Airline Finance News - North America

AirGuide Business, Feb 25, 2008

Feb 25, 2008

Open skies agreements bolster airlines' case for mergers. The new open skies agreements will allow airlines to argue that they must consolidate to compete effectively against new competition, according to one media outlet. The Open Skies treaty between the U.S. and the EU will allow any European carrier to operate flights from any point in Europe to any point in the United States, threatening domestic airlines' share of the lucrative international market. Feb 22, 2008

U.S. airline employment increased 3.7% in December, compared with the same month in 2006. Carriers have posted gains in employment for 11 straight months. Feb 21, 2008

Airlines will weigh profitability, efficiency when considering hubs' future. Merging airlines will consider many factors as they mull whether to continue operating all of their hubs, experts say. Carriers may decide to eliminate some hubs if other hubs serve their networks more efficiently. Experts also note that airlines will be reluctant to close profitable hubs. Feb 20, 2008

U.S. Domestic traffic climbs in 2007. DoT statistics indicate that domestic travel climbed 3.2% in the first 11 months of 2007. The overall domestic and international average load factor for U.S. airlines was 80.3%, a record for any 11-month period. Feb 19, 2008

Blending labor groups won't be easy for airlines, experts say. Merging airlines must effectively blend their workforces for consolidation to work, experts say. Union leaders note that they have significant leverage over mergers in the industry. They say they want to make sure seniority is preserved, and they are pushing for pay increases. Feb 18, 2008

Allegiant Air

Allegiant Air flew 304.3 million RPMs in January, a 47.1% increase over the year-ago month. Capacity rose 40.3% to 383.7 million ASMs and load factor was up 3.6 points to 79.3%. Feb 21, 2008

American Airlines

American scales back capacity plan for 2008. Soaring oil prices and a weaker economy have prompted American Airlines to scale back its capacity plans for 2008. In a Securities and Exchange Commission filing, the airline said it will increase capacity at its mainline operations by 0.2% this year, down from a forecast of 1%. Feb 21, 2008

Continental Airlines

Continental Airlines did not report a net profit figure when it released quarterly results on January 17, because at the time it had not yet finalized the special non-cash pension charge. It expects to contribute about USD$257 million to its defined benefit pension plans during 2008, but said has the flexibility to fund only a minimum requirement of about USD$140 million for the calendar year. Continental said it expects expenses of about USD$90 million related to its defined benefit plan in 2008. Feb 21, 2008

Continental Airlines

Continental Airlines posted a net loss of USD$32 million in the fourth quarter, compared to a loss of USD$26 million a year ago. Continental said it recorded a special non-cash tax charge of USD$104 million in its fourth quarter to increase its deferred tax asset valuation allowance. The fourth quarter also included a USD$30 million gain from selling shares of ARINC, a provider of transportation communications and systems engineering, to an affiliate of Carlyle. In its annual report for the U.S. Securities and Exchange Commission on Thursday, the company said 2007 included a USD$31 million non-cash settlement charge related to its pension plan for retired pilots. Feb 21, 2008

Continental Airlines, American Airlines, United Airlines

Continental Airlines is in merger negotiations with American Airlines and United Airlines, according to media reports. The talks with American are exploratory and come as Delta Air Lines and Northwest Airlines get closer to reaching a merger agreement, reports say. Carriers hope to reach merger agreements soon, before the Bush administration leaves the White House. Feb 18, 2008

Continental Airlines, United Airlines

Continental Airlines would continue to operate its hub in Cleveland if it merges with United Airlines, former Continental CEO Gordon Bethune said. "Cleveland must be profitable, or Continental wouldn't be expanding there," Bethune said, referring to the carrier's announcement last September to invest millions there. Senior vice president Bill Meehan said that recent merger rumors have not changed the carrier's plans to add more than 70 flights and 700 jobs at Cleveland Hopkins International Airport. Feb 18, 2008

Delta Air Lines, Northwest Airlines

Delta Air Lines and Northwest Airlines, still trying to win backing for a merger from their pilots, face another hurdle in their effort to create the world's largest airline. Before exiting bankruptcy last year, Northwest agreed to maintain a hub and headquarters in Minnesota in exchange for USD$445 million in loans and lease concessions at its Minneapolis operations. If it merges with larger Delta and moves its headquarters to Delta's home in Atlanta, Northwest may have to repay USD$245 million in outstanding debt on bonds that Minnesota's Metropolitan Airports Commission issued on Northwest's behalf. It also may have to give up USD$200 million a year in savings, stemming from a renegotiated lease agreement in Minneapolis. Feb 22, 2008