AIRLINE BIZ

There's a story out about a New York City lawyer who is suing Delta Air Lines for $5 million because he was stranded in Paris for four days last October.

Setting aside the question about where one would prefer to be stranded, the plaintiff says Delta's "incompetence and indifference" left him stuck in Paris during an airport workers' strike, according to the Associated Press.

The attorney, Thomas Mullaney, wound up buying tickets home on American Airlines. The class-action attorney is seeking class-action status for his lawsuit, filed in Manhattan Supreme Court, according to the New York Daily News:

"I just wanted to be reimbursed for the ticket - and they wouldn't do it," Mullaney said. "I should not have to accept just having this money stolen."

He said Delta promised to reimburse him $2,500 for the canceled portion of his round-trip ticket.

Delta has declined to comment on the litigation, according to AP and the Daily News.

This raises the questions about delays and getting stranded and whether we can get compensated for it. I doubt it. But it's an interesting question.

Some thoughts on Southwest Airlines earnings on Thursday:

Fuel can be your friend: Southwest's fuel hedging activities kept it in the black. Southwest picked up $511 million from favorable cash settlements from fuel contracts. One analyst last week suggested that if you want to invest in energy, Southwest could be your energy play, with fuel hedges valued at around $5 billion to the good.

Fuel can be your enemy: Southwest chairman and CEO Gary Kelly restates the obvious, that rising fuel costs hurt Southwest and that pain increases as the carrier's average price for gallon rises despite the fuel hedges.

Revenues are going up: Like other airlines, Southwest is seeing its revenues increase sharply as it raises fares and finds other ways to get money. The question is whether it can keep doing so enough to cancel out its rising fuel costs.

Alaska Airlines announced changes to its Mileage Plan frequent-flier program. As you might guess, most of the changes do not fall to the benefit of members.

Alaska is raising the cheapest general award, the coach round trip, from 20,000 miles to 25,000 miles. Okay, most airlines have been there a long time.

It also is raising the number of miles to redeem "saver" and "peak" awards for coach and first class travel, except for trips entirely within one state. The 15,000-mile award for intrastate travel, currently offered for trips entirely inside Alaska, will also be offered for intrastate travel entirely within California, Idaho, Montana, Oregon or Washington.

In changing the program, the airline has created a new middle level of award, which costs more than the cheapest award but has a lot more seats available.

If you want to redeem a trip on a partner airline, Alaska will now charge you $25.

There are other changes. For full details, check out Alaska's website.

The Association of Professional Flight Attendants says that 368 flight attendants took advantage of the "voluntary bridge to retirement," meaning they'll take a severance payment and some health and travel benefits to leave their jobs early.

Not surprising, the biggest number of people taking American Airlines up on the offer were from the biggest base, Dallas/Fort Worth. Of the 368 who accepted by the VBR, 93 came from the D/FW base.

The union and airline don't have numbers yet on how many attendants applied for voluntary leaves of absence or partnership flying, where they share a job with another attendant.

All that is important because the VBRs, leaves and partnership flying will reduce the number of attendants who get furloughed.

In another issue, the APFA says that a federal judge in two cases has ruled in its favor and against flight attendants who had challenged the 2003 vote to accept big contract concessions.

Northwest Airlines reported Wednesday morning that it lost $377 million in the second quarter, compared to net income of $2.15 billion in second quarter 2007.

But as in the case for most airlines that have reported so far, those earnings numbers don't tell the story.

Northwest had a special charge of $547 million related to writing down the value of goodwill on its books, on top of the $3.93 billion charge it took in the first quarter. It also had a $250 million gain from the increased value of its fuel hedges in the second quarter.

In second quarter 2007 as it came out of bankruptcy protection, Northwest recorded a $1.94 billion gain that distorted its earnings numbers.

Throw out this year's funny stuff, and Northwest reported net income of $170 million. Analysts had been expecting the carrier to lose more than $140 million excluding the special items. A year earlier, it earned $273 million without the accounting gains from its reorganization.

In the second quarter, there's been a lot of goodwill taken off the books by Delta Air Lines, Northwest, UAL and US Airways Group that distort the results. Here's the running tally for seven of the top 10 carriers, with Alaska Air, Southwest Airlines and AirTran Holdings still to report:

Net income Q2 2008: -$6.18 billion
Net income Q2 2007: +$4.84 billion
Change: -$11.02 bilion

Net income Q2 2008 without special items: -$261 million
Net income Q2 2007 without special items: +$1.59 billion
Change: -$1.85 billion

Wall Street has been beating up on airline stocks this year, and I've been reporting it.

But when airline stocks got so low earlier this month, it would have been very tempting to make a bet that share prices would go up.

To make such a foolhardy conclusion, one had to presume that oil prices would fall and that airlines would not go bankrupt. So to invest in airline stocks today, one must have faith, guts or a blind eye.

But stocks have skyrocketed in the past week, meaning that a bettor last week would be well rewarded this week.

Here's what you could have made in one week by investing $100,000 in each of the 10 largest airlines at the closing price Tuesday, July 15. (You say you don't have $1 million to invest? Well, I can't do everything for you.)

I don't think either US Airways or AMR should be pleased -- it probably indicates investor concern about the airlines' futures before the recent drop in oil prices.

Geesh, can't anyone bad-mouth an airport around here?

Texas Tech football coach Mike Leach just says he finds Dallas/Fort Worth International Airport a "confusing mess," and the D/FW people are sending out open letters within hours.

Read about it on the Dallas Morning News' SportsDay College Football blog.

Explaining to sports writers why he didn't bring quarterback Graham Harrell [Update note: Prize to Brandon for noticing the reversed names of Graham Harrell first] or received Michael Crabtree with him to be interviewed during the Big 12 football media days, Mr. Leach said:

Anybody who wants to talk to Graham or Michael Crabtree ... you can do it in their natural habitat in Lubbock, Texas. I recommend Love Field because D/FW [Airport] can be a confusing mess. Love Field, about every hour, goes to Lubbock, Texas, where we have some great steak places. And we'd love to see you.

(Nobody offers me tours and steaks when I criticize them, I should add. At least, not steaks.)

Virgin America, which next month celebrates its first year of operations, is offering customers some good Karma.

Or at least bubbly Karma.

The Burlingame, Calif.,-based carrier will offer KARMA California Brut --a single-serve sparkling wine packaged in a glass bottle that sort of ressembles a champagne flute -- on its more than 80 daily flights.

I guess its a way to look cultured while drinking your bubbly from the bottle?

It's available now and costs $10 to tipple.

UAL, US Airways and JetBlue Airways on Tuesday reported a combined net loss of $3.3 billion for the second quarter of 2008.

But if you exclude the special one-time items like the writing down of goodwill, the three combined lost only $259 million.

That $259 million is significantly worse than the $556 million in net income the three reported for second quarter 2007. But it's a far sight better than losing $3.3 billion.

Here's the running tab so far with six of the 10 largest carriers reported (in millions of dollars):

Jay Leno, on the Tonight Show on Monday night:

Well, here's a scary story you probably heard about. What's more frightening than something in a plane? An American Airlines flight from Boston to Los Angeles was forced to make an emergency landing in Oklahoma City when a passenger suddenly stripped off his clothes and ran up and down the aisle. The guy claims that was the only way he could get the attention of the male flight attendant. But I don't know -- I don't think that's it.

I mean, think about this. A guy takes off his clothes and runs up and down the aisle. Maybe it's me, but doesn't it seem like the in-flight entertainment is just getting worse and worse and worse? Show a movie, come on.

Why Oklahoma City? Is that punishment? "You're naked: You're going to Oklahoma City. Put them down on the ground, buddy. You take your clothes off, we'll make you go to Oklahoma City."

Here's the scary part -- not only was the guy running up and down the aisle naked, he tried to open the exit door, tried to open the door. At least he didn't try to squeeze back into his seat. ...

Anyway, the man was eventually subdued by a professional soccer team that just happened to be on the flight. A soccer team was on the flight, and they subdued the guy. In fact, that's why there weren't any witnesses. As soon as people realized it was a soccer team -- ah, they stoppped watching. ...

Anyway, the airline issued a statement today saying the man had a lot of emotional baggage. That's what they said. The man had a lot of emotional baggage, which of course American Airlines then charged him an additional $15 for.

The Business Travel Coalition, along with former American Airlines Chairm and and CEO Bob Crandall are asking travel industry members to sign a letter to President George W. Bush calling for a special session of Congress "for the sole purpose of debating our energy alternatives and enacting a coherent national energy policy."

In a letter to travel industry members, the coalition writes that "the extraordinary increase in the dollar price of fuel has much to do with the government's failure to articulate and implement either a national energy policy or a national transportation policy. While many factors have had an impact, the failure of our national leaders to do realistic energy and transportation planning is by any measure the primary problem."

The BTC is asking folks to sign the letter by Monday, July 28.

You can read the letter below.

Some interesting or weird news from the airline industry in recent days:

He got dressed again and returned to his seat, but then headed for an emergency exit door, where passengers helped stop him before he could do any mischief.

"He was just having some troubles, confused, not a scary guy," a passenger said in the Associated Press story.

Among those helping subdue the guy were members of the New England Revolution team in the Major Soccer League. According to AP:

Craig Tornberg, the soccer team's general manager, said he confronted the man as soon as he saw him emerge naked from one of the plane's restrooms.

"I said he should get back into the bathroom and put on his clothes," Tornberg said after the plane landed in Los Angeles. "He said something strange to me. He said, 'I don't hear you. I don't see you.'"

Bloomberg says that One-Two-Go "will ground its planes between July 22 and Sept. 15, the company said in an e-mailed statement yesterday. One-Two-Go will 'reorganize' its operation and staff before resuming flights, it said."

A Northwest Airlines jet landed at Dayton's airport Sunday after an engine shut down. The emergency landing disrupted an ongoing air show.

Here's the Associated Press story.

According to the Dayton Daily News, the air show announcer told the crowd after the airplane landed: ""All right, a piece of cake. Everything is stable."

AMR has said it will eliminate about 8 percent of its jobs this year. With 85,700 employees as of June 30, an 8 percent reduction would take AMR's payroll below 80,000 jobs for the first time since 1988.

But in what year did AMR have its most employees?

Answer below.

Some of your comments deserve a response and discussion. So let's take a look at some of them.

Please get your facts in order before publishing this information! The $15 fee for the first checked bag was NOT first adopted by American Airlines! Spirit Airlines and Allegiant Air were the first airlines to implement these fees. And if you were referring strictly to "legacy carriers" then make that clear! I am tired of listening [to] the incessant slams of American Airlines at every turn these days!

jetfuel1, on an item about Delta saying it isn't adopted a $15 first-bag fee like American Airlines

MAXON: Without doing the historical research, I've got a hunch that Allegiant and Spirit weren't the first to adopt first-bag fees. I'm guessing that Ryanair and other European discounters are way ahead of us on that. The question is how many qualifiers we need to make.

Spirit's first-bag fee isn't $15 -- it's $10 in advance, $20 at the airport.

Interesting point, to consider little Spirit Airlines and Allegiant Air as the trendsetters, not the world's biggest airline.

If I had written that American Airlines was the first legacy carrier to charge $15 for the first checked bag, would that qualification have prevented the item from being one of the incessant slams?

someone please explain to me why a company can lose 1 billion dollars over a 3 month period and the stock goes up?...SWA reports next week, and hopefully, it will again report another quarter of profit..may not be what analysts want, but a profit is good, right?...i think an airline that loses money should be on the way out...take UAL with you too..and an airline that makes money, however small should be on the way up, especially in stock price....

Davey (on the 32 percent rise in the price of AMR stock on the day it reported a $1.45 billion net loss, $284 million excluding special charges)

I'd put my money on No. 4 more than anything else. The other big carriers saw big jumps in stock value the same day.

Hey, was that another incessant slam at American?

A strike would be the worst thing the pilots could do to themselves. It would shut the airline down - permanently in the current environment - and they would all lose their jobs and precious seniority. I have to think it's a bluff. If not, the responsibility for all of AMR's lost jobs will rest squarely on Captain Hill.

John S

MAXON: I have no particular insight into the Allied Pilots Association. But unions always have strike preparedness committees. Don't interpret planning and exchanging ideas as meaning they plan to go out on strike next week.

The APA at some point would like to force the issue. But the legal requirements of the Railway Labor Act mean it's still a long time before the union would even have the options. And I'm sure they'd consider the ramifications carefully, just as you have.

Terry, I say it again..lose the picture of Kelleher smoking. It is disgraceful and non-productive. I can just see the parent-employees of Southwest singing his praises to their children and proudly showing them this photo. Smoking kills thousands of people every year. Please do not glorify it.

AAer

MAXON: This one gives me pause because I'm a non-smoker and don't like to be around cigarettes. However, Herb Kelleher is always smoking. It is part of his persona.

I cannot pretend that he doesn't usually have a cigarette in his hand. I don't know that we should try to toss out the ones that show him smoking. But I'll pass on your request to the people who actually choose what photos go on dallasnews.com.

This isn't like one of those celebrity shots where a paparazzi caught someone guiltily sneaking a smoke. Mr. Kelleher doesn't sneak smokes; he glories in them.

Two stories about Herb and smoking:

1. He was speaking to an SMU air law symposium in the early 1990s. The person who introduced him made a fervent public plea: Herb, please give up smoking for your own good. We want you around for a long time.

When Herb reached the podium, he started out his speech by saying, "I hope you don't mind if I smoke. Because if I can't smoke, I'm not speaking."

2. At one annual meeting, Herb was flicking his Bic frequently to light the next cigarette. Finally, I noticed that he was flicking, but the Bic wasn't lighting. I looked at my watch to see how long it would take him to adjourn the shareholders' meeting. It took 52 seconds.

Herb defends his smoking by saying he has floppy arteries and needs the cigarettes to tighten them up.

But other readers, what do you think? Should we clean up Herb, take the cigarette out of his mouth on dallasnews.com?

Great. We finally get done with fawning all over Herb and now we seem to be going through the same thing with Colleen.

Scott (on an item about Colleen Barrett's stepping down as Southwest Airlines president)

MAXON: Sorry, I'm sure we still have some more fawning to do over Herb.

A Salt Lake City-based marketing company plans to rollout ads on the bag carousels throughout Dallas/Fort Worth International Airport next month.

Double Take Marketing has been testing the ads, which are installed on the bag conveyers and rotate around the carousel with the dozens of black bags, since the beginning of the year in Terminal E.

The company plans to roll them out to 28 of the airport's 30 bag carousels starting in August.

You can see a video of what it looks like in action here.