Thoughts for Seattle’s KOMO TV

Personal note:

I’m down at ISTAT in San Diego and have just learned of the crash of a KOMO TV News helicopter in Seattle, killing two and critically injuring one. The names haven’t been released yet, so I don’t know if I know them.

But I do know many of the people at KOMO. Being based in Seattle, I occasionally appear on KOMO as a talking head on aerospace issues.

My thoughts go out to the KOMO family.

Scott Hamilton

Odds and Ends: 787 Update; SPEEA Council meets for membership vote; Asian caution

787 Update: The Wall Street Journal has this lengthy article on the twin-investigations of the US and Japanese authorities into the Boeing 787 incidents. (Subscription required.) Bloomberg News this long article profiling Boeing CEO Jim McNerney’s oversight of the Boeing probe. The Seattle Times has this article about the probe.

This story takes a different angle on the 787 challenges, focusing instead on the coming shortage of engineers.

SPEEA Council Meets Today: The top officials of SPEEA, Boeing’s engineers’ union, meets today to decide on sending the Best and Final Boeing offer to members for a vote to approve or disapprove the contract. A strike vote is also likely to be included.

Caution on Asian Airlines: Germany’s DVB Bank, a major player in commercial aerospace financing and analysis, raises caution about the growth plans of the new Asian airlines, according to this article by Reuters.

American logo reaction mixed: Forbes has this story about the new American Airlines livery, quoting a number of design professionals. This link has a number of suggestions, almost of which which we like better than the tail paint American purchased for God knows how much money.

Predict: What will be the most momentous event of 2013?

2013 stands to be a pretty eventful year, and we’ve listed thoughts for you to vote on. We’ll hide results until voting is complete.

Now a key question: SPEEA and Boeing are on a collision course. Talks resume Jan. 9, but SPEEA already is on record believing talks will immediately collapse. A strike date of Feb. 1 is targeted, but membership has to take a strike vote before a walk out can occur. It’s your turn to vote:

If a contract agreement is not reached, will SPEEA actually go on strike or will talks continue?

TSA move to replace body invaders a good one

The news that the Transportation Security Administration is swapping out the invasive body x-ray scanners with other equipment is good news indeed.

Setting aside the debate over whether the levels of radiation to produce x-rays is a health risk, the images created were truly invasive to personal privacy. We went out of our way to look for TSA lines where only magnomitors were in use in order to avoid the x-ray body invaders and as often as not requested a pat down if only the body invader was in use.

Europe has long used machines that produce stick figures of the person going through the machine, and little round dots to highlight areas that required pat downs. We had no issue with these machines.

The stick figure machines will reduce the number of invasive pat downs as well. Hopefully this will speed the entire security process.

And another:

Boeing rolls out Ray Conner to analysts

Boeing rolled out Ray Conner, the new CEO of Boeing Commercial Airplanes, to analysts in New York yesterday. The first research note we’ve received, from Imperial Capital’s Ken Herbert, portrayed a positive meeting. Below is a synopsis. As we receive more notes, we’ll add those comments.

We don’t like the resumed policy of using cash to repurchase stock, instead of putting it into new airplane programs (something Richard Aboulafia of the Teal Group, normally a pro-Boeing consultant, has roundly criticized for years).

Imperial Capital

We believe BA is benefitting from several tailwinds, and is demonstrating increased confidence regarding its 787 execution and the ability to take further costs out of the supply chain. However, we believe much of the good news is reflected in BA stock, and we see slowingorders in 2013 as limiting the multiple; therefore, we are maintaining our In-Line rating. Investors areexpecting a significant dividend increase or share repurchase program, which could be a positive catalyst, but we see the new program developments, which include the 737MAX, the 777X and 787-10, as potential competing cash pulls.

Regarding the 787, Boeing confirmed that Charleston is ahead of plan, but that it has been staffed to over deliver. Boeing also made a point of stressing that its movement down the cost curveon the 787 will be similar to that of the 777. We believe that there is an opportunity for Boeing toexceed expectations on the 787.

We continue to believe, however, the much of the execution upside is priced into Boeing stock. We believe that in order for the stock to see material upside, Boeing needs to demonstrate a very bold use of the expected free cash flow, in the form of both increased dividend and share repurchases, that will attract new investor interest and accelerate the EPS growth. However, this will limit the new product development options, considering the potentially competing development requirements of the 737MAX, the 787-10, and the 777X. We believe current BCA leadership wants to do both the 777X and the 787-10, and believes that there is significant pent-up order demand for both new aircraft, but we believe the focus on share repurchases and/or the dividend, reiterated at the 8/28/12 reception, could push some development effort to the right.

Separately:

  • A reader posted this link on NEO vs MAX orders and options and we think it so good we’re elevating it to a primary post. This website also recaps which airlines have switched allegiance. Thanks to Dave O’Flynn for the link.
  • China ordered 50 A320s instead of the expected 100.

Missing Bob Crandall

The link to a video of Bob Crandall on the Charlie Rose show speaking to airline industry issues, and the bankruptcy at American Airlines, spurred some comments from our readers. The most interesting comment came from a Doug Stephan, whose comment is reproduced at the end of this post.

When we co-owned Commercial Aviation Report (until recently called Commercial Aviation Online by Flight Global, which became the fourth owner of the company), we resided in Dallas in Bob Crandall’s backyard at American.

Naturally the proximity gave us many Crandall stories. Stephan’s comment spurred us to remember some. We share a few with readers today.

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WN vs AA: A personal story

I am going to depart not only from my usual approach to this blog but also shift from the editorial “we” to a personal “I” for this story. The point of the story is not my personal family issue but an illustrative point about Southwest Airlines and American Airlines.

As readers know, I live in Seattle. I have family in the Chicago area. My family had a developing situation that required that I go to Chicago to deal with it. The plan had been to attend the ISTAT meeting and US Airways media day in Phoenix earlier this week, fly back to Seattle for a day and then on to Chicago Friday. I had booked Southwest for the SEA-PHX-SEA trip and American Airlines for the SEA-ORD-SEA trip.

I truly don’t like flying Southwest because of the boarding process and the lack of an assigned seat. I’m a lifetime Gold Advantage member of American, with all the perks that implies.

I chose WN for the PHX trip because my business partner was joining me and she had to check a bag–and bags fly free on WN. I chose AA for Chicago because of the aforementioned Gold status and perks.

On Tuesday evening–the end of the ISTAT meeting but before the US Airways event–I received a call from my brother indicating the family situation had become critical; I need to fly to Chicago directly from PHX on Wednesday. WN changed the ticket (charging for the fare difference). I called AA to cancel my Friday reservation. The ticket was, as I knew, non-refundable but I also knew I could apply it for a future trip. For the fare difference and, as I also knew (regrettably), a $150 change fee. (Besides which AA also charges for the baggage check, which wasn’t applicable in this case but nonetheless contrasts ith WN’s policy.)

The situation in Chicago has now stablized for now but for the near term, I will buy WN to Chicago for family follow-up for the flexibility of being able to change tickets without a change fee. Tom Horton, take note: a lifetime Gold member is on your rival for now. I might be able to claim mileage to exotic places on AA and oneWorld compared with Lubbock and Little Rock on WN, but this doesn’t matter. Gary Kelly, also take note: good policies in place in these circumstance–even if I still despise your damn open seating.