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Monday, 8 October 2012

Many American Airlines [ AA ] Pilots Feel Painful Cuts





American Airlines pilots knew the cuts were coming, but the union calls the new terms “atomic.”  A company spokesperson tells NBC 5 that there’s no joy in making the cuts, but claims it has to be done for the airline to survive.
“What they’ve elected to do is really kick the hornet’s nest.  They told us they were going to go slow, that they’d like to get back to the bargaining table, but they’ve chosen the nuclear option here,” said First Officer Tom Hoban with the Allied Pilots Association.

Hoban said the cuts coming from American Airlines are just fueling pilots frustrations.  The company got the green light last week from a judge to start slashing $370 million in pilot costs.  The airline isn’t wasting any time.

“We’re going to be working more days with less pay, under some pretty significant, onerous conditions,” said Hoban.

American plans to increase the pilots maximum work time to 90 hours per month.  Hoban said that’s up from an average of 83 hours per month now and that 90 hours equates to about 20 days away from home every month.

The company is also planning to freeze pensions and immediately ease code-sharing restrictions. That allows American to use smaller, regional planes like SkyWest and Express Jet.  Pilots fear it will mean outsourcing their jobs and could impact passengers.

“When you buy a ticket on American Airlines, you expect to get on American Airlines.  With code-share, you could be on ‘XYZ’ and not know when you purchase a ticket,” said Hoban.

American said it tried to reach an agreement with the pilots, just like it did with the flight attendants and ground workers.  Right now, talks are at a standstill, which could increase the odds of a US Airways takeover. “If they don’t have a pilot contract in place, there’s a great deal of financial uncertainty and operational uncertainty,” Hoban said.

The pilots are now voting whether to strike.  The outcome of that vote is expected by Oct. 3.  The union said it will be up to a judge to decide if a strike is legal.

American Airlines spokeswoman Courtney Wallace said “This is more about federal law, which makes it really tough for a union to go on strike, and American and the APA haven’t reached the point where a job action (a strike) or other “self-help” would be allowed. The APA’s own general counsel reminded the union in a memorandum to its national officers and board of directors that any job action would be unlawful."

Airline labor relations are governed by the Railway Labor Act, which lays out a process for handling contract negotiations and labor disputes. Key to the RLA is the National Mediation Board, which steps into contract talks if the union and management cannot reach an agreement.

Under the RLA, a union cannot strike until a) the NMB has concluded that talks have come to an impasse; b) the NMB has proffered binding arbitration to the two sides; c) one party has declined the proffer; d) the board calls for a 30-day, cooling-off period; and e) the 30 days expires without a deal.”












Kingfisher Airlines violates regulations by opening ticket sales; DGCA wants ...
Times of India
NEW DELHI: Kingfisher Airlines in a fresh instance of violation of regulations has opened ticket bookings on its website from October 13, even as sector regulator DGCA awaits the airline's response to a show-cause notice asking why its license should ...
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Times of India
Foreign airlines stop Iran flights as currency crisis bites
Economic Times
TEHRAN: Foreign airlines, including Malaysia's AirAsia and Britain's BMI, are ceasing services to Iran amid its mounting economic problems spurred on by Western sanctions. AirAsia announced it was suspending its four flights a week between Kuala Lumpur ...
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Flight Centre 'asked airlines for no discounts'
The Australian
A BRISBANE court has been told that Australia's biggest travel retailer, Flight Centre, on six occasions asked three major overseas airlines not to lower their prices so the travel agency could continue to make money on commissions. The Australian ...
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Gulf airline Etihad partners with Air France-KLM
Businessweek
DUBAI, United Arab Emirates (AP) — Rapidly expanding Gulf carrier Etihad Airways has agreed to jointly market some of its flights with Air France-KLM in what could be the beginning of a larger strategic alliance, the airlines said Monday. The deal for ...
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'Terrorist threat' forces China plane to land
NDTV
The CZ680 China Southern Airlines flight had originally taken off from Istanbul in Turkey, before its scheduled arrival at Xinjiang's provincial capital, Urumqi. It was en route for Beijing when the alert happened. Domestic reports said the plane was a ...
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NDTV
Kingfisher Airlines staff protests outside Mumbai airport
IBNLive
The airlines issued a statement saying, "We regret that the illegal strike has still not been withdrawn and normalcy has not been restored in the company, thereby continuing to cripple and paralyse the working of the entire airline. In light of this ...
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IBNLive
Kingfisher Airlines should not forget the staff's role in any likely turnaround
IBNLive (blog)
The unending woes of Kingfisher Airlines have been brought into sharp focus by the suicide of a ground engineer's wife, allegedly because she was depressed owing to the fact that her husband had not received his salary for six months. The financial ...
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American Airlines revenue up despite flight problems
Chicago Tribune
American Airlines on Monday said unit revenue, a widely watched measure of pricing power, rose 4 percent last month and would have been higher if not for flight delays and cancellations connected with operational disruptions. Though the number of ...
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Kingfisher Airlines shares down 25% in 6 days
NDTV
At 11 a.m., Kingfisher Airlines shares were down 4.9 per cent at Rs 12.60 on the NSE. This was in sharp contrast to the other two listed carriers. Both Jet Airways and SpiceJet shares traded with over 1 per cent gains amid broad market weakness today.
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After Kingfisher Airlines, UB's beer brands set for a multi-crore knock-out
India Today
After his Kingfisher Airlines, Vijay Mallya's Kingfisher and London Pilsner beers are also likely to get hit. The Bombay High Court on October 1 ordered Mallya's company United Breweries (UB) to pay five times revised water charges with arrears since ...
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Kingfisher Airlines must Fly back, But Will Kingfisher fly again?



Has the end-game begun for Kingfisher Airlines? After flapping its wings about and trying to stay airborne for the better part of the last two years, Kingfisher has finally run out of fuel and seems headed for a belly landing. The government has sent a notice to the airline asking why its flying licence should not be cancelled on grounds of safety.

The airline needs urgent funds to pay up dues to banks, employees and the government and to cover at least a part of its accumulated losses estimated at Rs.7,200 crore. Yet, with banks refusing to touch the company with a bargepole — rightly so too — and Vijay Mallya unable to find a partner, Kingfisher appears headed for infamy as one more in a long list of badly-run free-market enterprises that bit the dust. Unless, of course, if Mr. Mallya brings in his own money, something that he has not shown any inclination to do until now.



HUBRIS IN THE SKY

The reasons for Kingfisher’s predicament are all well documented — over-ambition to lord it over Indian skies, bad strategy in acquiring Air Deccan and competing on price in an environment of rising costs, especially of fuel. That the airline has never reported a profit ever in its 7-year life says it all.

Kingfisher is probably paying a just price but what about its stakeholders — employees, shareholders, customers and lenders — who will also now suffer? Employees have been working without a salary for six months now and the human tragedy was highlighted by the suicide of an employee’s spouse last week. What is the answer to these employees and why is the government not leaning on the company to find funds for at least salaries?

Lenders have agreed to release Rs.60 crore from an escrow account to pay salaries but the company needs more than that to pay the six-month dues to its employees. Though there are other airlines where Kingfisher’s employees can possibly find jobs, the fact is that they have to under-sell themselves as they will be bargaining from a position of weakness.

COLLATERAL DAMAGE

Customers are the next big losers. Kingfisher, at its peak, had a market share of around 23 per cent but it is down to a little over 3 per cent now. It used to fly to more than 25 destinations in the country with 63 aircraft; that is now down to just 10 planes. When such a significant player goes down, the impact on passenger fares can well be imagined. Indeed, fares have been rising steadily over the last few months as Kingfisher gradually pulled out of some destinations and routes and with holiday season approaching now, they are bound to rise further.

Shareholders may well be holding worthless paper in the context of the ongoing troubles. The Kingfisher share was trading close to Rs.200 in early-2008 but since then it has been on a secular downtrend and is now worth just Rs.13.25, which is an improvement over the single-digit prices that it was trading at in August.

The biggest losers of all though will be the lenders who restructured their loans in early 2011. Out of the then outstanding bank term loans of Rs.4,263 crore, as much as a third or Rs.1,303 crore was converted into shares. A consortium of lenders led by State Bank of India got Rs.750 crore worth of equity shares and Rs.553 crore of preference shares. This granted banks a 23.37 per cent stake in Kingfisher. Notably, the Kingfisher share was valued at Rs.64.48 in March 2011 for the purpose of conversion against the then prevailing market price of Rs.39.90 a share. So, the banks lost straightaway. With the share at Rs.13.25 now, the loss to banks from this conversion of loans to equity is Rs.596 crore. Simply put, the banks will get just Rs.154 crore if they were to offload their entire stake in Kingfisher in the market now. Of course, this is assuming that they will find buyers, which is rather optimistic! Besides, the Rs.553 crore of preference shares were supposed to be converted to equity during a planned GDR issue, which may never happen now. Banks also gave other concessions such as lower interest rates. It is interesting that the airline never really flew out of the turbulent zone despite this bailout.

TOO BIG TO FAIL?

Lobbies have been and still are at work trying to convince the government to push banks for another bailout. The banks are clear that it is not an option sitting as they are on big losses already. But it begs the question: why should the government use taxpayer money to rescue a private commercial enterprise that has been run to the ground by a combination of inept management and circumstances? If at all anybody is to be rescued it is the employees and then the banks. Kingfisher Airlines should be allowed to fail if only for reasons of flight safety. The DGCA has questioned the maintenance of the aircraft and their airworthiness. There can be no compromise on this score.

Kingfisher Airlines, in a fresh instance of violation of regulations, has opened ticket bookings on its website from October 13, even as Directorate General of Civil Aviation (DGCA) awaits the airline's response to a show-cause notice, asking why its licence should not be cancelled given its irregularities.

Even makemytrip.com, one of the largest travel portals in India, has started selling Kingfisher tickets from the same date.

The cash-strapped carrier, which has not paid salaries to its employees for the past seven months, grounded operations from October 1 due to workers unrest and decided to take bookings from October 5, which was deferred to October 8 and then to October 12.

However, while civil aviation minister Ajit Singh had made it clear that the airline cannot take off without convincing the government of a sustainable recovery plan, which should include payment of salary dues, the airline has all of a sudden opened bookings without intimation to aviation watchdog DGCA.

"A few more people have brought this to my notice. We will write to them to stop this," DGCA head Arun Mishra told ET.

While other big travel portals said they haven't got any cue from Kingfisher AirlinesBSE -4.91 % to start selling, neither do most of them want to sell the airlines' tickets as they want to avoid problems like refunds in case of sudden cancellations, makemytrip.com said they have no control over this.

"We have no control over this. All I can say is that we are offering full refund on Kingfisher tickets for travel for the whole month of October. We want to ensure our customers don't lose money," travel portal COO Keyur Joshi said.

Meanwhile, an executive from another travel portal said that the airline told them that the response to the DGCA's show-cause notice is supposed to be different from future plans, which involves getting the workforce and funds together.

A day after one of Kingfisher Airlines employees' wife committed suicide, citing financial stress as her husband was not paid for months; the DGCA shot a show-cause notice to the Vijay Mallya-owned airline asking it to explain why its licence should not be cancelled.

According to the notice, abrupt cancellation of flights over past 10 months causing inconvenience to passengers has been "tantamount to non-compliance...which is punishable under Schedule VI of the said rules".

If the airline fails to reply to this show-cause by October 20, "it will be presumed that you have nothing to say in your defence and suitable action, as deemed fit, shall be taken against your organisation ex parte," the notice reads. Employees of the airline have confirmed that so far no communication about payment of salary arrears has been made to them. Kingfisher Airlines did not send any response to ET's questions on reopening of bookings.












The Hindu
Amid crisis, Kingfisher Airlines top executives get hefty pay hikes
IBNLive
Among the country's three listed airlines also, Kingfisher CEO Sanjay Agarwal's pay package was the second highest in the last fiscal ended March 31, 2012, as per the remuneration details provided in their annual reports. Recently, Kingfisher had to ...
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IBNLive
Kingfisher airlines risks losing licence
gulfnews.com
New Delhi: India's aviation regulator asked Kingfisher Airlines Ltd why its licence shouldn't be cancelled or suspended after the cash-strapped carrier extended a shutdown following a strike. Kingfisher hasn't come up with an operational plan, the ...
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gulfnews.com
Amid crisis, Kingfisher CEO gets hefty raise; amongst top-paid airline executives
NDTV
New Delhi: Air carriers may be flying through rough weathers, but their top executives have got handsome pay hikes, including the Chief Executive Officer (CEO) of crisis-ridden Kingfisher Airlines, who has emerged as the second-highest paid among all ...
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NDTV
Airline chiefs, including Kingfisher's Sanjay Aggarwal, get hefty pay raises
NDTV
Kingfisher CEO Sanjay Aggarwal's pay package was the second highest in the last fiscal ended March 31, 2012, as per the remuneration details provided in their annual reports. Recently,Kingfisher had to announce a temporary lockout due to employee ...
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Kingfisher CEO is highest paid top brass among airline chiefs
Daily Bhaskar
While Mallya was not paid anything at Kingfisher and another group firm UB Engineering, he got sitting fees of Rs 1.2 lakh from United Spirits, Rs one lakh each at United Breweries Ltd and Mangalore Chemicals and Fertilizers, Rs 34,550 at McDowell ...
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Kingfisher Has to Satisfy DGCA on All Issues: Ajit Singh
Outlook
Troubled Kingfisher Airlines would have to submit a "concrete" plan for running the carrier to aviation regulator DGCA and satisfy it on all aspects like safety and payment of salaries before it is allowed to resume flights, Civil Aviation Minister ...
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