In a bold understatement, American Airlines CEO Tom Horton has acknowledged in new stories that AA has had a rough few weeks.  Horton was admitting to AA’s operational problems primarily with respect to cancelled flights and reduced schedules due to pilot driven maintenance issues.

It’s notable that Horton would not speak about a merger with US Airways but did mention IAG (International Airlines Group: British Airways / Iberia) CEO Willie Horton was willing to take a minority stake in the airline to emerge from bankruptcy.

I strongly suspect that Horton and his team are continuing to look for every option to emerge independently from bankruptcy.  In short, he seems determined to benefit from the rewards previous airline CEOs have enjoyed upon emerging from bankruptcy rather than necessarily being oriented towards the best interests of AA’s stakeholders.

The problems going on at AA are many and not just limited to the pilots.  We now see an airline unable to cope with its unions with respect to coming to an agreement with pilots to settle the pilot induced operational problems as well as it seems to be having trouble figuring out how to deal with reduced staff as a result of “early out” options negotiated with unions representing flight attendants and mechanics.

Furthermore, it has enjoyed a PR disaster over the operational problems as well as the seat problems on 757 aircraft.

Here is the point:  None of these problems as a single event is that big of an issue.  Airlines go through these from time to time.  However, the ensuing perfect storm belies a company lacking leadership.   To further my point, this is really the first we’ve seen Tom Horton answering media questions in weeks and the answers aren’t entirely forthcoming.

Instead, we’ve seen subordinates and spokespersons responding to each problem as if to say “there really isn’t anything wrong here, look away.”

Denial starts to make you look stupid in these situations.  The growing consensus among industry observers is that it is time for this executive team to go.  I agree.

Whether it be a takeover by US Airways or another executive team, we see a leadership crisis that needs to be solved.  No one is out front and leading the airline through these crisis.  We continue to see “committee” responses to these problems that seem couched to avoid public mea culpas.  Airlines in denial fail more.

I expect that we will see financial results over the next few months that point to this denial and we’ll see a return to the “Wait, wait!  It will get better!  We promise” approach to advocating to the airline.

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Curiously, American Eagle has managed to get deals with all its unions on terms that seem to work very well for its labor and without nearly the muss and fuss that AA has experienced.

I think this has to do with a combination of factors:

1) Dan Garton, President & CEO of American Eagle, sees his destiny with American Eagle and sees the destiny of American Eagle going far past what business it can capture from American Airlines.  In short, he knows deals have got to be done.

2) Labor at American Eagle knows it has to have agreements in order to survive.  Regional airlines can be liquidated as they are not too big to fail.

3) American Eagle as a company knows that to survive, it must have in place agreements that permit it to compete with other regional airlines for business.

4)  American Airlines threw a warning out when it signed a deal with Skywest for flying in Los Angeles.

It is both surprising and pleasing to see just how non-contentious the negotiations have been in the American Eagle camp and makes me wonder if Dan Garton isn’t the person to be leading American Airlines.

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Despite vehement and even angry protests by Akbar Al Baker, Qatar Airways will be joining Oneworld sponsored by British Airways.   The expectation is that Qatar should be a fully integrated member in 12 to 18 months.

This brings a few questions out into the open.  First and foremost, why did QANTAS partner with Emirates in light of the knowledge it had to have had about Qatar Airways joining the alliance?  Does this spell the end of QANTAS in Oneworld?

I think QANTAS will remain in Oneworld for the time being but this does leave Oneworld a bit weak with a founding member not fully aligned with its alliance partnerships.

One wonders if the CEOs of Oneworld fully considered just who they were inviting into their parlor when it comes to Akbar Al Baker.  He is outspoken, a critic of the status quo and known for his angry outbursts and changes of opinion.

And you have to wonder what Al Baker saw in Oneworld.  Oneworld is made up of several airlines that, so far, have struggled more than most in changing with the world.  British Airways / Iberia (IAG) hasn’t exactly taken over Europe.  American Airlines is in bankruptcy.  QANTAS walked away from British Airways and into the arms of Emirates.  Cathay Pacific is . . . Cathay Pacific.  Nothing special.

And Qatar offers a PR coup, for sure, and an airline with an impeccable service product but it isn’t Etihad or Emirates and its Doha hub is less ideal than Emirates’ Dubai hub as a destination.  The airline has a widely varying fleet and I wouldn’t expect much harmony in the fleet for the future as Qatar has orders for wildly differing aircraft.

I think the PR is good for Oneworld, I think Qatar joining isn’t all that much added value in the grand scheme of things.  Qatar doesn’t bring a scale that would help as much as other airlines would.

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The Dallas Morning News Airline Biz Blog notes that American Airlines isn’t doing quite as bad with their on-time record last week.   Just 33.1% of flights were later than 15 minutes minutes.

It’s notable that American Eagle had just 15% of its flights late and that puts it ahead of all the major legacy airlines except Delta and Alaska (and Alaska traditionally does well in these assessments.

American remains dead last among the legacy airlines with United being the next worst at 22%.

Yes, there continues to be a problem at American Airlines.

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There is a growing consensus among many that AA’s leadership just isn’t making the grade.  Most recently, Leeham News and Commentary made a post summarizing, once again, the story of failed leadership at AA since Robert Crandall retired.  It’s a story I’ve told and many others out there have too.

It’s my personal observation that leadership doesn’t look or feel like what it is portrayed as in Hollywood.  There is some kind of belief that a strong leader runs around and says “My way!  I’m in charge! You don’t know, I know!”  This is what I would refer to as the Alexander Haig model.  Many of you may know how well that went.

It seems to me that the very best leaders in business, politics or elsewhere have some common attributes.  One of them is a certain amount of humility.  A humility that takes the form of that person not seeing himself as greater than any other individual.  In fact, that quality is often expressed in the way the leader or leaders see themselves in the service of those they actually lead.

They also learn how to change directions when circumstances call for it.  They are not married to a process that has been outgrown or which no longer fits the circumstances.

They learn to bring in new blood and adopt best practices from other businesses.

They may be tough but they aren’t imperious and they aren’t greedy.  They make decisions based upon what is right for all stakeholders and not just those whose interests are financially aligned with their own.

Sounds a lot like Bethune and Crandall, no?

What it doesn’t sound like is Carty or Arpey or Horton.  And that’s the point that all of us are making now.  Pilots and other labor groups hate the current leadership for both objective and emotional reasons.  I get that.

But this isn’t about hate.  It’s about failure to lead and the body of evidence says its time for other parties to lead.

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I found this MarketWatch Top Ten brands to disappear in 2013 and it lists American Airlines first.  The story cites that American was a leader but became a “mid-size” carrier after the unions of Delta/Northwest and United/Continental.

Uh, no, it won’t disappear in 2013.  Disappearing implies either liquidation or a merger where the brand disappears in favor of another.  That won’t happen.  American will either exit bankruptcy as a stand-alone and survive, exit bankruptcy and merge with another carrier or merge with another carrier and then exit bankruptcy.  In any of those situations, the brand is almost certainly going to remain American Airlines.

I will concede that the brand is taking a lot of hits this month and is likely to get hit a bit more over the next few months.  That, alone, won’t undo the brand.  It is highly recognizable and the fact that so many are upset at AA right now indicates that there is still ample opportunity to fix these problems and win people back.

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Terry Maxon who is the regular reporter for all things airline related at the Dallas Morning News and the primary contributor for the Dallas Morning News Aviation Blog has created an uproar among American Airlines pilots by suggesting that AA either suddenly has a vast number of its fleet experiencing serious maintenance problems all at once or something is up among the pilots and/or mechanics.

As a result, he’s gotten many emails from AA pilots contending that maintenance is the real issue  and that pilots are simply going by AA’s own book when it comes to dealing with those issues.

AA’s fleet is old by any standard and, yes, maintenance issues should be pretty common particularly among the MD-80 fleet.   Let me point out that the MD-80 fleet is only 191 strong now and is getting replaced rapidly by new build 737-800s.

AA has the following fleet count:

• MD-80:  191
• 737-800:  186
• 757-200:  105
• 767-200:  14 (and to be replaced by A321NEO aircraft)
• 767-300:  58
• 777-200:  47

205 aircraft in AA’s fleet could be categorized as “very old”.  These are the MD-80s and 767-200s.   Most of the 767-300 aircraft are actually not that old as aircraft go and should be categorized as “appropriate” and that accounts for 58.  The same is true for the 757 fleet and that gives us another 105 aircraft in the “appropriate” category with an average age of just 17 years.  For the relatively low cycles the 757 fleet has, that’s perfectly acceptable.  The 767-300 aircraft tell a story similar to that of the 757 fleet and total 58 aircraft.   The remaining aircraft (737/777) total 233 aircraft.

Now, please remember that fleets change and my counts may be off by a few aircraft but how I’m categorizing them isn’t.  So, let’s look at what is old vs new in the AA fleet:

• Very Old Aircraft (MD-80 and 767):  205  (34% of the fleet)
• Old But Appropriate (757 & 767-300):  163 (27% of the fleet)
• Young Aircraft:  233 (39% of the fleet)

I think the pilots are overplaying their story of age and poor maintenance.  Furthermore, I’ll point out that other airlines run similarly old or even older sub-fleets with nary a problem.  Airlines such as Delta, for instance.

And despite how old those MD-80s are, they are also by all accounts some of the most durable aircraft around and very capable of flying with deferred issues.

Sorry AA pilots, I think you’re right in that some stuff has been deferred, some maintenance not done as regularly but I also think you are still playing “the game” with the company too.  If you think I’m wrong, contact me and give me real evidence that you aren’t.

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These days, it seems as though American Airlines and the Allied Pilots Association are in a contest to see who can be more dysfunctional.   After asking for a return to negotiations, American Airlines has made threats to seek a court injunction against the pilots for the work slow downs occurring among some pilots.

The Allied Pilots Association is doing its union thing saying “What, us?  No way!” and then refusing to return to negotiations because its feelings are hurt.  But then also publicly cautioning its pilots that if they are engaging in a work slow down, they really should cut it out.

A curse on both their houses.

AA should have kept its silence and gotten to the table to get a deal in place.  Instead, they lost confidence and sent their new HR VP to threaten and already furious labor group.  That isn’t leadership.  That’s accounting people doing the accounting thing.  Do readers think that someone such as Gordon Bethune would have made such a move?

The APA should have shown it was in control of its pilots and gotten the word out quietly to cut it out as this is a chance to get a deal in place.  Instead, they did their usual song and dance.  The APA board is particularly dysfunctional since its run really by pilots who act in self interest instead of the better interest of the entire group.  The union’s president, Keith Wilson, is doing his best imitation of Laura Glading at this point which may get him re-elected but won’t get his group a deal.  Do you think David Bates would have advocated for these silly moves?

Like I said:   A curse on both their houses.

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The Fort Worth Star Telegram’s Sky Talk blog has a story about how Maxim Group analyst Ray Neidl sees a similarity in the behavior of American Airlines pilots and how Eastern Airlines pilots managed to drive their own company into the ground 20+ years ago.

While I agree with Neidl seeing similar behaviors that are similarly irrational, I don’t necessarily agree that the same outcome is likely.  Eastern Airlines pilots did what they did, in part, because it was very hard for airline labor not to believe that an airline such as Eastern would be allowed to go bankrupt and effectively liquidate itself.  This, despite seeing Braniff vanish just a few years before.  There was a belief, at that time, that management would cave in to labor or that Congress would intervene.  Neither happened.

Today, I think that AA pilots know a little better.  That said, things are already getting out of hand.  What pilots don’t appreciate is that their small individual actions have a massive combined effect.  The press on this issue is already exposing just how far this has gone and just how little room there is for it to go further.  Furthermore, I think we would have to see a greater indicator of irrational behavior on the part of the APA board and leadership before determining that the risk is realized and the threat of demise imminent.

I will, however, reserve my right to change my opinion based on union behaviors over the next few weeks.  If we see union leadership fail to reign in these behaviors, I’ll fully acknowledge the likelihood that the airline starts a downward spiral financially.

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It’s no surprise to anyone who lives in the Dallas / Fort Worth area that the local newspapers are awfully friendly towards its local airlines.  Both the Dallas Morning News and the Fort Worth Star Telegram tend to be very forgiving of American Airlines in particular but even Southwest Airlines gets a pass on occasion.   The area is dependent upon this industry in many ways and, to some degree, it’s OK.

One local reporter working for the Dallas Observer, Jim Schutze, is a man I respect quite a bit.  He worked for the Dallas Times Herald when it was in operation and then moved on to working as the Dallas bureau chief of the Houston Chronicle and writes for the Dallas Observer as well.  Schutze is a liberal and, in this town, liberals don’t get much play.  Balance between liberal and conservative viewpoints in the DFW area is a myth.  That said, Schutze is first and foremost a balanced reporter who exemplifies what journalism once was and rarely is today.

Schutze wrote THIS entry on his Dallas Observer blog regarding American Airlines and, curiously enough, Mitch Schnurman, a reporter for the Dallas Morning News and, until recently, the Fort Worth Star Telegram.  It was Schnurman who wrote scathing attacks on American Airlines management through the summer for the Star Telegram and caught national attention.

Schutze takes issue with the fact that in a recent Dallas Morning News column Schnurman took pilots to task this time for the AA operational slowdown without taking note that the pilot’s deed have resulted in a new development:  AA wants to go back to the bargaining table with the pilots.  He’s not wrong:  that is news.

Both are right.  The greater news was that AA is taking a beating and needs to come to a better agreement with its pilots.  But the pilots are, in fact, driving their company to the wall and that can only happen for so long before real and permanent damage gets done.

As I keep pointing out:  The pilots didn’t get their attitude today because they were treated appropriately by management.  Management didn’t lead them well at all.  However, you can only beat your own company up so long before not only does the board and creditors lose faith in the management, the public will lose faith in the airline.  When the public loses faith in the airline, that is a very, very dangerous thing.

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American Airlines has made a formal request of the Allied Pilots Association to return to the negotiating table.  We believe this is entirely due to the “work to rules” action that pilots are engaging in over the past few weeks at American Airlines.  Hey, when your on-time record plunges more than 20 percentage points in a month’s time, you’ve got to do something.

Frankly, I’m ambivalent about this.  On the one hand, it’s rewarding atrocious behavior designed to directly impact customers and thereby directly impact a company that continues to issue paychecks to these same pilots.

On the other hand, I  would point a finger at American Airlines and point out that while the company did try to make a deal, it wasn’t done out of sheer anger.  No one at AA understands that the rage among labor needs to be cooled.  This is a mistake that gets repeated over and over and over again in the airline world and I do not understand it.

Both parties have done very badly for their constituents and both need to clean up their behavior.  Neither will.

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Calgary based WestJet has done another code share deal with a major legacy airline.  This time, it’s with British Airways, a Oneworld alliance member.  British Airways passengers on BA flights to Toronto, Calgary and Vancouver will be able to connect on WestJet flights to final destinations.

WestJet’s code share partners are now:

• American Airlines (Oneworld)
• British Airways  (Oneworld)
• Cathay Pacific (Oneworld)
• China Eastern (SkyTeam)
• Delta Air Lines (SkyTeam)
• Japan Airlines (Oneworld)
• KLM (SkyTeam)
• Korean Air (SkyTeam)

WestJet appears to be very agnostic to alliances but hasn’t yet established any codeshare relationships with Star Alliance members to date.  Why?  Air Canada is in the Star Alliance.   They do, however, have interline agreements with a variety of Star Alliance members.

Curiously, WestJet has aggressively sought relationships with large, multi-national legacy airlines and it appears to be paying off for them and their partners.   This is a model that has worked well for Alaska Airlines and it’s notable that WestJet’s CEO, Gregg Saretsky, worked as a senior executive at Alaska Airlines prior to joining WestJet.

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Spirit Airlines has launched two daily non-stop flights between Dallas / Fort Worth (DFW) and Houston (IAH) starting today.  The flights from DFW to IAH are an early morning and a early evening flight and I can see how those would be satisfying enough for the casual traveler that is Spirit’s target customer.  From IAH to DFW, there is a mid-morning and mid-evening flight that also appear to be fairly satisfying at this time.  Prices show to be Spirit’s typical ultra-low cost fares with some showing to be as little as $30 each way (without fees).

I think Spirit is targeting opportunity it sees in this market pretty smart.  Some of this is aimed at Southwest and it’s original customers who have seen SWA prices rise considerably over the past several years.  This won’t hurt Southwest because that airline is selling frequency and value now that earns a revenue that is consistent with its needs.

It’s more of a strike at American Airlines.  It hits at their airport and with times that actually fit OK into the day trippers that exist between those two airports but who don’t find Love Field (DAL) or Houston Hobby (HOU) convenient.

I expect we’ll see more and more flights from DFW to other Spirit destinations over the next 12 months and most will be aimed squarely at AA routes.

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Scott McCartney, Wall Street Journal blogger, is now advising readers to book away from American Airlines citing the fact that their operations are in a shambles and can’t be trusted.  American Airlines is reducing its schedule voluntarily for the next 2 months because pilots are retiring in higher than expected numbers and others are calling in sick at higher than expected rates.

Is there a sickout going on?  I suspect not.  I don’t even think there is a “work to rules” effort going on right now.  I think that pilots are just kind of *done* with their employer right now.  There is no reason to make the extra effort for their job at this point.  If someone feels like they may be about to get a cold, I think they’re just calling in sick as opposed to hoping for the best and making the flight anyway.

I think other pilots see the writing on the wall and realize that their retirement is going to be improved by hanging around this airline.  If they’re eligible, they’re leaving in many cases.

This is what I meant by American Airlines still having many, many problems with their service and operations in light of the rather hostile actions that have gone on between the company and its unions.  You can force the issues, fight in the court room and win the battles during bankruptcy but . . .

What do you have to succeed with even upon bankruptcy exit?  Not much.  Hostile workforces don’t help retain existing customers and attract new ones.   This is the revenue side many have spoken about and I continue to question AA’s premise that it can operate successfully on the revenue side upon bankruptcy exit.

All of the employees who are directly involved in serving AA customers are now royally pissed off at the company and its management and do not feel motivated to do anything to help this company succeed.  And I can’t say that that attitude is undeserved.

This isn’t all about what American Airlines has done over the past 10 months either.  It’s about how American has treated its employees for as many as 7 years.  It hasn’t negotiated in good faith and it hasn’t really tried to achieve equitable contracts and if it had, quite frankly, I’m not sure we would see American Airlines in bankruptcy today.

Yes, I think the unions have, over the years, made unrealistic demands and have even been led by contentious people but leadership starts at the executive level, not at the union leadership level.  It’s an executive team’s job to make that side of the company work and to preserve a harmonious and productive relationship with its work force.  That just hasn’t happened at all.

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Emirates CEO Tim Clark has revealed that Emirates is in talks with American Airlines to establish codeshares on flights and extend reciprocal frequent flier benefits.

And now I understand why QANTAS had the comfort level to do so itself.

For those of you wondering if this is a precursor to Emirates joining Oneworld, I think not.  Emirates does enjoy codesharing with many airlines and it will continue to do so with both legacy and newer full service airlines.  I do not believe they see value in joining an alliance because that would be more limiting to an airline with aspirations to be a truly global airline itself.

These codeshares are about providing feed to Emirates flights and providing follow-on connecting flights to its own customers.

The real question, in my mind, is this:  Will IAG (British Airways and Iberia) see this as inspiration to do a deal itself with someone like Emirates if not Emirates itself or will Willie Walsh (CEO of IAG) resist this to the end?  I suspect the latter will be true but I think the former would be better for IAG in the long run.

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Change or divorce in marriages is a traumatic time for all sides.  The relationship between AA pilots and AA management has been a classic co-dependent and hostile relationship for a pretty long time now.  Both sides have been doing the same thing over and over again expecting a different result.

What’s a good deal look like to AA pilots?

I think it’s divorce.  Right or wrong, I think the pilots see a relationship with their management that is so toxic that they just simply want out.  Since there is more of them than there are management, the pilots want management gone.  They want a fresh slate with someone new.

Its not entirely unreasonable for them to want this.  It has been a toxic relationship but . . . change doesn’t mean things get better either.  The desire to see someone, anyone else in leadership at AA could lead to driving change that is worse.

It seems to me that the leadership at the AA pilots union, the Allied Pilots Association, needs as much restructuring and change as the executive leadership at AA.

Frankly, not only am I not a fan of AA executive leadership, I’m in violent agreement that it needs to change.  It’s mediocre at best and pretty awful at its worst.

But it got there, in part, with help.  Unions at American Airlines drive their points with a baseline from the 1980s.  Sadly, the airline industry doesn’t operate in the 1980s and, frankly, the 1980s were not a healthy time for airlines anyway.

We think that everyone just wants more money.  I suspect that that isn’t entirely true.  For instance, I suspect that AA pilots would like to see less stagnancy in their positions at the airline.  I think they would like to see a better quality of life that allows them to work hard but also experience a life outside AA.  I think they would like to experience some new challenges and get to expand their world view as much as anyone else.

But it won’t happen without  a fundamental change in the leadership at the union.  That leadership has been so focused on taking power and using it to ding the AA executive leadership that it has lost sight of what is truly good for its membership.  There are no self-examining conversations about how to work in a change industry and achieve job satisfaction and reward.  I think David Bates, former APA President, tried to start that conversation but I think the structure of leadership at the APA made it impossible to do.  There was and is more reward for the Board of Directors to second guess and undermine the president of that union.

This isn’t just true for the APA.  I believe the APFA needs a similar change in structure and a similar conversation about how to achieve more job satisfaction and reward in a changed industry.

Until those conversations happen, it’s unlikely that anyone is going to be happy with any of the choices in leadership for AA at this point.

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American Airlines’ bankrtupcy judge has decided that AA can abrogate its agreement with its pilots and impose terms upon them.  Based on what I’ve read, AA could choose to impose its original Section 1113 terms or better terms, if it so chooses.  At this point, the pilots are left to the whims of American Airlines.  American Airlines has said it will announce its intentions in the near future.

On a related note, a spokesperson for the unsecured creditors committee has said that the creditors see it as absolutely necessary to have a long term pilot agreement in place to exit bankruptcy.  This makes things tricky for AA since it means that simply imposing terms and moving on isn’t satisfactory to the creditors.  A real, negotiated agreement is necessary.  AA doesn’t have much maneuvering room with its pilot union since they’ve rejected the last, best offer.

In addition, the pilots have strongly indicated that they simply do not wish to do a deal with the AA executive team at all.  Their vote on the last, best offer made that clear.  Enter US Airways.

US Airways probably can get an agreement in place in short order.   At least enough of an agreement to satisfy creditors.  Once again, US Airways is in a strong(er) position to negotiate a merger ultimately.  I think the only way the pilots will agree to something is if the company’s exit from bankruptcy doesn’t see CEO Tom Horton and his team in charge.

Why?  Because these pilots gave up 13.5% of the equity stake available in the reorganized company to make their disapproval vocally known.  That equity stake was a big deal politically and financially.  We’re also talking about a group of people who, in many respects, can afford to draw this out to AA’s disadvantage.

American Airlines can’t afford to be delayed in anything. It needs deals in place and a firm plan drawn up in order to exit bankruptcy.  It doesn’t have all the deals it needs and therefore can’t offer a firm plan either.

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The APA and American Airlines are facing off in bankruptcy court in New York City today.  The APA contends that the last, best final offer should be the baseline of the Section 1113 terms whereas AA thinks that the judge already addressed everything but 2 terms that are being revisited.

The judge did acknowledge that AA needed its savings in his last ruling and did seem to indicate that if AA fixed two minor issues, he would rule in their favor for Section 1113 terms.  Smart money says that AA will get what it wants this time.

But I am not so sure.  This judge hasn’t been inclined to be punitive in his rulings thus far and worked extra hard to see if AA could come to an agreement with all its unions.  If anything, he’s bent over backward trying to see to it that agreements with unions are in place and reasonable for both parties.

No doubt he may have been annoyed at the APA voting down the last, best offer but annoyance doesn’t have a place in the courtroom when it comes to judges and this judge seems to avoid it quite a bit.

The bankruptcy judge is also there to see to it that creditors are protected.  Reasonable union agreements protect creditors when an airline exits bankruptcy.  Unreasonable union agreements offer the potential for labor strife that adds risk to the exit.

I think there is a chance that the judge may try to see to it that the baseline of the pilot Section 1113 terms is, in fact, the last best offer.  Or something closely approximating that.

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US Airways has signed American Airlines Non-Disclosure Agreement and plans to engage in reviewing sensitive American Airlines information with AA in order to make a better determination if a merger can be done and, if so, how it should be done.

Expect both airlines to go pretty radio silent on this issue for many weeks now.  It takes time to review data and it takes time to do an analysis on that data.  US Airways has until December, more or less, to formulate a plan and have it ready for presentation.

If we hear of anything from AA about this process, especially from Tom Horton, expect this to become a much more ugly fight.

AA goes into this with the public thinking that it is already improving its situation with respect to reported profits for the past 2 months.  Those reported profits aren’t “real”.  Bankruptcy has allowed AA to stop paying many creditors and to reduce payments to others.  Its operating costs are artificially low presently and combine that with the summer season and you get what appears to be “profit”.  It’s a nice publicity announcement and can certainly go a long way towards confusing public perception but analysts know better.

Also of interest is the fact that AA has revealed it has signed NDAs with other parties as well.  These may not be airlines and, in fact, they may be investment companies interested in participating in a stand-alone exit where the equity they would hold is quite likely to see a considerable gain in the first year.

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Laura Wright, CFO of Southwest Airlines, has announced her upcoming retirement.   Wright will retire on Sept 20th but remain within the company until the end of the year to assist in the transition to her named successor, Tammy Romo (current VP of Planning).

Wright is one of many exceptional airline executives that sit at Southwest Airlines.  Frankly, I’ve often wondered why some of those executives don’t get headhunted by other airlines as they tend to be the very cream of the cream of the crop.  Wright’s talent as CFO as well as her ability to partner with SWA executives is an excellent example.

As always, I expect that some will speculate on change at Southwest Airlines with a newcomer.  The thing is, Southwest not only has great executives, they are a great training ground for upcoming executives.  These people get mentored into the company in ways not seen at any other airline.  And somehow they are kept in the fold.

The truth is that SWA could lose half of its executives overnight including the CEO and I think they would barely miss a beat in operating the airline.  Wright was mentored by CEO Kelly and has no doubt mentored a number of people at SWA as well.  Her calm guidance will be missed when it comes to publicly talking about the airline.

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