AIRLINE BIZ

From the mailbag or blog comments:

On an item about American Airlines furloughs:
Elbert: It is mindboggling to me that right over there on your front door steps is the darling, and a well deserved title, I must add, Southwest Airlines. But there is hardly ever anything positive written by your own local newspapers about their success! AA can hiccup and it makes news, even when their stock is nose diving!

It would be so nice to see some "balanced" reporting over there between the two airlines. AA problems lie squarely at the feet of their so-called management team, who give huge bonuses to their executives and at the same time lay off the workers - workers may not be the smartest people, but any idiot can see what is happening - and what has happened throughout the years at AA. Why doesn't AA just hire SWA management people to train them? I read your column regularly and appreciate the opportunity to comment.

Maxon: Uh... Could one of you other people respond with your frequent criticism that we have too much favorable coverage of Southwest Airlines?

On an item saying that airlines are expected to lose $5.2 billion in 2008:
Ian: How about this for an idea, Airlines charge fares that cover their costs!!!!

Maxon: Cover whose costs? Their competitors? Should Southwest Airlines charge fares sufficient to cover American Airlines' costs?

The problem we got here is that not all airlines have the same costs, and the lowest-cost providers usually set the prices.

American, for example, isn't charging the fares it is charging because it wants to lose money; it's charging fares based on what its competitors are charging and what its customers are willing to pay.

The U.S. industry is hoping that that cutting capacity this fall will allow them to keep fares up. That presumes that fares will go up more than traffic will decline. We'll see.

With JetBlue Airways traffic now in, we've got the numbers for the top 10 U.S. carriers. Here's the report card:

Traffic is down 1.5 percent compared to August 2007. The biggest drops came from Southwest Airlines, down 5.2 percent, and United Airlines, down 5.1 percent. AirTran Airways showed a 12.7 percent increase.

Capacity is down 0.2 percent, but half the carriers actually grew, led by AirTran's 8.8 percent expansion. But the largest carrier, American Airlines, shrank by 1.1 percent, and No. 2 United Airlines was down 3.1 percent.

Load factors, the percentage of seats filled, dropped by 1.1 percentage points to 84.0 percent. Despite growing the most, AirTran also grew its load factor the most, up 3 points to 87.3 percent. Only Northwest Airlines, with an 87.8 percent load factor, reported a higher percentage of seats filled.

We'll expect the September numbers, at least in capacity, to show noticeable shrinkage, with even bigger reductions in November.

Below, the charts.

The National Hurricane Center now has Hurricane Ike smack dab in the middle of South Florida by Wednesday.

It is predicting that Ike's center will be west of Fort Lauderdale at 2 a.m. EDT with winds of about 110 mph, down from over 130 mph 24 hours earlier.

"The official forecast could be conservative in the longer-range as [two models] show a more intense hurricane," the National Hurricane Center said in an 11 a.m. EDT update. "Regardless of exactly how strong it is...all signs are that Ike will be a dangerous hurricane for days to come."

It isn't hard to imagine a hurricane path that curves along the length of the Florida peninsula. However, Wednesday is a long way away, and hurricanes are fickle creatures.

"It cannot be repeated enough that four- and five-day track forecasts can have significant errors...and combined with the fact that the model spread is still notable beyond 72 hours...one should not focus on the exact track," the NHC cautions.

Of course, airlines and travelers first have to get Tropical Storm Hanna out of the way. Hanna will be raking the East Coast with high winds and rain all weekend.

Continental Airlines has joined some other major carriers and will begin charging coach customers $15 for the first checked bag.

In doing so, Continental joins American Airlines, which implemented the fee in June, and several other carriers who have since added it.

The fee applies for tickets booked beginning Friday for travel on or after Oct. 7. Like the others, Continental won't charge the fee to some people, such as elite members of its frequent-flier program, people traveling on non-discounted coach tickets, members of the military or their families traveling on official orders.

Continental also said it was reducing the bonus miles earned by elite OnePass members on trips, and is doing away with the 500-mile minimum award on trips. In other words, a 250-mile trip will get you 250 miles, not 500 as now.

On Thursday, discount carrier Sun Country Airlines announced a $12 first-bag fee for travel booked Friday and afterward for trips Oct. 1 and afterward. First-class customers won't have to pay the fee.

Below, the full announcement from Continental with all the happy details.

This and that from the airline industry:

* Midwest Airlines this week worked a deal to have Republic Airlines fly 12 Embraer jets on its behalf and secured more funding

The upshot, however, is more layoffs at the airline -- 270.

The $40 million in additional funding, plus another $20 million in reserve, might keep the airline out of bankruptcy, the Milwaukee Journal-Sentinel reported.

"For the foreseeable future, we are out of the shadows of Chapter 11," it quoted airline spokesman Michael Brophy as saying.

However, its pilots union criticized management for the Republic transaction. "Today marks a dark day in the history of Milwaukee, Wisconsin, as management has essentially sounded the death knell for Midwest Airlines and the reputation the employees have built for providing the 'best care in the air,'" Air Line Pilots Association unit chairman Jay Schnedorf said.

* Alaska Airlines may furlough as many as 165 of its 1,500 pilots as it reduces its schedule this year. The airline called that many furloughs a worst-case scenario.

* The Wall Street Journal reports that accident investigators think a Spanair flight crashed because its wing flaps weren't extended for takeoff, giving it insufficient lift, and that "a suspected electrical malfunction kept them from getting a cockpit warning about the danger."

* United Airlines has decided not to charge for meals in coach on international flights out of Washington Dulles.

* Spirit Airlines pilots are suing the airline, saying Spirit was violating ALPA's 2003 contract. Spirit management says it isn't violating the contract and is doing what it needs to do to cope with difficult times.

Sir Richard Branson has an op-ed piece in the Daily Telegraph on Friday attacking the American Airlines-British Airways-Iberia alliance. His airline, Virgin Atlantic Airways, competes with them, particularly at London's Heathrow Airport, so he doesn't like anything that would make them stronger.

Sir Richard acknowledges that other airlines have gotten antitrust immunity with their partners on international routes. However, he says the BA/AA alliance "is different and ought to be stopped."

Heathrow Airport, which accounts for nearly a quarter of all passengers travelling between Europe and the US, is totally unique. It is full, unlike Paris Charles de Gaulle and Frankfurt. Heathrow's owner, BAA, has confirmed many times the reality of what airlines face - the impossibility of getting slots there.

The rare slot that does emerge is usually at a time of day that does not work for transatlantic carriers or is snapped up for huge sums of money, as US carriers have discovered to their cost. This situation makes it physically and financially impossible for any carrier to offer any meaningful level of competitive service, let alone attempt to replicate the network that BA/AA would have.

For the full piece, read here.

On Wednesday, American and British Airways responded to a filing by Virgin Atlantic with their own justification of the alliance and different numbers than Virgin Atlantic is using. Click here to see the Department of Transportation documents that have been filed.

1. The scariest words from a teenager on Sunday night: "Oh, yeah." As in, "Oh, yeah, I've got a research project due tomorrow." Or "Oh, yeah, I have to have a diorama of Jamestown finished by Tuesday." You never hear "Oh, yeah" at 7 p.m. on a Friday.

2. Sometimes, when I want to be alone, I go to a weeknight Texas Rangers game in September.

3. We're coming up on the second anniversary of the pilot union contract talks at American Airlines and Southwest Airlines this month. I wonder if there'll be a party?

Virgin Atlantic Airways Ltd has come out vigorously against the American-British Airways alliance, and other carriers have said it shouldn't be approved unless American and British Airways surrender valuable landing and take-off slots at London's Heathrow Airport.

In a filing Wednesday with the Department of Transportation, American and BA disputed Virgin Atlantic's contention that the two carriers control too much of the U.S.-Heathrow service.

They said Virgin Atlantic alleges the two control 66 percent of the U.S.-Heathrow traffic and 74 percent of the New York Kennedy-Heathrow traffic.

However, they said have less than that - 43.6 percent of U.S.-Heathrow bookings, 44.8 percent of New York-London bookings, 48.2 percent of New York-Heathrow bookings and 52.3 percent of New York Kennedy-Heathrow bookings.

Those numbers are lower than on routes flown by competitors who have been given antitrust immunity for their international alliances, the two said.

British Airways and American noted that on the six routes where they're the only non-stop carriers, they are most dominant on the Dallas/Fort Worth-London route with 79.3 percent of the daily traffic between the two communities. But that's also the smallest of the six routes, and, the airlines point out, more than one in five passengers are already using other airlines.

We await the formal filings of Virgin Atlantic with great anticipation.

It looks like AirTran Airways wins the race from New Orleans, while ExpressJet wins the race to New Orleans.

According to Flightstats.com, an AirTran flight to Atlanta was the first post-Gustav flight to depart Louis Armstrong New Orleans International Airport, leaving around 6:30 a.m. Thursday.

ExpressJet had the first arrival at the airport, with a 7:14 a.m. arrival from Houston.

ExpressJet had the second departure behind AirTran, with a flight to Houston around 8:30 a.m. United Airlines had a flight to Denver depart shortly afterward, followed just before 9 a.m. by a Delta Air Lines flight to Atlanta.

Southwest Airlines had a mid-morning departure to Nashville, even though it canceled all other pre-noon flights. American Airlines' first flights left around midday for Chicago and Dallas/Fort Worth.

US Airways had a 10:45 a.m. departure to Charlotte to kick off its flights, and JetBlue Airways had a 10 a.m. departure to New York.

From noon onwards, it appears that most flights are operating to and from New Orleans.

Now, we can start worrying about airports in the path of Hurricane Hanna.

The pilots at American Airlines are using their well-placed billboard on State Highway 183 to remember the people who died in the Sept. 11, 2001, terrorist hijackings and crashes.

The Allied Pilots Association billboard is on the south side of 183 near the entrance to D/FW Airport. Says the union:

APA is committed to never forgetting the September 11, 2001 terrorist attacks. In honor of everyone lost that day--including crewmembers, passengers, first responders and thousands of other innocent people--the union designed a special message for display on a billboard near its Fort Worth, Texas headquarters and also on a billboard near Chicago's O'Hare International Airport.

Along with the phrase "We will never forget," the billboard features a color photograph of a group of American Airlines pilots with their heads bowed. The photo was taken during a flag-lowering ceremony APA conducted outside its Fort Worth offices on September 11, 2007 at the precise time American Airlines Flight 11 struck the World Trade Center. A large contingent of pilots participated in the ceremony.

Louis Armstrong New Orleans International Airport said Wednesday morning that the airport was open and that it expects outbound flights to resume Thursday.

The airport, which on a typical day has about 125 departures, has been closed down since Sunday evening in advance of the arrival of Hurricane Gustav.

UPDATE: AirTran Airways says it will resume New Orleans flights with an Atlanta flight that arrives in New Orleans at 8:53 pm Wednesday. "The airline will resume full operations to/from New Orleans on Thursday, September 4," AirTran said Wednesday.

As of late Wednesday morning, American Airlines appears to have cancelled its Thursday morning departures from New Orleans, but flights from noon onwards still seem to be on the schedule.

Southwest said Tuesday it expected to resume New Orleans operations at midday Thursday. The web sites for Continental Airlines and Delta Air Lines show they plans to resume New Orleans flights with departures between 8 a.m. and 9 a.m. Thursday.

US Airways and Northwest Airlines appear to be starting back up in mid to late morning Thursday. United Airlines seems to be picking up its New Orleans scheduled at mid-day Thursday.

However, check with your airline. The online information only is a snapshot valid only at the time I look at it.

The International Air Transport Association has revised its projections for airline earnings, and it's down, down, down.

The latest estimate is that airlines will lose $5.2 billion for the year, with $5 billion losses in North America, smaller but growing losses in Latin America and Africa and shrinking profits in other regions.

One consistent element in Wednesday's projections is that every region will do worse than IATA predicted three months ago.

Here's the progression of gloom, with IATA's predictions on 2008 net income:

Tuesday evening, Southwest Airlines said it won't be flying to New Orleans on Wednesday and didn't really know if it'll be going Thursday.

The airline said "the soonest the airline could resume operations will be Noon Central Time on Thursday, Sept. 4. Plans to resume service to and from New Orleans will depend upon the status of airport security personnel, facilities, and services."

American Airlines appears to have cancelled all its New Orleans flights for Wednesday.

Louis Armstrong New Orleans International Airport said power has been restored to the airport, but not the parking garages. "We anticipate passenger traffic to resume by Thursday. YOU MUST CHECK WITH YOUR AIRLINE FOR THE LATEST FLIGHT INFORMATION."

As of Sept. 9, Southwest Airlines will require your credit card, debit card or your frequent-flier coupons if you want to buy beer, wine, energy drinks or cocktails on board the airplane.

Says Scott Halfmann, Southwest's vice president of provisioning:

For years, customers have been asking Southwest to accept credit cards onboard for payment, and now we can give our customers one more feature they want. No more remembering to hit the cash machine before boarding your flight.

In doing so, Southwest joins a growing list of carriers that have introduced technology to accept credit cards, including some like Southwest that don't want to mess with dollar bills any more.

According to Bestfares.com guy Tom Parsons, only Southwest, Northwest Airlines and United Airlines were cash-only in late July, and now Southwest is switching to plastic.

One hopes this reduces the hassle for flight attendants, who can get into big trouble if the sales and receipts don't add up at the end of the day.

Okay, Gary Chase of Lehman Brothers isn't that euphoric. But in a note out Tuesday, Mr. Chase argues that the airline industry is on an upswing that has been largely ignored during the dog days of August:

Liquidity is better than anyone expected it to be, capacity reductions are greater than most believed, and the change in the energy markets over the last several weeks has been transformational from an airline perspective.

Financial risk has declined considerably and we now have visibility into profits for 2010 or sooner as well as multiple years of restrained capacity. It's hard to ask for much more than that as an airline analyst.

The combination of factors means that "the risk of financial distress is off the table at least until the end of 2009," he suggests.

Furthermore, "we now think the industry can be cash flow breakeven during 2009 despite our continued expectations for a recession and a correspondingly negative revenue outcome."

His top choices for stocks are UAL and Delta Air Lines, but the improved environment is helping the industry in general, he says.

Hurricane Gustav is now out of the way, but flights to and from New Orleans won't get back to normal until Wednesday, apparently.

Says Louis Armstrong New Orleans International Airport on its Web site:

The airport remains closed to all passenger traffic. We are still operating on generator power and hope to have commercial power back some time today.

We anticipate passenger traffic to resume some time tomorrow [Wednesday]. YOU MUST CHECK WITH YOUR AIRLINE FOR THE LATEST FLIGHT INFORMATION.

Many parishes remain under a curfew with limited utilities. Passengers arriving at MSY will still have to abide by their local parish curfews and re-entry policies.

The parking garages at the airport are still without power. Passengers may retrieve their vehicles once the curfew restrictions in Jefferson Parish have been removed.

American Airlines has canceled all its New Orleans departures to Dallas/Fort Worth, St. Louis and Chicago for Tuesday. American Airlines spokesman Tim Wagner says via email that AA probably won't be back in New Orleans until Wednesday afternoon.

"American Eagle has resumed or will resume service today into most of its Louisiana, Texas, Alabama, Mississippi and Florida cities in the aftermath of Hurricane Gustav," he says. "Baton Rouge and Alexandria are having some power and phone issues so their afternoon schedules may be delayed."

Southwest says on its Web site that it has "temporarily suspended our scheduled service to/from MSY (New Orleans). The resumption of our operations is contingent upon the availability of airport facilities and services."

Continental says that Lafayette, Baton Rouge, Lake Charles, New Orleans, and Monroe, La., "may experience flight delays and/or cancellations due to airport conditions." Its Web site showed all New Orleans-Houston flights canceled on Tuesday, as well as the first two on Wednesday.

AirTran says it won't resume New Orleans flights until Wednesday, but would operate all flights to and from Gulfport/Biloxi on Tuesday.

Delta's Web site shows all New Orleans-Atlanta flights canceled Tuesday, plus the first two on Wednesday.

Northwest has canceled its New Orleans fli