Tuesday, 5 November 2013

Midday Glance: Airlines companies

NEW YORK (AP) -- Shares of some top airlines companies are up at 1 p.m.:

Delta Air rose $1.05 or 3.9 percent, to $27.69.

JetBlue Airways Corp. rose $.23 or 3.2 percent, to $7.50.

Southwest Airlines Co. rose $.59 or 3.4 percent, to $18.06.

US Airways Group rose $1.11 or 4.9 percent, to $23.55.

United Continental Holdings Inc. rose $.78 or 2.2 percent, to $36.32.


View the original article here

L.A. Shooting Points to Limits on Airport Security Levels

You need to enable Javascript to play media on Bloomberg.com

FBI Press Conference on L.A. Airport Shooting

The slaying of a Transportation Security Administration officer at Los Angeles International Airport showed how little is being done to control areas outside of the security perimeter -- and how tough it may be to do more.

As U.S. officials and lawmakers explore ways to prevent another firefight at an airport, they’re likely to run into practical limits on security upgrades while also reviving the debate on what restrictions Americans are willing to accept in exchange for greater safety.

“To some extent, it’s an unavoidable risk,” said Stewart Verdery, former assistant administrator for policy and planning at the U.S. Homeland Security Department. “We have an open society. You have malls. You have stadiums. You don’t normally screen 50,000 people going into a stadium for weapons.”

The Nov. 1 shooting began at a TSA checkpoint, whose purpose is keeping bombs and weapons off planes. No matter how far the initial line of defense is pushed outward from those vulnerable targets, the risk couldn’t be eliminated for the men and women on guard, said security specialists, consultants and a congressional committee chairman who oversees the TSA.

“The TSA is there to make sure it doesn’t happen on an airplane,” said George Hamlin, a former Airbus SAS executive who runs Hamlin Transportation Consulting in Fairfax, Virginia. “How do you set up a system to protect the protectors?”

TSA Administrator John Pistole said Nov. 2 the agency is discussing airport security issues “writ large” with Congress, including whether officers should be armed. The agency will study its policies and procedures to determine what can provide the best possible security, he told reporters in Los Angeles.

The agency was created after the Sept. 11 attacks to bolster protections against terrorists boarding aircraft. U.S. House Homeland Security Committee Chairman Michael McCaul, whose panel oversees the TSA, promised fresh attention to in-airport security during an interview yesterday on CNN.

“How we typically stop a lot of these things is through good intelligence,” said McCaul, who cited parallels between the Los Angeles incident and the Sept. 16 Washington Navy Yard massacre, in which a gunman with a history of mental illness killed 12 people.

The alleged Nov. 1 shooter, identified by authorities as Paul Ciancia, 23, left a note in which he wrote of wanting to kill TSA agents, the Federal Bureau of Investigation said. Ciancia’s family alerted authorities in New Jersey, and Los Angeles police visited Ciancia’s home the morning of the attack, McCaul told CNN.

Ciancia is accused of killing one TSA officer and wounding two other TSA employees and a civilian passenger, according to a criminal complaint filed Nov. 2 in Los Angeles federal court, and was shot by airport police.

The U.S. today obtained a search warrant for Ciancia’s mobile phone, which he left in the car of a roommate who drove him to the airport. Among other things, federal investigators want to search the phone for records, documents, applications or materials related to Ciancia’s views on the legitimacy and activities of the U.S. government, “including the existence of a plot to impose a New World Order,” according to the warrant.

Pistole, the TSA chief, is looking to expand the use of Visible Intermodal Prevention and Response Teams with stepped-up local law enforcement to enhance airport security, McCaul said. Having more law enforcement officers on display will help, even though it’s difficult to provide foolproof security, he said.

“It’s almost like an open shopping mall, so it’s very difficult to protect,” McCaul told CNN. “We are going to be reviewing this along with the director of TSA.”

While some of the best-known instances of airport violence have occurred outside the U.S., such as terrorists’ 1985 attacks on ticket counters in Rome and Vienna targeting El Al Israel Airlines (ELAL), the U.S. hasn’t been immune. A gunman killed two people at the El Al counter in Los Angeles in 2002.

Richard Bloom, chief academic officer and professor of security studies at Embry-Riddle Aeronautical University in Prescott, Arizona, said the apparent absence of a link to international terrorism in last week’s case raises questions about whether airports need safeguards for lower-level threats.

“As worried as we are about al-Qaeda or al-Shabaab or some other terrorist organization, maybe we need to recalibrate for the garden-variety unstable individual who can commit violent acts as well,” Bloom said.

Air-travel volumes underscore the challenge in trying to extend higher security levels beyond the checkpoints: About 815 million passengers flew in the U.S. last year, according to the U.S. Bureau of Transportation Statistics.

It’s hard to imagine how to add another layer of screening on top of the existing checkpoints, said former Homeland Security official Verdery, who worked at the agency during former President George W. Bush’s administration and is now a partner at Washington-based lobbying firm Monument Policy Group.

The trade-off implicit in post-9/11 measures was that check-in halls weren’t going to get the same level of scrutiny as would passengers, said Rafi Rahav, a former operative for Israel’s General Security Service, known as Shin-Bet.

“All the security measures since 9/11 are aimed at making sure that a terrorist does not get onto an aircraft, where he can cause the deaths of more than 300 people,” said Rahav, who now consults with U.S. airlines on security matters.

“The primary concern is not that one or three people will die in the terminal,” Rahav said in an interview. “The aim is to prevent somebody from penetrating onto the plane with guns.”

Arming TSA officers would be one step toward putting more firepower in officials’ hands to ward off an attack in an airport’s unsecured areas.

TSA employees at checkpoints are in high-stress situations and are subjected to thousands of assaults a year, said J. David Cox, national president of the American Federation of Government Employees, which represents about 45,000 agency workers. The power to arrest unruly passengers and arming some agency employees are among the options for providing better security at the checkpoint, he said.

“The sad truth is that our TSA officers are subject to daily verbal assaults and far too frequent physical attacks,” Cox said in a statement today. “A larger and more consistent armed presence in screening areas would be a positive step in improving security.”

Verdery, the former Homeland Security official, drew a distinction between those agents and law enforcement authorities. It would be prohibitively expensive to train and pay TSA employees like police, and also would introduce more firearms into a high-risk environment, he said.

Robert W. Mann, a former American Airlines executive who now runs aviation consultant R.W. Mann & Co. in Port Washington, New York, said U.S. officials would have to weigh competing priorities in deciding to change airport security, or continue to accept the status quo.

“The question is whether we design around every black swan or do we design around the middle of the flock,” Mann said in an interview. “You can try to design everything around these one-off events, but I’m not sure that would make sense.”

To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net; Tim Catts in New York at tcatts1@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net

Enlarge image L.A. Shooting Shows Limits on Keeping Airports’ Protectors Safe L.A. Shooting Shows Limits on Keeping Airports’ Protectors Safe Police stand guard in Terminal 2 at Los Angeles International Airport on Nov. 1, 2013.

Police stand guard in Terminal 2 at Los Angeles International Airport on Nov. 1, 2013. Photographer: Reed Saxon/AP Photo

Enlarge image Los Angeles Airport Los Angeles Airport Kevork Djansezian/Getty Images

A Los Angeles Police Department officer and her canine leave after making a sweep of the re-opened Terminal 3 a day after a shooting at Los Angeles International Airport, November 2, 2013.

A Los Angeles Police Department officer and her canine leave after making a sweep of the re-opened Terminal 3 a day after a shooting at Los Angeles International Airport, November 2, 2013. Photographer: Kevork Djansezian/Getty Images

Enlarge image LAX Shooting Suspect LAX Shooting Suspect The suspect, identified as Paul Anthony Ciancia, 23, of Los Angeles, opened fire with an assault rifle at Los Angeles International Airport, killing a Transportation Security Administration officer on Nov. 1, 2013.

The suspect, identified as Paul Anthony Ciancia, 23, of Los Angeles, opened fire with an assault rifle at Los Angeles International Airport, killing a Transportation Security Administration officer on Nov. 1, 2013. Source: FBI via Bloomberg


View the original article here

Justice Department details deal for American, US Airways fight

By Diane Bartz

WASHINGTON (Reuters) - The Justice Department wants US Airways and American Airlines to divest landing and take-off slots at Reagan National and other "key" U.S. airports as a condition to drop its effort to block a proposed merger, Attorney General Eric Holder said on Monday.

Share prices in the airlines jumped as Holder seemed to offer a path to an agreement, three weeks before the scheduled start of a trial on November 25.

The bankrupt AMR Corp (AAMRQ.PK), parent of American Airlines, closed up 24.5 percent in heavy volume, while those of US Airways (LCC) at one point rose more than 5 percent to their highest in almost six years before retreating to close up 1.2 percent.

Holder said that talks with the companies were ongoing and he hoped for an agreement before the trial is due to start.

The Justice Department's complaint focused on the carriers' dominant position at Reagan National, outside Washington, and on more than 1,000 city pairings that American and US Airways now dominate. It said the merger would reduce choice for travelers and lead to higher fares.

Holder would not elaborate on Monday about whether the government has a specific number of slots in mind that the carriers need to sell to advance the deal. There were a "number of ways" to address the government's concerns, he said.

"What we have tried to focus on is to make sure that any resolution in this case necessarily includes divestitures of facilities at key constrained airports throughout the United States," Holder said.

"We hope that we will be able to resolve this short of trial, but if we do not meet those demands that we have, we are fully prepared to take this case to trial," he said. "We will not agree to something that does not fundamentally resolve the concerns that were expressed in the complaint."

Experts said it is unusual for an attorney general to comment at length in the middle of antitrust battle.

"I think it's a positive sign (of potential settlement), but it's important not to over-read it," Herbert Hovenkamp, an antitrust expert who teaches at the University of Iowa's College of Law, said of Holder's comments.

Several antitrust specialists were surprised by the share price increases, which suggested that investors saw Holder's utterances as a tipping point in favor of the merger.

Three said Holder essentially backed up previous comments from his antitrust deputy, Bill Baer, by insisting that the merger created antitrust problems in a number of markets nationally.

"Bill Baer can now sit there and say "'You heard from the boss. What can I do?'...This is a message to the parties," said Steve Axinn, a Justice Department veteran now at the law firm Axinn Veltrop and Harkrider LLP.

Seth Bloom, a former staffer for the Senate Judiciary Committee's antitrust subcommittee, agreed the comments did not necessarily signal that a quick settlement was in the works.

"He's saying you need divestitures nationally...and so the airlines have to make a fundamental change in their merger proposals," he said. "It's a very difficult case to settle."

Three weeks before the scheduled start of the trial, US Airways and American Airlines can agree to a package of divestitures, prepare to litigate, or abandon a merger that has been years in the making, Hovenkamp said.

"The government is asking for a lot and the parties want to give up as little as possible," Hovenkamp added.

DOMINANT AT REAGAN NATIONAL

The two carriers control a combined 69 percent of takeoff and landing slots at Reagan National, an airport used by many members of Congress to fly to their home districts.

Roughly 55 percent of slots at the airport are held by US Airways and 14 percent held by American. Airline officials have said privately that they are willing to cede some slots, but not scale back by the equivalent of the entire 14-percent American share.

US Airways declined comment on Holder's remarks. American Airlines did not respond to requests for comment.

(Additional reporting by David Ingram in Washington and Karen Jacobs in Atlanta; Editing by Ros Krasny, Lisa Von Ahnn, L Gevirtz and Ken Wills)


View the original article here

What Does the DoJ Want from US Airways and American Airlines?

US Airways Plane

The Department of Justice is asking for more than US Airways (NYSE:LCC) and AMR Corp.’s (AAMRQ.PK) American Airlines may want to give in order for their planned merger to succeed. According to people familiar with the discussions who spoke to The Wall Street Journal, the Justice Department wants the airlines to give up takeoff and landing slots at airports around the country if the government agency is to drop its lawsuit blocking the merger.

Previous discussions focused on Ronald Reagan National Airport outside Washington, D.C., where the combined airline would own 69 percent of the takeoff and landing slots. It was expected that the DoJ would ask the airlines to give up space there, but a source who spoke to the Journal said the Department of Justice made a list of airports around the country where it wants US Airways and American Airlines to give up spaces.

The DoJ said that the merger, which will create the world’s largest airline by traffic, will result in only four carriers owning 80 percent of the U.S. flight market, which will reduce competition and potentially raise prices. The airlines say the merger will help them better compete with bigger airlines like United Continental (NYSE:UAL) and Delta Air Lines (NYSE:DAL), which will ultimately be good for consumers.


View the original article here

Bull of the Day: Spirit (SAVE)

The airlines are flying high and so are their stocks. Spirit Airlines, Inc. (SAVE) recently posted record third quarter results as revenue jumped double digits over a year ago. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth in both 2013 and 2014.

Spirit Airlines operates a low-cost airlines based on ultra-low base fares which allows customers to buy the extras they value. The company has a $9 Fare Club program that costs $59.95 per year but gives customers access to special low fares and deals on baggage fees.

Spirit operates about 250 flights to 50 destinations in the U.S., Caribbean and Latin America. It is one of the few airlines offering service from the United States to the expanding markets of Panama and Colombia.

Big Beat in the Third Quarter

On Oct 30, Spirit reported its third quarter results and blew by the Zacks Consensus by $0.10. Earnings were $0.79 compared to the Zacks Consensus of $0.69. It was the fourth earnings beat in a row.

Revenue jumped 33.4% to $456.6 million. Total revenue per available seat mile ('RASM') was 12.55 cents, up 8.9% compared to the year ago quarter. The gain was due to higher load factors and higher average passenger yields.

Adjusted pre-tax margin rose to 20.3%, the highest quarterly adjusted pre-tax margin in the company's history.

Spirit is expected to have strong double digit earnings growth of 57% in 2013 and another 20.2% in 2014.

In the third quarter, Spirit added one new A320 aircraft, bringing its total fleet to 51 aircraft. It recently started several new routes including Dallas/Fort Worth to Phoenix Sky Harbor, Phoenix Sky Harbor to Chicago and Minneapolis/St. Paul to Tampa.

Shares At 2-Year Highs

After another solid earnings beat, shares jumped to new highs.

Even though shares are hitting new highs, the stock isn't super expensive. It trades with a forward P/E of 18.9 but given its strong earnings growth it has a PEG ratio of just 0.7. A PEG under 1.0 usually indicates that a company is undervalued.

For investors looking for a way to play the low-cost airlines, Spirit is one to keep on the short list.

Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.


SPIRIT AIRLINES (SAVE): Free Stock Analysis Report

Zacks Investment Research


View the original article here

United Airlines Posts Best Monthly Performance of the Year and Rewards Employees with Bonuses

CHICAGO, Nov. 4, 2013 /PRNewswire/ -- United Airlines today announced that it is rewarding its eligible employees with a $100 on-time bonus for exceeding the airline's domestic and international on-time arrival performance goals for the month of October. United achieved 85 percent on-time performance for domestic flights and 82.4 percent for international flights. The on-time arrival rate is based on flights arriving within 14 minutes of the scheduled arrival time.

The monthly domestic on-time performance was the airline's best of the year and the best since November 2012, while the international on-time performance was the highest monthly performance in nearly three years. On six days in October, the airline exceeded a 90 percent on-time arrival rate, and Oct. 26 was the second best day of the year with an average 93 percent on-time arrival rate.

"Across the system our co-workers are focused on running a reliable, on-time airline and delivering great customer service," said Pete McDonald, United's executive vice president and chief operations officer. "I'm proud of their hard work and determination – it is paying off."

While several of the airline's hubs experienced weather challenges ranging from thunderstorms and fog to the first light snow of the season, United employees continued to focus on good-weather performance and quick recovery from bad weather. United's Houston hub, in particular, was hit hard by bad weather several days in October, but despite the challenges, the team at Houston achieved nearly their best on-time departure performance of the year.

About United
United Airlines and United Express operate an average of more than 5,300 flights a day to more than 360 airports across six continents. In 2012, United and United Express carried more passenger traffic than any other airline in the world and operated nearly two million flights carrying 140 million customers. United is investing in upgrading its onboard products and now offers more flat-bed seats in its premium cabins and more extra-legroom, economy-class seating than any airline in North America. In 2013, United became the first U.S.-based international carrier to offer satellite-based Wi-Fi on long-haul overseas routes. The airline also features DIRECTV® on more than 200 aircraft, offering customers more live television access than any other airline in the world. United operates nearly 700 mainline aircraft and has made large-scale investments in its fleet. In 2013, United continues to modernize its fleet by taking delivery of more than two dozen new Boeing aircraft. The company will have launched 14 new international and 19 new domestic routes, including the addition of seven new cities to its network, by the end of 2013. Business Traveler magazine awarded United Best Airline for North American Travel for 2012, and readers of Global Traveler magazine have voted United's MileagePlus program the best frequent flyer program for nine consecutive years. According to the 4th annual Switchfly Reward Seat Availability Survey published by IdeaWorksCompany in May 2013, United has the most saver-style award-seat availability among the largest U.S. global airlines. Air Transport World named United as the Eco-Aviation Airline of the Year Gold Winner in 2013. United is a founding member of Star Alliance, which provides service to 195 countries via 28 member airlines. More than 85,000 United employees reside in every U.S. state and in countries around the world. For more information, visit united.com or follow United on Twitter and Facebook. The common stock of United's parent, United Continental Holdings, Inc., is traded on the NYSE under the symbol UAL.

(Logo: http://photos.prnewswire.com/prnh/20130404/MM89155LOGO)


View the original article here

Monday, 4 November 2013

U.S. Justice Dept details deal for American, US Airways fight

* AMR Corp shares spike up 24.5 percent

* US Airways stock reaches highest level in nearly 6 years

* Holder - could resolve merger concerns before scheduled trial

By Diane Bartz

WASHINGTON, Nov 4 (Reuters) - The U.S. Justice Department wants US Airways and American Airlines to divest landing and take-off slots at Reagan National and other "key" U.S. airports as a condition to drop its effort to block a proposed merger, Attorney General Eric Holder said on Monday.

Share prices in the airlines jumped as Holder seemed to offer a path to an agreement, three weeks before the scheduled start of a trial on Nov. 25.

The bankrupt AMR Corp, parent of American Airlines, closed up 24.5 percent in heavy volume, while those of US Airways at one point rose more than 5 percent to their highest in almost six years before retreating to close up 1.2 percent.

Holder said that talks with the companies were ongoing and he hoped for an agreement before the trial is due to start.

The Justice Department's complaint focused on the carriers' dominant position at Reagan National, outside Washington, and on more than 1,000 city pairings that American and US Airways now dominate. It said the merger would reduce choice for travelers and lead to higher fares.

Holder would not elaborate on Monday about whether the government has a specific number of slots in mind that the carriers need to sell to advance the deal. There were a "number of ways" to address the government's concerns, he said.

"What we have tried to focus on is to make sure that any resolution in this case necessarily includes divestitures of facilities at key constrained airports throughout the United States," Holder said.

"We hope that we will be able to resolve this short of trial, but if we do not meet those demands that we have, we are fully prepared to take this case to trial," he said. "We will not agree to something that does not fundamentally resolve the concerns that were expressed in the complaint."

Experts said it is unusual for an attorney general to comment at length in the middle of antitrust battle.

"I think it's a positive sign (of potential settlement), but it's important not to over-read it," Herbert Hovenkamp, an antitrust expert who teaches at the University of Iowa's College of Law, said of Holder's comments.

Several antitrust specialists were surprised by the share price increases, which suggested that investors saw Holder's utterances as a tipping point in favor of the merger.

Three said Holder essentially backed up previous comments from his antitrust deputy, Bill Baer, by insisting that the merger created antitrust problems in a number of markets nationally.

"Bill Baer can now sit there and say "'You heard from the boss. What can I do?'...This is a message to the parties," said Steve Axinn, a Justice Department veteran now at the law firm Axinn Veltrop and Harkrider LLP.

Seth Bloom, a former staffer for the Senate Judiciary Committee's antitrust subcommittee, agreed the comments did not necessarily signal that a quick settlement was in the works.

"He's saying you need divestitures nationally...and so the airlines have to make a fundamental change in their merger proposals," he said. "It's a very difficult case to settle."

Three weeks before the scheduled start of the trial, US Airways and American Airlines can agree to a package of divestitures, prepare to litigate, or abandon a merger that has been years in the making, Hovenkamp said.

"The government is asking for a lot and the parties want to give up as little as possible," Hovenkamp added.

DOMINANT AT REAGAN NATIONAL

The two carriers control a combined 69 percent of takeoff and landing slots at Reagan National, an airport used by many members of Congress to fly to their home districts.

Roughly 55 percent of slots at the airport are held by US Airways and 14 percent held by American. Airline officials have said privately that they are willing to cede some slots, but not scale back by the equivalent of the entire 14-percent American share.

US Airways declined comment on Holder's remarks. American Airlines did not respond to requests for comment.


View the original article here