Company Watch July 2005.


France proposes airline tax to prevent spread of disease. French President Jacques Chirac is urging world leaders to support his plan for an international tax on airline tickets that would pay to prevent widespread epidemics. The plan could raise $3 billion each year, according to French officials. Algeria, Brazil, Chile and Spain are among the countries supporting the plan. Jul 28, 2005

Airlines would get relief from committee pension bill. The Senate Finance Committee approved legislation that would overhaul rules governing corporate pension plans. The proposal would give airlines with underfunded plans 14 years to catch up. Some airlines had asked for 25 years. United Airlines recently turned its underfunded pension plan over to the Pension Benefit Guaranty Corp. The PBGC now has a deficit of more than $20 billion. Jul 27, 2005

Pension payments, high fuel prices concern Delta Air Lines. Pension obligations and high fuel prices are two pressing concerns for Delta Air Lines, the company's chief executive said. Pension reforms must happen "as soon as possible" to have a positive effect on the airline, Gerald Grinstein said. Some observers believe the company may have to file for bankruptcy if Congress does not pass laws reforming the pension system. Delta supports legislation that would allow airlines to spread the funding of their plans over 25 years. Jul 26, 2005

Senate committee may add airline provision to pension bill. The Senate Finance Committee is expected to add a provision to pension legislation that would give airlines more time to catch up with pension payments, according to media reports. If passed, the legislation could help Delta Air Lines and Northwest Airlines avoid filing for bankruptcy. Jul 26, 2005

National air fares decline 6%, Transportation Department reports. Air fares dropped by about 6% in the fourth quarter of 2004, according to a Department of Transportation report. Rapid growth of discount airlines has pushed airfares lower for several years. In Dallas, ticket prices fell 7% during the last quarter of 2004. Jul 22, 2005

Lawmakers postpone decision on daylight-saving time plan. The Senate Energy Committee postponed until Thursday a decision on a proposal to extend daylight-saving time. Airlines, the White House and some church groups oppose the plan, which would extend daylight-saving time one month in the spring and fall. The Air Transport Association has said airlines could lose millions in schedule disruptions if the plan goes through. Jul 20, 2005

Lawmakers to introduce airline pension bill soon. The chairman of the Senate Finance Committee said lawmakers would deal with airline pension plans "more strictly" than the companies had hoped. Legislation on the issue will be introduced soon, said committee chairman Sen. Charles Grassley, R-Iowa. Northwest Airlines and Delta Air Lines have lobbied for changes to pension laws, which they say they need to avoid bankruptcy. Jul 20, 2005

Fuel eclipses labor as costliest item at some airlines. Though labor has historically been the costliest airline expense, the price of fuel is now higher than the price of labor for some airlines. Fuel expenses in April for US Airways exceeded $147.2 million, compared with $135.5 million for labor. An Air Transport Association spokesman said carriers are retiring older planes, reducing weight onboard and hedging fuel to reduce expenses. Jul 11, 2005

Airlines worry as oil soars past $60 per barrel. The price of oil closed at $60.73 a barrel. Analysts said the impact of the London bombings would be similar to that of the 2004 bombings in Madrid. A month after the Madrid bombings, the number of daily airline passengers from the U.S. to Spain had climbed 10%. Jul 8, 2005

Demand for planes and parts increases May factory orders. Strong demand for airplanes and parts helped raise U.S. factory orders 2.9% in May. The gain was the largest in 14 months. However, gains across different sectors were uneven, machinery and computer orders decreased, and orders for cars were flat. Jul 6, 2005

Federal insurer takes over United pensions; attendants may strike. The Pension Benefit Guaranty Corp. took over the pension plan for United Airlines flight attendants on Thursday. The workers oppose the takeover, and the union representing them has said the termination of the plan gives them the right to strike. United noted a bankruptcy court approved the takeover of four pension plans by the federal pension insurer.

Jul 1, 2005


WTO creates panel to investigate Boeing, Airbus subsidy dispute. World Trade Organization panels will investigate whether the EU and U.S. paid illegal subsidies to respective jet makers Airbus and Boeing. The U.S. claims Airbus receives illegal state aid to develop its jetliners. Airbus counters that Boeing receives unfair subsidies in the form of defense contracts. Observers say the conflict could escalate into the biggest trade battle in history. Both sides say they are open to further negotiations. Jul 20, 2005


Airbus may forgo state subsidies for A350. The chief financial officer of EADS said jetmaker Airbus may decide not to use state loans to develop its planned A350 jetliner. Hans Peter Ring said forgoing the loans may help Airbus reach a settlement in a dispute with the U.S. over aircraft subsidies. U.S. jetmaker Boeing believes the state loans Airbus receives to develop new planes amount to unfair subsidies. Airbus counters that Boeing receives subsidies in the form of defense contracts. Ring said EADS will decide by September whether to develop the A350. Jul 8, 2005


AirTran Q2 profits drop on high fuel costs. Soaring fuel prices pushed second-quarter profits down at AirTran Airways. AirTran said it spent $108.3 million on jet fuel in the second quarter, up from $54.9 million a year earlier. The airline said second-quarter profits dropped 32%. Jul 27, 2005

Alaska Airlines

Alaska Airlines mechanics reject contract proposal. Mechanics at Alaska Airlines rejected a four-year contract proposal that would have boosted their wages. The airline and the union representing the workers will return to negotiations. Union leaders say the workers rejected the contract because it did not include retroactive pay adjustments. The company says it believes the sides will reach an agreement. Jul 28, 2005

America West Airlines, JetBlue Airways

Three airlines report small Q2 profits. Several airlines posted small second quarter profits. America West Airlines said it earned $13.9 million, up from $10.7 million a year ago. JetBlue Airways reported a profit of $12.2 million, smaller than the $21.5 million reported a year ago. Fuel hedging helped Alaska Airlines, which reported a profit of $17.4 million, compared with a loss of $1.7 million. Jul 22, 2005

America West, US Airways

Board approves US Airways, America West merger. The Air Transportation Stabilization board on Friday approved the merger of US Airways and America West. The board consolidated the airlines' loan balances and created a new payment schedule for the merged company. The merger still needs the approval of a bankruptcy court, US Airways creditors, and America West shareholders. Executives say they expect to complete the merger by early October. Jul 25, 2005

American Airlines

American CEO could get millions in stock if goals are met. American Airlines Chief Executive Gerard Arpey could receive more than 500,000 American shares in 10 years if the company meets certain performance goals, according to a Securities and Exchange Commission filing. Arpey must also stay with American until 2015. The value of the stock on Tuesday was about $7 million. The company's board will decide Arpey's stock compensation. Factors will include profits, cash flow, revenue, stock price, operating performance and labor relations, among other things. Jul 27, 2005

American Airlines

American workers help cut costs as carrier posts profits. American Airlines credits its employees with helping it return to profitability. The airline regularly asks workers for ways to cut costs. A group of pilots...

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