Airline Finance News - North America

AirGuide Business, May 5, 2008

Mesa Air Group, Delta Air Lines

Mesa Air, a Phoenix-based regional carrier, already in a financial tailspin, has sued Delta Air Lines after the mega-carrier said it plans to bail on a flying agreement the parties had. Mesa Air Group Inc. filed a lawsuit April 7 in federal court in Atlanta asking Judge Clarence Cooper to keep Delta from jettisoning the contract it had with Mesa subsidiary Freedom Airlines Inc. involving 36 aircraft. The case, which revolves around a code-sharing arrangement involving 50-seat aircraft, is set to be heard May 27-29. Delta, which declined comment citing pending litigation, wants to pull the contract because Freedom failed to complete a minimum number of flights -- or "completion rate" -- during three months of the six-month period September 2007 through February, a court document noted. May 2, 2008

Northwest Airlines

US airline shares moved higher on Tuesday, led by Northwest Airlines, on a sharp decline in the price of crude oil, which is directly linked to the price of jet fuel. Northwest stock gained 17.5 percent to USD$8.95 on the New York Stock Exchange. Delta Air Lines shares gained 11.1 to USD$7.99 on NYSE. American Airlines parent AMR was up 9.4 percent at USD$8.47 on NYSE. The Amex airline index was up 4.9 percent. Calyon Securities analyst Ray Neidl linked the rally to a sell-off in the price of Nymex crude, which was down USD$3.31 at USD$115.44 after notching a record high near USD$120 on Monday. The airline industry has been pummeled by soaring fuel prices that have offset many cost-cutting initiatives undertaken by the carriers in recent years. Neidl said Northwest and Delta shares may also be taking additional support from the outlook for their upcoming merger. The two airlines intend to join forces to become the world's largest airline. "I imagine the market is starting to take some recognition of that," he said. Apr 29, 2008

Northwest Airlines

Northwest Airlines said it would match fare increases instituted by other carriers. It said it will match the approximately 3-5 percent increase first implemented by United Airlines and matched by Delta Air Lines, American Airlines, Continental Airlines. "We are making this move to offset the extraordinarily high cost of fuel," said Jim Cron, senior vice president of revenue management. The fare increase comes on the heels of this weeks' 1Q earnings report, showing Northwest Airlines lost $4.1 billion. Earlier this month the airline announced a plan to mitigate the dramatic fuel cost increases. That plan included revenue enhancements from increased fees, fares and fuel surcharges; domestic capacity reductions of five percent; a fleet reduction of 15 to 20 aircraft; an estimated $100 million reduction in non-aircraft capital expenditures; and a $100 million improvement to the airline's bottom line, profit and loss statement, that will be achieved through other cost reductions, productivity improvements and revenue enhancements. The increases began Thursday afternoon when United Airlines instituted increases of $4 to $70 roundtrip. American Airlines and Delta Airlines matched that evening. Continental matched Friday morning, according to Rick Seaney, CEO of FareCompare.com. "This increase attempt is now 15 percent short of the 20 percent called on by the Delta CEO earlier this week," Seaney wrote in an e-mail, "he estimated it would require 15-20 percent in airfare hikes to make the airlines whole at $120 barrel oil." Apr 28, 2008