October 25, 2004 E-Mail news for the commercial aviation industry
Company Watch
Delta close to bankruptcy filing, report says
Delta Air Lines may decide to file for Chapter 11 bankruptcy protection this week, according to a report in The Washington Post. The filing may be postponed if the company reaches a concessionary agreement with its pilots union, the report said. A Delta spokesman declined to comment on the bankruptcy report. Talks between the union and the company continue this week. The Washington Post (free registration) (10/23), The Cincinnati Enquirer (10/25), USA TODAY/Reuters (10/23), The Wall Street Journal (subscription required) (10/25)
In cost-cutting move, American plans up to 1,100 furloughs
In a move to cut costs and become more efficient, American Airlines told employees in a memo it will furlough as many as 450 pilots and 650 maintenance workers. The company is also considering reducing its flight schedule. The New York Times/Associated Press (free registration) (10/24), The Wall Street Journal (subscription required) (10/23)
US Airways sets November deadline for contract concessions
US Airways will ask a bankruptcy judge to void contracts with several employee groups in mid-November if it doesn't reach concessionary agreements with the groups by that time. The airline is seeking pay cuts from machinists, flight attendants and ground workers. US Airways' pilots union agreed to wage cuts last week. CNNmoney/Reuters (10/24)
US Airways says proposed cuts to its retiree health coverage could save $69 million in 2005. The airline's plan would affect 11,000 retired workers, some of whom depend on US Airways for medical coverage. A company spokesman noted that the airline has said both past and present workers will participate in its cost-cutting plan. The Charlotte Observer (N.C.) (free registration) (10/23)
United plans to hire firm to review business plan
United Airlines said it will hire Bridge Associates to review its turnaround plan after approval by the bankruptcy court. Union leaders said they will drop their request for the court to appoint a bankruptcy trustee if the consulting group is hired. Bridge will make recommendations after reviewing United's turnaround plan for 30 days. The New York Times/Associated Press (free registration) (10/23)
AirTran lowers fares, stimulates local traffic at D/FW
Fares have gone down at Dallas/Fort Worth Airport since AirTran Airways began service at the airport a year ago. While the discount airline hopes to turn the airport, where American Airlines operates a major hub, into its own "mini-hub," AirTran chief executive Joe Leonard said he doesn't expect his airline to add any new destinations from D/FW in the near future. Fort Worth Star-Telegram (Texas) (free registration) (10/24)
Frontier hires "scouts" to boost customer service
Frontier Airlines has hired retirees to help out part-time with customer service. These "scouts" are paid roughly minimum wage, but most say they are in it for the travel benefits. The airline believes hiring retirees and using its own employees for customer service positions helps create customer loyalty; some airlines subcontract these positions. The Denver Post (10/22)
Inside Aviation
High fuel prices, tough competition may force airline consolidation
Airlines are continuing to fly, despite severe financial challenges from the high cost of fuel and cut-throat competition, but industry observers say some carriers could be forced to liquidate. As a spokesman for the Air Transport Association put it, "Consolidation is coming, and consolidation is really a matter of letting the marketplace work." Daily Herald (Chicago) (10/24)
Regulatory Update
TSA gets authority to review all foreign pilot candidates
The TSA now has the authority to investigate all foreigners who want to enter flight school in the U.S. The authority was recently transferred to the TSA from the Department of Justice, and it now includes candidates who want to fly small planes as well as large commercial jets. Air Transport World (10/25)
Airports need government guidelines before hiring private screeners
Airports are still waiting for government guidelines that will allow them
to replace federal baggage and passenger screeners with a private work force. The TSA has not announced details of the guidelines, including how private contracts will be managed. The application period for screening contracts begins Nov. 19 and is set to last for three weeks. USA TODAY/Associated Press (10/25)
Industry Trends
Analysis: Winter brings challenges for big airlines
Major airlines have a tough few months ahead of them, Eric Torbenson writes in The Dallas Morning News. They can look forward to a period of high jet fuel prices, competitive fares from discount airlines, and employee groups who may resent taking large pay cuts. The Dallas Morning News (free registration) (10/23)
Facing tough competition at home, big U.S. carriers will grow abroad
Big airlines are redirecting their flights to overseas destinations in efforts to avoid weak prices and stiff competition from discounters at home. China is a popular choice for big airlines because its economy is growing at a rapid pace. USA TODAY (10/24)
Experts: Troubled airlines should listen to workers to ease resentment
Many workers at big airlines have taken steep pay cuts to help their companies avoid, or emerge from, bankruptcy. Employee management experts say the best ways to keep workers from becoming resentful are to listen to their concerns and to acknowledge their anger. The Philadelphia Inquirer (free registration) (10/24)