This Week in Airlines
by Holly Hegeman (TMF Wings)

Dallas, TX (June 15, 1997) -- Foolish readers, have you noticed? It's summer out there. Not only that, but as one of my regular readers pointed out to me this past week, it may just be time to take the Ratty Old Bear Suit out from the plastic cleaning bag and put that sucker on -- heat or no heat. Now, I can see you shaking your Foolish heads saying, "Wings, what in the world are you talking about? The market was up EVERY day last week and it hit a new record high at the end of the week, so why in the WORLD would you be putting on that old oppressive Ratty Old Bear Suit?"

Hey, dear readers, remember, this is the AIRLINE sector we are talking about. Not the market as a whole, and not the Dow Jones Industrial Average. And in case you folks did not notice, some of the things we had been warning about the past few weeks finally converged this week, and PRESTO! As a result we saw very few carriers post a gain, and most drop significant amounts. In fact, had it not been for a mini-rally in the airline stocks at the end of the week, the carnage would have been much worse.

BUT if the DOW is setting records, what's wrong with the airlines?

First, let us remember the overall institutional buying and selling cycle that we have with this sector. As a rule of thumb, institutional investors buy this sector in December and sell in late May-early June. This cycle can be clearly seen if you track airline stock returns for the last 20 years. There is also a smaller buy and sell cycle in the fall, but it is not as general an upturn as the spring cycle. The fall cycle tends to be a bit more selective in nature.

So, this, dear readers, is why you had so many airline insiders exercising stock options in April and May. No one in their right mind would wait until the summer to exercise an option in this sector. Just does not make sense.

In addition, there were several tangible things on the horizon that we had spotted and discussed. One, suddenly all the carriers began to get more aggressive with sales the end of May. This would tell us what? Tells us that demand is not as great as had been expected. And what does that tell us? That yields are going to be lower than expected. Yields are lower than expected -- what is next? Earnings will be lower than expected. Guess what that means? Yep, you are getting so good. Analysts lower earnings estimates and the stocks are then affected negatively.

Many of the airlines were in contact with analysts late the week before and early this last week in an effort to get them to lower their second quarter estimates. DELTA AIR LINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %>, for one, just came out and said point blank that their yields were not going to be as high as had been expected for this quarter. While other carriers were not as open about the situation, it was clear that Delta was not the only one seeing a softening of demand.

In addition, as we had also discussed, this quarter the airlines are going to be hard pressed to beat year-over-year figures from last year's second quarter. Why? Last year they did not have to turn over 10% of all passenger revenue and 6.5% of cargo revenue to the federal government. The ticket tax was not in effect last year during the second quarter. Now, the airlines have raised fares in the meantime, but, guess what? Apparently, that is not going to make up the difference, as we are beginning to see by the aggressive sales of late.

It appears that the high-end of the fare cycle may have reached its peak. Passengers may have just finally said,"Enough."

So, take all these lovely factors and put them together and what do we have?

You got it. Stocks took a hit this week.

Friday Market Activity

Now, having said all that, there was one bright spot to the week. On Friday, analysts seemed to think the 0.3% dip in the May producer-price index bolstered the belief the Federal Reserve will not raise interest rates at its July meeting.

As a result, transportation issues posted strong gains. The Dow Jones Industrial Average jumped 70.57 to close at 7782.04, giving the index a gain of 346.26 points for the week, the biggest weekly point advance ever for the Dow. Over the six-session run to new highs, the Dow has soared 476.75 points, or 6.5%. Whew.

As a result, the Dow Jones Transportation Average leaped 50.73, or 1.9%, to 2741.67, eclipsing the closing high of a week earlier. UNITED AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> climbed $2 3/8, AMERICAN AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> rose $2 1/8, and Delta gained $1 7/8.

So, we will just have to wait and see what sentiment wins out going forward. Will investors continue to think that airlines can increase earnings, given all we have discussed above? Or will the Street finally decide that perhaps our winged ones are facing a more difficult time going forward?

What is our favorite saying? Never a dull momento.

Two Double-Digit Gainers on the Week

We did have two strong double-digit exceptions to our overall dismal returns this week as substantial gains were posted by ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %> and FRONTIER AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRNT)") else Response.Write("(Nasdaq: FRNT)") end if %>. Atlas Air announced, as we said in last week's update, an agreement to purchase 10 Boeing 747-400 freighters, with an option to purchase 10 more. The Street liked this news and apparently sees this as a positive for the company going forward. Scott & Stringfellow analyst Alex Brand summed it up when he said, "For me, this deal clears up a lot of business risk concerns. The long-term impact of this deal is just overwhelmingly positive and offsets any near-term risk."

As we reported last week, Brand upgraded Atlas Air to "strong buy" from "neutral" after the announcement.

We had mixed feelings on this one -- thought the Street might not like the added expense of the metal -- without firm clients for the big birds. But the track record of Atlas getting customers is strong, and the Street apparently sees this in only a positive sense -- that it will allow the carrier to grow, with a much reduced level of operating expense --the heck with the added expense for the planes.

Atlas ended the week up 22% to close at $35. (And see, did we not tell you that drop to $24 or so was an overreaction in January?) Tsk..tsk..that will teach you not to listen to us!)

Frontier moved up for two reasons. One, their May traffic figures were very respectable (see more on these below) and two, according to more than one source, the merger discussions with WESTERN PACIFIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WPAC)") else Response.Write("(Nasdaq: WPAC)") end if %> seem to be close to a firm agreement. Oddly enough, Western Pacific's stock has not gone up at all while all this merger talk has been going on. This may be because there could be a dilutive effect on Western Pacific stock if the carrier authorizes the shares necessary to do the stock swap that is being proposed. Then again, it could be an effect of the fact that Western Pacific may have trouble getting two of its new 737's to Denver on time for the new timetable that is supposed to take effect June 29. This date was specifically chosen to match up with the delivery of these jets in June. But there seems to be a potential delay, and this may cause Western Pacific to juggle schedules as a result.

Frontier gained 15% on the week to close at $3 3/4, while Western Pacific closed down 8% to end the week at $5 7/8.

Governmental News

A great deal of the important news this week, as concerns the financial health of the Motley Flock, was centered around various governmental goings-on -- more so than the usual cut-throat competition on routes, fares, or airline management follies.

Ticket-Tax Change Up in the Air

A proposed change to the current flat-rate 10% ticket tax was announced this week, as part of the revised budget proposal.

However, concerns were voiced by leaders of both parties about Congressman Bill Archer's (R-Texas) proposed airline-ticket tax changes.

A straight renewal of the 10% ticket tax, which expires Oct. 1, would have raised about $29 billion over five years. Mr. Archer proposed to lower the ticket tax to 7.5%, and impose separate fees on "flight segments" flown by passengers and boost the departure fee on international flights. The plan, which would boost the revenue raised to about $34 billion, has sparked heated opposition from major carriers such as Delta Airlines and regional carriers such as Southwest Airlines.

"The airlines are crawling everywhere," said a senior House tax aide, who predicted a major fight on the issue within the Ways and Means Committee.

Additionally, Mr. Archer has airlines and major credit-card issuers in a tizzy over a proposed 7.5% tax on the payments issuers make to airlines as part of frequent-flier and other reward programs. The airlines and credit-card companies, which have found such rewards programs lucrative, say they will be forced to pass along the levy to customers.

In an advertisement that appeared in newspapers Wednesday, several big airlines warn consumers to "prepare for rip-off." Meanwhile, Kelly Presta, a spokesman for Visa U.S.A., called the tax "a particularly bad idea" because, he said, it would effectively tax consumers twice: once for the credit-card purchases required to win the free-tickets, and again on the tickets themselves. Mr. Presta said the tax could destroy the increasingly popular affinity programs between credit-card issuers and airlines.

"Frankly, it is an unreasonable financial burden for these programs, and it's unclear whether something which is amazingly popular will be able to continue," he said.

Stay tuned. Yes, this change could affect the bottom line of carriers.

FAA Mandates Fire Prevention Measures

As if the proposed change in the ticket tax was not enough, airlines got hit this week with a mandate requiring inaccessible airline cargo compartments to have fire detectors and extinguishers by 2001.

About 3,000 U.S.-based airliners are expected to be affected by the new requirement at a total cost of $296 million, the FAA said.

The formal notice of proposed rule went on display Tuesday in the Federal Register, launching a legal process expected to produce a final rule by year's end.

While most airline cargo compartments already have detectors and fire extinguishers, they aren't required in sealed compartments because it was believed that lack of oxygen would extinguish any fires that might break out.

Though a final ruling hasn't been made in the ValuJet crash case, investigators believe a cargo of oxygen generators fed the fire in that plane, leading to the deadly crash. This crash has led to the increased scrutiny of the safety of such sealed cargo compartments.

American Airlines/ British Airways Future Plans

British Airways CEO Robert Ayling is not happy.

This week the BRITISH AIRWAYS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAB)") else Response.Write("(NYSE: BAB)") end if %> CEO publicly stated that if the proposed alliance between the two carriers is not approved by this September that the airline will probably drop efforts to see the proposed alliance to fruition. AMERICAN AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> Chairman and CEO Robert Crandall had already said publicly that both parties would probably proceed with an alliance of a more limited sort with BA if final approval for the anti-trust exemption was not granted.

Alaska Air Upgraded by S&P

Standard & Poor's has revised its outlook on ALASKA AIR GROUP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %> and subsidiary Alaska Airlines Inc. to "positive" from "stable."

Alaska Air Group's single-'B'-plus corporate credit rating and single-'B'-minus senior unsecured and subordinated debt ratings have been affirmed.

Also, Standard & Poor's has affirmed its single-'B'-plus corporate credit rating on Alaska Airlines and its double-'B' rating on the company's equipment trust certificates.

About $200 million of rated debt is affected.

The outlook revision reflects Alaska Air Group's stabilized competitive position and improving financial profile. The company is the holding company for Alaska Airlines and Horizon Air Industries Inc. Alaska Airlines is the nation's 10th largest airline.

Increased competition from low-cost, low-fare SOUTHWEST AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUV)") else Response.Write("(NYSE: LUV)") end if %> and UNITED AIR LINES's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> Shuttle into Alaska's West Coast markets forced Alaska Airlines to reduce its cost structure in order to survive. It succeeded, aided by labor cost concessions and one of the youngest fleets in the industry. At

the same time, capacity growth has abated in those markets and fares have stabilized. Alaska Airlines is now a strong competitor in those markets.

Alaska Air Group has improved its financial profile, despite a heavy operating lease burden, with lease-adjusted pretax interest coverage having improved to 1.58 times (x) in 1996 from 1.28x in 1995; earnings before interest, taxes, depreciation, and amortization coverage, to 3.58x from 3x in 1995; funds from operations to debt, to 19.2% from 16.1%; and debt to capital having declined to 83.7% from 88.4%.

Alaska Air closed down 5% this week to close at $24 1/4. The carrier was a Foolish Fave last year, and the carrier has posted a 15% YTD return for the year.

American Slated to Go With EMB-145's--as well as 777's.

Ah, to be at the Paris Airshow this week. (Sigh) Well, there are a number of reasons why we would love to be there--but one of them is that this is where an announcement is expected in regard to American's purchase of regional jets for its American Eagle operation. It is expected that American will announce it is purchasing both Canadair 70 seat jets, in addition to 50 seat EMB-145's. The Embraer order is expected in the near term--the Canadair order at a later date. (The Embraer order would be a victory for the Brasilian manufacturer over the rival 50 seat Canadair CRJ.)

Scott Hamilton, editor of Commercial Aviation Report, was reported this week as saying that the deciding factor for the Embraer was "price, price, price."

Expect to hear an announcement this week.

Meanwhile, American Airlines did confirm this week that it had ordered seven Boeing 777-200IGW (Increased Gross Weight) aircraft to be delivered in early 1999 and 2000. In addition, it acquired the purchase rights for additional Boeing 777s in late 1999, 2000 and 2001.

Last month, American finalized terms for firm orders and purchase rights for the 737, 757 and 767 aircraft that form the bulk of the aircraft order, but deferred the 777 decision for further analysis of the various 777 models.

The IGW aircraft will replace MD-11 that the company plans to retire over the next five years, the carrier said.

TWA

TWA <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TWA)") else Response.Write("(AMEX: TWA)") end if %> was the Goat of the Week as the stock dropped 11% to close at $9 1/16. As we thought, the rapid run-up in the stock of the last week was due, apparently, to the news concerning the cause of the crash of Flight 800. We don't see this fall-back as anything drastic, just a retrenchment from the run-up following all the publicity, as this stock has been prone to ups and downs per news coverage ever since the crash.

Continental Makes the Menage a Trois Official

CONTINENTAL AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAI/B)") else Response.Write("(NYSE: CAI/B)") end if %> announced this week (are we surprised?) that they will become the third American airline to enter into an "exclusive" contract with Boeing to provide them with aircraft. (Who was it that was responsible at Boeing for coming up with this great marketing gimmick anyway? The person should receive a huge salary for life and free air travel anytime they want it!)

I mean, what a marketing genius this person is!

Anyway, Continental signed on the dotted line as it agreed to purchase 35 new widebody aircraft from Boeing.

Continental said that under the letter of intent, it will purchase Boeing jet aircraft over the next 20 years, subject to certain conditions.

Continental's order consists of five firm orders for Boeing 777-200 jetliners and firm orders for 30 new generation Boeing 767-400ER aircraft. The companies will negotiate options to purchase additional 777s and 767s.

This order is in addition to the five 777s the airline already has on order with Boeing.

Continental expects to fund the purchase mainly with enhanced equipment trust certificates.

The new widebody aircraft will replace Continental's fleet of six DC10-10 and 31 DC10-30 aircraft, which will be retired. The new aircraft will be used to expand the airline's international and transcontinental service.

Should Continental NOT Have Ordered New Planes?

An interesting note here. As most of you readers are aware, much of the angst involved with the three-year war between American Airlines and its pilots' union involved a decision by the company NOT to expand, pending the signing of a new labor agreement. US Airways' CEO Stephen Wolf seems to be following the same script, as he holds out the threat of shrinking the carrier versus ordering new planes and expanding the company as he attempts to come to terms with the airline's unions.

Well, guess what? Continental did just the opposite. They did not hold their unions hostage to growth. They went out and agreed to buy new planes. Now the pilots' union, in their telephone message of June 11, blames the management of the airline for spending money -- while not paying them competitive wages.

Hey guys, I think what the management of Continental did was the more desirable of the two choices. Look at American and how it suffered over the last three years. Yes, it did. The carrier was in a "shut-down" mode, pending an agreement with the pilots. Wolf is duplicating the strategy at US Airways now.

Continental pilots -- don't see this decision by the company as negative.

Need any more incentive than just my ramblings? Look at the alternatives.

It makes much more sense, from a financial standpoint, to know what ones' costs are going to be from a competitive standpoint going forward, than to just shut down the growth of an airline, pending a labor agreement.

Food for thought.

Atlantic Southeast FAs tell union and airline "Forget it."

Flight attendants at ATLANTIC SOUTHEAST AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASAI)") else Response.Write("(Nasdaq: ASAI)") end if %> soundly rejected a tentative agreement reached between their union, the Association of Flight Attendants, and the Delta Connection carrier. Approximately 80% of those voting decided against the agreement, which the company had characterized as its "last offer."

Interesting note -- the leadership of the AFA supported this agreement, but apparently the compensation involved, and the fact that the agreement was for a five-year period, was just not something the FAs could live with.

The flight attendants' current contract became amendable on June 30, 1995, at which time negotiations for a new contract began. The two parties have been in mediated talks since early 1996.

"We will go back to the table and see if we can come up with a contract that answers the expectations of the flight attendants," Patricia Friend, President of the AFA stated. "They know what they want and they've shown that they will stand tough to get it."

Tougher than their own union, apparently.

Atlantic Southeast ended the week down 1% to close at $25 3/4.

May Traffic Reports

Airtran

AIRWAYS CORP.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAIR)") else Response.Write("(Nasdaq: AAIR)") end if %> AirTran Airways unit Monday reported a May load factor of 67.2% compared to 67% a year earlier.

Airways said AirTran flew 78.8 million revenue passenger miles, a decrease of 5.9% from 83.7 million a year earlier.

Airways said load factor or the percentage of available seats filled for the five months ended May 31 fell to 67.2% from 68.4% a year earlier and traffic for the same period fell 4.4% to 401 million revenue passenger miles flown from 419.6 million a year earlier.

Amtran

AMTRAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMTR)") else Response.Write("(Nasdaq: AMTR)") end if %> said Friday that the service load factor of its American Trans Air unit, a low-cost, Midwestern air carrier, was 75.2% in May, up from 63.5% a year earlier.

On a consolidated basis, the airline added, its May load factor was 69.7%, up from 62.5% a year ago.

In May, the airline flew 703.5 million revenue passenger miles on a consolidated basis, down 6% from 707.6 million a year ago.

On a scheduled-service basis, the airline flew 325.6 revenue passenger miles in May, down 19% from the 402.2 million flown a year ago.

For the five month year-to-date period, American Trans Air had a consolidated load factor of 72.6%, compared with 69.8% last year.

Atlantic Southeast

Atlantic Southeast flew 82.5 million revenue passenger miles during May 1997, a 0.4%t decrease over the same period last year, according to John W. Beiser, president of the Atlanta-based airline. Atlantic Southeast's load factor was 52.1% compared with 53.5% during May 1996. Available seat miles increased to 158.2 million from 154.7 million, a 2.2% increase. The airline enplaned 336,913 passengers, a 1.6% decrease over the previous May.

On a year-to-date basis, ASA carried 1,489,892 passengers compared with 1,490,702 during 1996, a 0.1% decrease. Revenue passenger miles totaled 363.8 million compared with 360.0 million, a 1.0% increase. Available seat miles increased 0.8% from 736.6 million to 742.3 million. The load factor on a year-to-date basis was 49.0% compared with 48.9% during the previous year.

America West

AMERICAN WEST AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AWA)") else Response.Write("(NYSE: AWA)") end if %> reported Monday its May load factor, or the percentage of available seats filled, fell to 68.2% from 70.6% a year ago.

The airline said May traffic rose 5.7% to 1.35 billion revenue passenger miles, from 1.28 billion revenue passenger miles in May 1996.

America West reported load factor of 68.9% for the first five months of 1997, compared with 71.1% a year ago. Traffic for the year-to-date period rose 10.5% to 6.69 billion revenue passenger miles, compared with 6.05 billion in the first five months of 1996.

Frontier Airlines

FRONTIER AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRNT)") else Response.Write("(Nasdaq: FRNT)") end if %> flew 84,034,000 revenue passenger miles in May, a 39.6% increase from May 1996.

Frontier recorded 140,325,000 available seat miles (one seat available one mile) in May, up 41.6% from the year-ago month. The 35-month-old airline's load factor was 59.9% in May 1997 vs. 60.8% in May 1996.

Mesaba

MESABA AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MAIR)") else Response.Write("(Nasdaq: MAIR)") end if %>, said its May load factor, or percentage of seats filled, was 55.5%, up from 52.4% a year ago.

Mesaba said it flew 48.4 million revenue passenger miles in May, up 40.3% from 34.5 million a year ago.

In the year-to-date period, Mesaba's load factor was 50.9%, up from 49.9% a year ago. The airline flew 202 million revenue passenger miles during the period, up 27.9% from 157.9 million flown a year earlier.

Midwest Express

MIDWEST EXPRESS AIRLINE's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEH)") else Response.Write("(NYSE: MEH)") end if %> revenue passenger miles (RPMs) increased 16.8% for the month of May 1997 to 119.4 million from 102.2 million in May 1996. Available seat miles (ASMs) increased 14.4% to 185.0 million from 161.7 million ASMs in the same month last year. Load factor was 64.5% in May, up from 63.2% in the same month a year earlier. Passengers boarded increased 10.2% to 141,128 from 128,051 in May last year.

For the first five months of 1997, RPMs increased 10.0% to 544.6 million from 495.1 million in the same period of 1996. ASMs increased 13.3% to 881.3 million from 777.9 million in the same period a year ago. Load factor for the five-month period was 61.8%, down from 63.7% last year. Passenger boardings for the first five months of 1997 were up 7.7% to 637,353 from 591,655 in the comparable period last year.

Northwest Airlines

NORTHWEST AIRLINE CORP.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> load factor rose to 74.8% in May from 73.8% a year ago. The airline also said Monday that it flew 6.03 billion revenue passenger miles in May, up 3.8% from 5.80 billion miles flown a year ago.

In the year-to-date period, Northwest Airline's load factor, or the percentage of available seats filled on its flights, rose to 72.4% from 71.1% last year. The airline flew 28.23 billion miles in the period, up 5.7% from 26.70 billion miles flown a year ago.

Reno Air

RENO AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RENO)") else Response.Write("(Nasdaq: RENO)") end if %> reported a load factor of 66.9% for May compared with 65% a year ago. The carrier's traffic rose 0.5% to 257.4 million revenue passenger miles from 256.2 million miles in May 1996.

Reno Air's load factor, or the percentage of available seats filled on its flights, was 65.6% for the first five months of 1997, down from 66.6% a year ago. Traffic for the latest period rose 7.5% to 1.23 billion miles from 1.15 billion miles in year-earlier period.

Skywest

SKYWEST AIRLINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SKYW)") else Response.Write("(Nasdaq: SKYW)") end if %> said Tuesday its May load factor, the percentage of available seats filled, was 49.6%, down from 51.7% in May 1996.

SkyWest said it flew 63.4 million revenue passenger miles in May, up 2.6% from 61.8 million a year ago.

For the year-to-date period, load factor was 49.3%, down from 51.4% last year.

The airline flew 301.4 million revenue passenger miles in the year-to-date period, up 7.6% from 280.2 million a year ago.

Southwest Airlines

Southwest Airlines said that its load factor fell to 64.3% in May from 66% a year earlier. Traffic rose 4.5% to 2.38 billion revenue passenger miles from with 2.28 billion miles in May 1996.

Southwest's load factor, or the percentage of available seats filled on its flights, was 62.3% for the first five months of 1997 compared with 62.5% a year ago. Traffic for the latest period rose 8.2% to 11.1 billion miles from 10.26 billion miles in the first five months of 1996.

Weekly Stock Performance Results

            Closing  Closing  
             Price    Price   Percent
Symbol     06/06/97 06/13/97  Change

  
ATLS        28  3/4    35       22%
FRNT         3  1/4     3  3/4  15%
MESA         5  1/16    5  9/32  4%
AAIR         5  3/8     5  9/16  3%
WLDA         7  3/4     8        3%
SKYW        16  3/8    16  3/4   2%
FDX         56  1/4    56  7/8   1%
U           35  1/2    35  7/8   1%
COMR        25  1/4    25  1/2   1%
ABF         37  3/4    37  7/8   0%
AWA         15  1/2    15  1/2   0%
KLM         29  3/8    29  3/8   0%
BAB        121        120  7/8   0%
PAA          8  3/8     8  5/16 -1%
HA           4  5/8     4  9/16 -1%
JAPNY        8  7/8     8  3/4  -1%
LUV         26  3/8    26       -1%
ASAI        26  1/8    25  3/4  -1%
VJET         7  3/4     7  5/8  -2%
ACAI        16  5/8    16  1/4  -2%
CAIB        35  1/8    34  1/8  -3%
UAL         77  3/4    75       -4%
TOWR         3  1/2     3  3/8  -4%
VNGD         1 11/25    1  3/8  -5%
DAL         94         89  1/2  -5%
ALK         25  1/2    24  1/4  -5%
MAIR        15  1/4    14  1/2  -5%
AIRT         4  3/4     4  1/2  -5%
AMR        102         96       -6%
AMTR         8  1/2     8       -6%
MEH         31  7/8    29  1/2  -7%
WPAC         6  3/8     5  7/8  -8%
NWAC        40         36  3/4  -8%
CEA         28  1/4    25  5/8  -9%
RENO         8  5/16    7  7/16 -11%
TWA         10  3/16    9  1/16 -11%

TMF Wings' Mail Bag--Delta, AA and More.

Just some comments on some things that were passed along to me this past week. I understand that my update from last week was posted on the American Airlines' APA (Allied Pilots Association) online forum, and that there was a comment made that I was "Pro-Pilot." Well, I probably need to take exception to that. (See my comments to the Delta pilots last week as an example!)

I am not Pro-Pilot, I am not Pro-Management. I am, if anything, Pro-Airline. I look at the industry as a whole, and identify those trends that may affect the industry from a financial and operational standpoint -- in addition to commenting on the week to week financial performance of the carriers that are traded publicly. I do think, that in terms of information, that many times airline employees are caught in the middle. You can't believe everything that management is telling you -- but can you believe everything that labor is telling you, either?

It is my hope that we can provide an unbiased view that at least makes you stop, think, and consider.

For example, I said last week that the Delta pilots should forget this idea of renegotiating their contract. Why do I think this? Because I think Delta Air Lines is not as financially healthy as it appears. There have been massive efforts by management to cut costs and make Wall Street happy. Translation? The stock price has gone nuts --but the company has suffered. It STILL has not grown revenues as it should have, and it's apparent rosy financials are not as healthy as they seem, because the company has cut back WAY TOO FAR in many areas.

So, as a result, I think that the pilots should fly their airplanes, hope the company hires a spectacular CEO, and recognize that the company has some serious rethinking to do.

KIWI?

In another post, a reader asked about KIWI airlines. Yes, while there was news about KIWI this week, we do not ordinarily report on KIWI, as the stock is not publicly traded.

Holly Hegeman
TMF [email protected]

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