Virus - Airliners Cutting Services to Mexico

Continental Airlines Inc., the biggest U.S. carrier to Mexico, said it will cut by half the number of seats it sells to fly to Mexico beginning Monday. The Houston-based airline said it will work with travelers to get them where they need to go, although schedules and routes might change.

US Airways Group Inc., another major U.S. carrier to Mexico, said it would reduce its May and June departures to Mexico by 38 percent, beginning May 10.

Delta Air Lines Inc. also said it would reduce its Mexico service to match declining demand, but it didn't indicate how deep the cuts would be.

UAL Corp.'s United Airlines said it will cut its weekly flights to Mexico from 61 to 24 this month, beginning on Tuesday. Its June schedule will drop from 90 flights per week to 52. United said Mexico represents less than 2 percent of its overall capacity.

Southwest Airlines Co. doesn't fly to Mexico, but its chief executive said bookings within the U.S. may have softened in the past week in response to concern about flying.

"It's having an effect on air travel," Southwest CEO Gary Kelly told The Associated Press. "The bookings this week have been erratic at best ... it does seem like we're off-trend, and I just wouldn't be surprised at all if we find that our traffic is impacted over the next couple of weeks because of this concern."

Kelly didn't provide any numbers, but he said that as schools close -- Fort Worth became the first large U.S. district to shut all its campuses -- and large public events around the country are canceled to avoid spreading the virus, air traffic could fall.

Continental said it will reduce May flights to Mexico by about 40 percent and use smaller planes but will continue flying to all 29 Mexican cities it serves. It also extended its waiver policy to let customers with trips booked for Mexico change itineraries without penalty by the end of May.

Continental was running an average of 450 flights a week to Mexico, and the changes will cut its expected May capacity about 2 percent.

"We were already experiencing soft market conditions due to the economy, and now our Mexico routes in particular have extra weakness," said Larry Kellner, Continental's chairman and CEO.

US Airways said it would reduce its schedule by cutting the number of flights and by flying smaller planes, but that it wouldn't pull out of any Mexican cities altogether.

It also said it would reevaluate its July and August schedule in the next few weeks. It said it hopes to resume its normal schedule of flights to Mexico on July 2.

US Airways said the planned reductions amount to 0.5 percent of its systemwide departures.

Jim Corridore, an analyst for Standard & Poor's, said the reductions are an insignificant part of Continental's total capacity and revenue, and it's an even smaller problem for other airlines.

"If the main concern stays focused on Mexico, swine flu shouldn't have a big impact on the U.S. airline industry," he said. "I would expect that this would be a short-term issue."

Delta officials said they were reducing flight frequencies and switching to smaller jets on some flights to pare capacity to Mexico while still serving 11 Mexican cities. Atlanta-based Delta, which also operates Northwest Airlines, runs 350 flights a week to Mexico.

AirTran Airways, which operates only 16 weekly flights to the resort town of Cancun, will cut two of those flights. Spokesman Christopher White said the decision was based on demand over the past several weeks, not just since the flu epidemic hit.

JetBlue Airways Corp. canceled about a dozen flights over the next month to Cancun because they weren't full enough, said spokesman Bryan Baldwin.

American Airlines was monitoring travel demand to Mexico but hadn't canceled any flights by late afternoon, said spokesman Tim Smith. AMR Corp.'s American is the second-biggest U.S. carrier to Mexico.

Health authorities have confirmed 15 swine-flu deaths in Mexico and one in the U.S., a toddler from Mexico who died this week in Houston. There are more than 500 confirmed cases worldwide, including more than 300 in Mexico and more than 100 in the U.S.

A United Airlines ramp worker in Denver was among those confirmed with swine flu, said airline spokesman Rahsaan Johnson. The man last worked on April 23, and reported getting sick after that, Johnson said. There's been no indication that any of the man's co-workers have fallen ill, he said.

"We're all very happy that he is well. He is out of the hospital and recovering. We are looking forward to welcoming him back to work," Johnson said.

The U.S. Centers for Disease Control and Prevention advised against nonessential travel to Mexico, and European Union officials advised their citizens to postpone nonessential travel to parts of Mexico and the U.S. affected by swine flu.

A check by The Associated Press on Wednesday showed that some flights from the United States to Mexico had an unusually high number of empty seats. Flights heading north appeared to be fuller.

After a flap this week over comments by Vice President Joe Biden, who said he told family members to avoid airplanes, Transportation Secretary Ray LaHood declared that air travel was safe and there was no reason to cancel flights.

Kelly, the CEO of Dallas-based Southwest, said air travel is safe but that his airline had instructed employees to be vigilant about washing hands, sanitizing aircraft and looking out for fellow workers or passengers who appeared ill.

Anyone who looks ill will be given a paper mask to wear during the flight, he said.

Alaska Airlines said it was removing pillows and blankets from all of its 114 planes, and would disinfect and sanitize all of its planes during overnight maintenance. It said crews were also doing an extra interior cleaning of planes arriving from Mexico in between flights.

Sabre, a major airline reservation and ticket-distribution company, said other than a decline in trips to Mexico, travel within the United States and to other parts of the world appeared to be holding steady

Labor Pains - Get in Southwest Airlines Flight

If you're having labor pains, hurry up and go to Amarillo. You may get four free tickets on Southwest Airlines.

Southwest is celebrating its 30th anniversary in Amarillo on Friday, and said it would give the four free tickets to anywhere it flies to the first baby born Friday at Amarillo's North West Texas Health Care System or Baptist -- St. Anthony's Health System hospitals.

Southwest says anyone wearing yellow at the airport gets a free complimentary adult beverage, although 7-year-old in a Spongebob T-shirt probably isn't going to talk them out of a beer.

Southwest Airlines Fare Sale

Southwest Airlines announced a nationwide fare sale Tuesday, with a Thursday deadline to purchase.

It appears from Southwest Airlines' Web site that you can travel from Dallas to the far ends of its system for no more than $109, plus taxes and such, depending on the day. Don't expect the cheap fares to still be available around Christmas to Orlando, for example.

The sale is good for travel between Dec. 2 and Feb. 11.

As Tom Parsons of Bestfares.com notes, we haven't seen many fare sales from Southwest lately. It has been nearly six months, he said.

"I have been monitoring Southwest Airlines airfares for over 27 years and have seen Southwest avoid a nationwide airfare sale for about six weeks, usually between Memorial Day through the 4th of July," Mr. Parsons says, "but to hold out on a system-wide airfare sale for almost six months is historical."

S&P Takes Away the A- Rating of Southwest Airlines

Standard and Poor's Ratings Services downgraded the debt ratings for Southwest Airlines, citing a financial situation that's not as good as it used to be. S&P knocked Southwest's long-term corporate credit rating, which had been rated A-, to BBB+, the second downgrade in 14 months.

Standard & Poor's credit analyst Betsy Snyder, who focuses on airlines, had this to say:

The downgrade is based on a moderate weakening in the company's still-strong financial profile that began in late 2007 and continued into 2008.
While we expect Southwest's earnings to improve in 2009, reflecting continuing benefits from the company's fuel-hedging program and potential market share gains as its competitors reduce capacity in many of its markets, we don't expect its credit metrics to return to the peak levels reached in 2007.

Southwest Airlines Load Factor Declines in September

Southwest Airlines reported a decline in load factor for the month of September due to lower traffic. Capacity, however, rose marginally from the prior-year month. Dallas, Texas-based Southwest Airlines' September load factor, or occupancy, decreased 4.5 points to 63.4% compared to 67.9% in the same month a year ago.

Traffic, measured in revenue passenger miles, for the month declined 5.9% to 5.31 billion from 5.64 billion the prior-year month. Capacity, measured in available seat miles, rose 0.8% to 8.38 billion from 8.31 billion a year ago.

For the third quarter, traffic decreased 4.4%, while capacity increased 2.2% from the prior-year quarter. Quarterly load factor was 71.6% compared to 76.6% recorded in the same quarter last year.

For the year-to-date period, traffic increased 2.6% and capacity rose 4.6% from the prior-year period. Load factor, however, declined 1.4 points to 72.3% from 73.7% reported in the prior-year period.

LUV is currently trading at $14.20, down $0.31, on a volume of 10.78 million shares.

Southwest Airlines - Media Day

Southwest Airlines chief financial officer Laura Wright, speaking before the news media Wednesday, said Southwest will take four fewer airplanes in 2009 than previously planned. Ms. Wright said Southwest has reached agreement with the Boeing Co. to defer the four Boeing 737-700 airplanes to 2016. The change means that Southwest will take only 10 airplanes in 2009 rather than 14.

The carrier has taken delivery of the 26 of the 29 new airplanes it is set to receive in 2008, and it has sufficient cash on hand and operating cash flow to pay for the remaining three if necessary, she said. However, the Boeing strike makes a delivery date uncertain, she added.

Ms. Wright said the nation's on-going financial crisis has not notably affected Southwest, although she said the carrier is concerned about the longer term effect on U.S. business. Ms. Wright indicated that Southwest has some financial exposure in its fuel hedging activities because the other side in the transactions haven't put all the cash needed to entirely cover the hedging positions.

However, she said 85 to 86 percent of the hedges are covered with cash being held by Southwest. She declined to name the financial services companies with whom Southwest has hedged, but said: "They are definitely Wall Street names you'd recognize."

She said Lehman Brothers was not one of the hedgers. "We've got really good protection there. We're not 100 percent protected from counter party risk," she said.

Priority Lanes for Southwest Airlines

Southwest Airlines will create priority lanes to let its best customers -- Business Select and Rapid Reward A-list members -- get through some airports' security checkpoints more quickly than other Southwest passengers.

The "Fly By" lanes, starting later this month, will be installed at Dallas Love Field, Baltimore, Phoenix, Denver, San Francisco, Los Angeles and Orange County, Calif. "We believe that our customers will appreciate the added benefit priority security lanes will provide," said Kevin Krone, Southwest's vice president of marketing, sales and distribution.

"Expediting passengers through security is just one example of how Southwest is enhancing the customer experience by offering added convenience for seasoned travelers," Mr. Krone said.

American Airlines recently announced special lanes for its full-fare coach customers, its elite frequent-flier members and first class and business class customers at check-in counters, security checkpoints and boarding gates.

Southwest Airlines Service to Minneapolis

Southwest Airlines is planning to begin its service to Minneapolis, its first new city in more than a year, even as the airline faces a "very significant risk of slowing demand" due to an economic slowdown, Chief Executive Gary Kelly said Wednesday. The Minneapolis service will initially be limited to flights to and from Chicago.

Minneapolis suburb Eagan, Minn., is the home of Northwest Airlines Corp., which is being acquired by Delta Air Lines Inc. Some experts say the combined airline will probably reduce flights at Minneapolis, but Kelly said the Delta-Northwest deal was not a consideration. Other U.S. carriers have raised fares and sharply cut flights this fall, creating "tremendous opportunities for Southwest Airlines to expand," Kelly said.

Southwest serves more than 60 U.S. cities but has curtailed growth in recent years. Its last new city was San Francisco, in August 2007. The addition of Minneapolis for Southwest comes as airlines face high fuel prices and concern about a weakening economy. Kelly said he cannot tell yet but suspects that economic weakness — and higher fares — are hurting travel demand. He said bookings are still healthy but planes will probably be slightly less full this fall than a year ago.

The airline's chief financial officer said Southwest has "very limited financing needs" and little immediate exposure to the turmoil in the financial markets.Laura Wright said Southwest, which enters fuel-hedging transactions with financial-services firms as counterparties, has no exposure to bankrupt Lehman Brothers and only a small amount to brokerages that don't have a commercial banking side.

Wright said Southwest, which reported about $5.8 billion in cash and short-term investments on June 30, has enough cash set aside to cover about 85 percent of its fuel-hedging positions.

Separately, Southwest said Wednesday it would set aside priority security lanes for business-fare customers and frequent fliers at seven airports beginning next month. It's similar to an announcement two weeks ago by American Airlines, which will add priority security screening and boarding for top customers. Long considered an airline catering to leisure travelers, Southwest has been making a push for business travelers. Customers who buy more expensive "business select" tickets will qualify for the faster "fly by" security screening.

Southwest, the only major U.S. airline to remain profitable this year because of those hedges, which reduce the price it pays for fuel, has slowed growth and deferred aircraft it planned to add in 2009, from 14 down to 10 Boeing 737s.

The Dallas-based carrier has bought 26 new jets this year and has three more deliveries scheduled before year-end, but Wright said the strike at supplier Boeing Co. has put those deliveries in doubt.

Wright, speaking during a company meeting with reporters, said Southwest also has an unused $600 million line of credit and believes it could tap European bank credit markets, as it did this spring. Southwest debt is rated "A-minus," still investment-grade, by Standard & Poor's and Fitch Ratings, and "Baa1" by Moody's.

The company has hedged against 80 percent of its fuel needs for the fourth quarter at an average price equivalent to $58 per barrel fuel, and is more than 70 percent hedged next year at $66 per barrel, Wright said.

Southwest boasts in advertising that it foregoes the fees that other airlines charge, but it too is looking for new sources of revenue. The airline will soon begin testing Internet access in flight, and plans to charge for it. It is boosting sales of alcohol by accepting credit cards instead of cash.

The company reports third-quarter results on Oct. 16. Shares of Southwest Airlines Co. fell 31 cents, or 2.1 percent, to close at $14.20. Other airline stocks rose. Those carriers are not as well insulated from fuel prices, so Wednesday's decline in oil prices offered them more support.

FAA to help Skywest Airlines, US Airways and Southwest Airlines to install the Crash Aviodance Equipment

Three airlines that operate at Los Angeles International Airport will install safety equipment in their cockpits designed to reduce runway near misses, the Federal Aviation Administration announced Wednesday.

The FAA will provide $600,000 each to Skywest Airlines, US Airways and Southwest Airlines to help pay for cockpit systems that show pilots their precise locations at airports and provide them with information about the runways they are entering, crossing or departing from.

Research by the FAA and the airline industry shows that the technology would have eliminated 44% of the serious runway incursions nationwide that were caused by pilot error between 2004 and '08.

Incursions occur when pilots fail to stop at hold lines on taxiways that lead to runways. Aircraft that stray too far present a risk of collision with other planes.

FAA officials say the so-called "electronic flight bags," which include a map display and an alerting system, will be particularly useful to pilots at night, during poor weather or when flight crews are not familiar with the layout of an airport.

"This technology is on every pilot's wish list. It's going to be a big boost for runway safety," said Bobby Sturgell, the FAA's acting administrator. "As a former airline pilot myself, I can tell you that putting these systems in the cockpit will raise situational awareness considerably."

The FAA has agreed to help fund the systems in exchange for information from the airlines that will help the agency evaluate the effectiveness of the system. Under the agreement, each airline will install the technology in 20 aircraft by May 15, 2009.

The $600,000 grants are part of a $5-million program by the FAA to help equip cargo and passenger carriers with the new technology, especially at major airports with runway safety issues.

Southwest Airlines drops flights

Southwest Airlines says it plans next year to drop six flights from San Diego's Lindbergh Field. The airline says the cuts are part of nationwide cutbacks prompted by a declining economy, high oil prices and the difficulties of winter travel.

Southwest spokesman Chris Mainz says the airline is cutting two flights from San Diego to Oakland and one flight each to Albuquerque, Washington D.C., Chicago and Sacramento.

Nationwide, Mainz says Southwest plans to reduce its daily schedule early next year by 196 flights. It will also add six new flights.

Southwest Airlines with Success Secret – Hedging?

Southwest Airlines was the only major U.S. carrier to turn a profit in the last financial quarter. It did it without charging a dime for pillows, water, or even checked bags - all while poking fun at its rivals. What's Southwest's secret? Well, two decades ago, it made a bet on a strategy called "hedging," paying more up-front to lock in the price it pays for oil. Today, the going rate for a barrel of crude is $112 - but Southwest pays just $51. "Just this year alone, 2008, our fuel hedges will likely save us close to $2 billion," said Gary Kelly, Southwest Airlines' CEO. "And our annual revenues are about $11 billion, so it's a very, very significant part of our success." But it's far from the only part, according to aviation analyst Peter Goelz. "Well, Southwest has done it right from the start," he said. "And it starts with the aircraft." Boeing 737, is the only jet in the Southwest fleet. That's compared to the six to 11 models most airlines maintain. "They have less training costs, less spare parts to carry, they have essentially a uni-plane fleet. Smart move," Goelz said. It is all about efficiency. With just one cabin class, coach, and no assigned seats or meals, boarding goes quickly, and cleaning does, too. "A plane comes in here to BWI; it's ready to go out in 20 minutes. And crucially, Southwest steers clear of those big hubs with their high landing fees and congestion. Bypassing, say, Chicago's O'Hare, where one out of every three arriving flights is delayed, it files to nearby Midway, where only one in five arrive late. Instead of flying to Washington's Reagan National, which charges airlines $12.44 per passenger, it staked a claim in Baltimore, which charges just $4.33 per passenger. But even high-flying Southwest, with its no-frills approach, isn't immune to the challenges currently rocking the industry. Some analysts predict that next quarter, for the first time in more than 30 years, Southwest will fail to turn a profit. "It's a very successful fuel-hedging company with an unprofitable airline on the side," said Hubert Horan, an airline industry analyst.