Airline Finance News - North America

AirGuide Business, April 28, 2008

Apr 28, 2008

Airfares continued climbing in Q4, DoT report says. A new government report shows air fares continued to increase in the final three months of 2007. Average fourth-quarter fares climbed 4% to $331, the DoT report said. Apr 24, 2008

The Airline Reporting Corporationis (ARC) first fraud prevention workshop was held during the Sabre TRAMS, Inc. Travel Marketing University conference in Las Vegas this week. In an interview with Dottie Hogan, ARCis director of risk management, Travel Agent learned that fraud, including ticketing scams, has increased year over year and that travel agents remain liable. ARC[sup.1]s goal in sponsoring the workshop is to build travel agents' awareness of the growth of fraud and how agencies and agents can prevent it. Hogan sees a vital role for ARC and wants to spark a dialogue between ARC and agents on fraud issues. Host agencies are especially vulnerable, Hogan says. ARC works closely with law enforcement agencies, airlines and credit card companies on the fraud program. The workshop attracted 20-plus agencies and home-based independent agents concerned with the proliferation of fraud and the impact of it on agency operations and profitability. One unnamed agency faced a $210,000 loss due to fraudsters, Hogan said. We are seeing year over year growth in fraudsoprimarily airline ticketingoand use of the Internet,i Hogan said. iEven small losses of $5,000 can directly and adversely impact a small or home-based agentis bottom-line results. Agents are liable and must develop ways to minimize risks and counter fraud. Apr 24, 2008

The reason that airlines don't just hike prices more, analysts say, is that they're afraid of losing passengers, especially with the economic slowdown. The competition is intense for Americans' flying dollars. What this means is that the big network airlines, which went through a series of difficult restructurings and bankruptcies in the past seven years so they could compete with the Southwests of the world, still aren't able to charge enough money to cover their basic costs n especially with the recent spike in fuel prices. This is the case even though planes are flying fuller than ever before. With planes flying so full, it may not make sense to the average, cramped passenger that the system has too much capacity. But analysts say it's not a physical capacity problem, but an economic one. If airlines cut back on the number and frequency of flights, which several have indicated this week that they will, it will allow them to charge more for the remaining seats. What this means is even more bad news for passengers: fewer choices and higher prices. Apr 23, 2008

Air Canada, WestJet, Air Canada Jazz, Air Transat

Air Transport Assn. of Canada announced that Air Canada, WestJet, Air Canada Jazz and Air Transat have withdrawn from the organization effective immediately. The four carriers represented just under half its membership revenue, ATAC said, adding that it will work to develop a revised business plan. "Today's announcement is an unfortunate development. . .but does not change our commitment to our members to improve Canada's commercial aviation sector," Chairman Mike Doiron said. ATAC still boasts approximately 230 operator and associate members. Apr 24, 2008

AirTran Airways

AirTran Airways parent AirTran Holdings said "very strong" first-quarter revenues were not enough to overcome "the effects of record high fuel costs" as the company sank to a $34.8 million net loss that compared to a $2.2 million profit in the first three months of 2007. "We remain committed to serving our customers, reducing costs and profitably managing our company going forward," President and CEO Bob Fornaro said. To that end, AirTran will reduce its planned capacity growth for the final four months of 2008 and all of 2009 from approximately 10% to "no more than flat." The LCC enjoyed a 12.6% lift in passenger numbers to 5.7 million as traffic climbed 19.2% to 4.35 billion RPMs. Capacity rose 10.8% to 5.77 billion ASMs as it added four Boeing 737-700s, increasing its fleet to 141. Load factor improved 5.2 points to 75.3%. Yield slipped 0.7% to 13.03 cents and unit revenue grew 6.9% to 9.82 cents. Operating CASM was up 16% to 10.94 cents but just 0.8% to 6.29 cents excluding fuel. AirTran yesterday announced its intention to raise $65 million through the offering of convertible senior notes due in 2015 and convertible into common stock, plus an additional 14.25 million shares of common stock, with the option to purchase overallotments available on each. Morgan Stanley is bookrunner and Credit Suisse Securities is co-lead manager. Apr 23, 2008

AirTran Holdings, JetBlue Airways

AirTran Holdings and JetBlue Airways reported first-quarter losses on Tuesday. United Airlines also reported a first-quarter loss earlier in the day, citing higher fuel costs for the results. United is launching a plan to cut domestic mainline capacity by 9% by the fourth quarter and plans to shed more than 1,000 jobs. Airline executives have also noted that due to current oil prices they would have to boost ticket prices by up to 15% to break even. Apr 23, 2008