay packages at the moment. They were moved to the top of the list
> due to legacy airlines going bankrupt and being bailed out. ie...
> massive labor cost cutting and pay reductions Most of the concessions
> with these companies were made by Labor and Unions to save their
> jobs. Now Southwest looks like they pay the most...only in comparison.
> The reason they haven't had to go through this is that they have
> managed to stay profitable for 30 years. (only this may not hold
> true in this economy)
>
> Management can make mistakes again and again, and still get bonuses
> and pay raises. Pilots can usually only make a mistake once...with
> terrible consequences.
>
> Because air travel is so common now and reasonably affordable, most
> consumers are very jaded. The American sense of entitlement at all
> levels will hopefully be successfully reevalutated when it comes
> to this particular issue with lives at stake. And it won't take continued
> tragedies before companies wake up to the coming dilema of experienced
> pilots shortages that are already escalating.
>
> Unfortunately when it comes to executive pay, whether in the airlines
> or wall st. it seems that the status quo of greed and inefficiency
> still reigns over reason and common sense.
>
> Be careful what you wish for when it comes to cheap travel.
>
> Southwest can pay its pilots better because they are much more productive
> than the pilots of a typical legacy airline. They also have been
> profitable, and thereby have not needed to pass through bankruptcy
> court--not even once! Their fares are relatively low, and they (along
> with other low cost airlines) are setting the fares on many routes
> and steadily taking market share domestically from the legacies.
>
>
> Look at total cost per available seat mile, not just at pilot pay
> and benefits. Southwest is still one of the lowest cost majors--they've
> lost their cost lead recently to AirTran.
>
> On Nov 01 08:22 PM CAVU wrote:

Airlines: Some Costs They Can't - And Shouldn't - Cut

Southwest can pay its pilots better because they are much more productive than the pilots of a typical legacy airline. They also have been profitable, and thereby have not needed to pass through bankruptcy court--not even once! Their fares are relatively low, and they (along with other low cost airlines) are setting the fares on many routes and steadily taking market share domestically from the legacies.

Look at total cost per available seat mile, not just at pilot pay and benefits. Southwest is still one of the lowest cost majors--they've lost their cost lead recently to AirTran.

On Nov 01 08:22 PM CAVU wrote:

> Then explain why the pilot labor costs at SW are higher than any
> legacy relative to ticket price. The industry is saying that pilot
> wages are the problem when the executive pay, poor planning, debt
> service costs for equipment aquisition, and just plain old mismanagement
> on executive levels are the real problem. Every time they screw up
> as executives...they get a bonus and try to cut pilot wages....free
> market is why regionals hire pilots that can't even fly on a good
> day without an autopilot. The system is not working at all....it
> is screwed up beyond repair...

Airlines: Some Costs They Can't - And Shouldn't - Cut

The relatively-free market is working. The non-legacy airlines have the lowest costs per available seat mile--(e.g. Southwest, AirTran, JetBlue, etc.).

Over recent years, a greater and greater percentage of domestic fares are increasingly being set by the low cost airlines. Now, even some of the international routes are being developed by these same carriers-- to Mexico, the Caribbean, Central America, etc. Meanwhile, the legacies will continue to reduce their capacity and attempt to survive on more long-haul international routes.

To an even larger degree in the future, airline pilots are going to be paid at closer to market rates, even with the strenuous efforts of their unions to resist!

No Room for Error at Air T

Hi Saj,

You claim that most of my points "were not relevant to the article. The airticle is about AIRT's revenue risks." I contend that all of my points dealt directly with "revenue risks," which you claim was the major thrust of your piece.

First, the Air Force has exercised each of its available options over the prior ten years. You are correct that the ten year period was covered by a four year contract and two three year options at the Air Force's sole option and not two five year contracts as I had stated, so; your comment is not relevant to my point!! The AF exercised each of its options--this was my point. These contracts with AIRT are "requirements type" contracts that don't specify any minimum level of orders; the AF is not obligated to place any orders whatsoever, but they have done business with AIRT for ten years now, exercising or extending each of its opportunities to do business with AIRT and have recently (four days before your piece was published) awarded a new contract.

My second point dealt with "revenue risk" on the FedEx contract. As I stated, FedEx has done business under this contract containing a "30 day cancellation clause" since 1980--nearly 30 years. Enough said.

My third point dealt with "revenue risk" regarding reported backlog levels, which you found a way to distort and mislead the reader in your piece by comparing March 31, 2009 vs. 2008 without analyzing the different timing of AF orders in the two years.

My fourth point dealt with "revenue risk" in the new Global Aviation Services (GAS) division. You attempted to mislead the reader by neglecting to tell how this operation was started and how it has grown profitably over the less-than-two years of its history. I believe that DAL will likely award additional work to GAS at some of its stations, to take advantage of the lower costs that the former NWA part of DAL is now enjoying. DAL needs to find many ways to reduce its costs.

Saj, deal with it!!

Airlines: Bail or Let Them Fail?

Loren, you say that if a major would liquidate, it would eliminate industry capacity, and the remaining carriers could raise prices. Your presumption is just wrong!

Pricing in the domestic market is now (and has been for some time) controlled by the low cost carriers (Southwest, AirTran, JetBlue, Spirit, etc.). The low cost carriers have been steadily gaining domestic market share for years. Add to that the current downturn in business and international traffic, and the legacy carriers' business models stopped working, at least during the current economic downturn.

If a major were to liquidate, the low cost carriers would soon grow capacity to absorb this traffic.

The legacies are now facing low cost carriers that are also competing to take a bigger share of domestic business travel. Southwest has changed some policies recently directed toward the business traveler, and AirTran earlier this month completed the addition of WiFi to every single flight--a first in the industry.

It's just a matter of time before Southwest adds international destinations, while Spirit, JetBlue and AirTran have already begun this process. If you are a legacy carrier, it's time to face the hard, cold facts!!

No Room for Error at Air T

Saj, your comments are weak and not responsive to the points made above!!

You should know that this is an internet blog and not a monthly business magazine with a cut-off date three and a half weeks before the date on its cover. You should "look around" before you push the "publish button" and not more than four days before doing so. If the "built in delay" for publishing is four days or more, then SA needs to get out of this business.

I believe that you have established a "template and matching headline" and then covered each of your supporting points using the most pessimistic of scenarios and thereby misleading the reader. 1. You don't point out that the Air Force has not failed to exercise its one year options for more than the last 10 years. 2. You don't point out that AIRT had done contract work for FedEx since 1980 with that same "30 day cancellation clause" in force. 3. In picking March 31 for backlog comparisons, you fail to recognize or acknowledge the change in timing of Air Force ordering for 2009 vs. 2008. 4. You distort the Global Aviation Services (GAS) division story; this operation only started in September 2007 with NWA as the launch customer. NWA previously had savaged its maintenance unions until they "whimpered like a young puppy, with its tail between its legs while wetting the rug." My point was that DAL will more likely outsource more of this work to GAS at certain stations than to take the former NWA work in house or award a contract to a competitor of GAS.

Saj, your analysis is biased, as you have selected only negative scenarios that probably have a low probability of occurence either individually or in concert.

Saj, IT'S TIME TO STAND AND DELIVER.!!!

No Room for Error at Air T

Saj, your analysis is both shallow and incompetent!!

You report (on July 17) that the 5-year Air Force contract expired last month (the second consecutive 5-year contract awarded to AIRT). What you fail to report is that on Monday, July 13 the Air Force awarded a new contract to AIRT (that carries a first year (of five) value based on BEQ's of $15.4 million). It is a contract that will become five years if the Air Force exercises all four one year options (which it has always done in the past).

You say that the March 31 backlog had declined, but you fail to report that the Air Force placed an order in early May for $11.5 million or to consider the different timing of Air Force ordering in 2009 versus 2008.

You point out that FedEx might cancel the air freight services contract, but you fail to tell the reader how long this contract has run. And, FedEx cannot perform these services more cost effectively in house (the unions would swarm). This contract is a great value for FedEx, and as long as AIRT continues providing this value and quality, the contract will go on and on.

You report that Delta (former NWA part) is the major customer for the Global Aviation Services division, but you fail to point out that NWA was the first (and major) contract that launched this division just about two years ago. You failed to report how AIRT has grown this business by adding both new customers and new stations. I will assure you that Delta cannot perform this work in house as cost effectively as can Global. And since the DAL maintenance staff is non-union, the end result may be that DAL will cost effectively outsource this work at some stations, and without dealing with any union bosses in the process.

Are Airlines Going Bankrupt Again?

Domestic fare levels are now largely being set by JetBlue, AirTran and Southwest based upon their cost structures. As a result, the low cost carriers are steadily gaining domestic market share vs. the legacies.

Southwest has benefitted greatly from its fuel hedges, which are now liquidated--its airline business is marginally profitable now, as its costs are above those of AirTran and JetBlue.

It is fairly easy to project that these trends will continue, and the least profitable airlines (e.g. UAL, etc.) will eventually seek bankruptcy protection once again; their capital assets are being eroded at rapid rates.

Five Reasons to Buy Raser Technologies

How many of the shares that are short do you think were shorted by holders of the convertible notes ($55 million representing 5.96 million shares)? If these were shorted above the conversion price (around $9.23 per share), these investors are generating an infinite return on their original investment. They are getting 8.0% on the original investment while having a negative net investment (and they don't need to "make up" any dividends on RZ).

How are you going to squeeze these shorts?

Raser Technologies: A Short Squeeze in the Making

The $55 million of convertible notes represents almost 6 million shares. How many of these holders have shorted the common? I would suspect that it is a material portion. If they shorted above $9.22 per share, they have recovered all of their capital and still get the interest on the notes.

How are you going to squeeze these shorts?