Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- SPEEA, Boeing at impasse over safety program, union says April 23, 2024
- Better transparency needed on Boeing’s 1Q earnings call April 22, 2024
- Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency April 19, 2024
- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
Odds and Ends: Seeking an injunction against A320 sharklet sales; more
A320 Sharklets: Remember the lawsuits between Aviation Partners and Airbus over winglets and sharklets? AP wants an injunction against A320 sharklet sales. That sure got Airbus’ attention.
American and US Airways: Bloomberg has a long piece on US Airways’ effort to acquire American Airlines.
Emirates Airlines: The fast-growing carrier is about to become the world’s third largest.
Airbus and US Spending: Airbus wants to double its US supply-chain sourcing to $24bn.
Boeing BWB: This article has some pictures of Boeing’s latest version of the Blended Wing Body research model.
Ft Worth columnist blasts American’s Horton
This is one of the most blistering critiques we’ve seen of a company CEO where no improprieties were involved.
Mitchell Schnurman of American’s hometown paper, The Ft. Worth Star Telegram, just pummels AMR/American CEO Tom Horton.
AMR’s goofy merger explorations
So AMR says it will explore merger opportunities as part of its bankruptcy process.
The choices of potential partners are odd, indeed. According to The Wall Street Journal, AMR’s choices for a potential combination with American Airlines are US Airways, JetBlue, Alaska Air Group, Republic Airways Holdings’s Frontier Airlines, and Virgin America.
The Wall Street Journal notes: Besides US Airways, none of the others has publicly expressed a desire to merge with American. JetBlue and Alaska Air have indicated they prefer to remain independent, and people familiar with closely held Virgin America also said the company isn’t interested. Asked about that, Mr. Horton said: “If somebody’s not interested, they’re not interested.”
The choices, aside from US Airways, are pretty goofy. None is a network carrier that would add a system to American. JetBlue and Alaska Airlines would certainly beef up the East and West coasts, respectively, where American is weak. JetBlue would add strength to American’s JFK international hub. But neither brings a network to the airline.
Frontier Airlines and Virgin America wouldn’t bring even the attributes offered by JetBlue and Alaska. Frontier’s Denver hub competes with United Airlines and Southwest Airlines. Does American really want to get into this fight? We think not.
Virgin America, which regularly posts huge losses, isn’t strong in San Francisco where it is based and neither is American. We don’t understand why this airline is even mentioned.
The only airline that makes sense for consideration among those mentioned is US Airways. US Airways has a network, strong East Coast presence, and a sharp management, which wants to be in control and this seems to be the biggest obstacle for the AMR/American management.
And it only makes sense for the US Airways management to be the surviving one.
US Airways’ CEO talks AMR, industry conditions at National Press Club
US Airways CEO Doug Parker spoke today on the effort to merge with American Airlines and of industry conditions.
This is a running tally of the comments and Q&A.
Parker:
- Was introduced as a good poker player, citing Herb Kelleher. Parker responds: I’m not particularly good. Herb is just very bad.
- Our country needs a practical and sustainable airline policy.
- Team at US Airways is doing a phenominal job. Producing record revenues, yields, strong load factors, new records in every operating measure. Credit goes to 32,000 employees. I can’t thank them enough.
- You might ask if US Airways is doing so well on its own, why talk so much about mergers? We don’t need to merge but we owe it to employees and other stakeholders to become as strong and as viable as possible.
- Previous mergers have led to increased traffic, cost reductions, better competition.
- Employees will have better opportunities.
- American Airlines sat out these mergers and have missed opportunities. It is not the largest airline in the world anymore or even close to it. Delta and United have surpassed it.
- Finally American resorted to bankruptcy. Bankruptcy does allow airlines to negotiate to contracts, renegotiate and terminate contracts and debt. Bankruptcy cannot fix a revenue problem or network deficiencies through organic growth.
- American can fix these only through merger with US Airways. American’s Cornerstone strategy doesn’t regain previous strength. There is a big hole on the Eastern seaboard.
- American is steadily losing share to Delta and United. It can only be gained back by merging with US Airways which is strong on east coast.
- Merger will enable both airlines to become stronger. Networks are complimentary and little overlap, so no need to scale back services.
- A new American would be able to provide connecting services through Philadelphia, Washington and Charlotte rather than backtracking through Chicago, which passengers won’t do.
- American is now in fourth or fifth place in most regions. A combined carrier would become first or second in most areas.
- Almost all analysts concluded American’s Cornerstone strategy won’t fix problems.
- Why isn’t it happening? Timing is everything. We believe a merger should happen within bankruptcy to avoid many costs that would occur outside bankruptcy.
- US Airways is here now and ready to do this now. There is no guarantee it will be later. We believe the action for merger is now. We want a fair chance to present our plan.
- We are certain any objective analysis will conclude merger with US Airways is best for the bankruptcy process.
- According to American, the bankruptcy process is because of the unions–they are the “offenders.” My experience with these unions in supporting the merger is to the contrary.
- The compensation gap between the US Airways proposal and the American proposal is not that large. The unions understand the future for American is a strong carrier.
- Everyone knows what the right answer is. The public has a lot at stake in the outcome. There are 100,000 jobs at stake here.
Odds and Ends: 737 MAX development cost; another range boost for A330
737 MAX: We did this story last week on the development cost of the Boeing 737 MAX.
A330: Airbus is going to boost the range of the A330 to make it more closely match that of the Boeing 777 and 787, according to this story.
Fill ‘er up: Here’s a scary story about a goof in aerial refueling of a Boeing 707-based JSTARS.
Thoughts on US 1549
Update, January 19:
More information continues to emerge over the remarkable saga of US Airways flight 1549. Readers can Google the news stories and get plenty; we linked to New York Times pieces at the end of this column, below the jump. A good resource is Flight International, which always excels at accident reporting.
Here are some more of our thoughts, none of which has made it into the media so far as we know.
This isn’t the first time an airliner was brought down by birds. Way back around 1961-62, an Eastern Airlines Lockheed Electra crashed on take-off from Boston’s Logan Airport after hitting a flock of starlings so thick that all four turbo-prop engines failed. This happened right at lift-off. All aboard were killed, if memory serves correctly.
Did the Airbus flight envelope protection system help US 1549’s pilots control the airplane as it descended to the Hudson River? The system is designed to prevent stalls, and it’s believed the captain properly had a nose-up attitude in order to hit the water with the tail of the plane and minimize impact to the front of the aircraft. The maneuver was tricky to say the least without engine power. Did the computer system help prevent a crash? Update, 8:00 PM PST January 19: The Wall Street Journal, in an article dated January 20 and posted on its website January 19, confirms that the flight envelope system was operating and contributed to the safe landing of the airplane.
Was this a crash, like the media reported? In fact, this was a controlled water landing and, yup, the aircraft was destroyed–but was it a crash in the classic sense of the word? Even the flight attendants described the contact with the water like a “hard landing.”
Hand-wringing over birds around the airport was overblown in this case. The A320 didn’t strike the birds around the airport; the plane was miles away at 3,200 ft. Birds at the airport had nothing to do with this accident.
Speaking of over-wrought hand-wringing, Fox News’ Sean Hannity was worse than usual. This dip claimed the accident was the fault of US Sen. Charles Schumer (D-NY), the environmentalists and liberals because of laws protecting Canadian geese around airports. This one is over the top even for this right-wing wack job.
Speaking of wack jobs, KIRO Radio (Seattle) conservative talk show host Dori Monson had one call into his program as he was doing a superb job interviewing pilots about the US Airways incident. This caller wanted President Bush to invade Canada because the birds thought to have struck the A320 were Canadian geese. Dori, a bit of a wack job himself on occasion, exceled at his coverage and knows the ridiculous when he sees it. He so wanted to talk to this lady, but she hung up before he got to her. (Dori’s screener got her subject matter.)
US Airways says ‘no’ to A340 China lift
US Airways received an award to fly from Philadelphia to China in 2009 and there were wide reports that the company was looking for Airbus A340s to serve as interim lift until the A350 could be delivered beginning in 2014.
Even one official of the company said so at the annual media day today. But in private conversation with CFO Derek Kerr, he told us it ain’t gonna happen. Kerr said he has no interest in the A340 and the airline will use the A330-200, with load restrictions when necessary, to serve the route until the A350 can be delivered.