Monday, 27 April 2015


American Airlines Group Inc. (NASDAQ: AAL) today reported its first quarter 2015 results.
·         Reported record first quarter 2015 net profit of $1.2 billion excluding net special charges, tripling the Company’s first quarter 2014 net profit of $402 million excluding net special credits
·         Reported record first quarter 2015 GAAP net profit of $932 million, a $452 million improvement versus the Company’s first quarter 2014 GAAP net profit of $480 million
·         Achieved several critical integration milestones during the quarter, including a combined frequent flyer program and recalibration of the schedule at the Company’s hubs at Chicago O’Hare and Dallas/Fort Worth. Also obtained a single operating certificate from the Federal Aviation Administration (FAA) in early April
·         Declared a dividend of $0.10 per share to be paid on May 18, 2015, to shareholders of record as of May 4, 2015

Excluding net special charges, American Airlines Group’s first quarter 2015 net profit was a record $1.2 billion, or $1.73 per diluted share. This represents a tripling of the Company’s first quarter 2014 net profit excluding net special credits of $402 million, or $0.54 per diluted share. The Company’s first quarter 2015 pretax margin excluding net special charges was a record 12.7 percent, up 8.6 percentage points from the same period last year.

On a GAAP basis, the Company reported a record net profit of $932 million, or $1.30 per diluted share. This compares to a GAAP net profit of $480 million in the first quarter 2014, or $0.65 per diluted share.

See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of GAAP to non-GAAP financial information.

“We are pleased to report record first quarter profits, exceeding the prior record set just last year,” said Doug Parker, American Airlines Group Chairman and CEO. “The credit belongs to our 100,000 team members who are working together to restore American to the greatest airline in the world. We are particularly pleased with the integration achievements our team has realized and look forward to building on those successes through 2015 and beyond.”

Revenue and Cost Comparisons
While core demand remains healthy, first quarter 2015 revenue was impacted by competitive capacity growth, a stronger U.S. dollar and economic softness in Latin America. Total revenue in the first quarter was $9.8 billion, a decrease of 1.7 percent versus the first quarter 2014 on a 0.9 percent decrease in total available seat miles (ASMs). Consolidated passenger revenue per ASM (PRASM) was 13.44 cents, down 1.7 percent versus the first quarter 2014. Consolidated passenger yield was 16.82 cents, down 1.2 percent year-over-year.

Total operating expenses in the first quarter were $8.6 billion, a decrease of 7.1 percent compared to the first quarter 2014 due primarily to a 42.2 percent decrease in consolidated fuel expense. First quarter mainline cost per available seat mile (CASM) was 12.80 cents, down 5.2 percent on a 1.7 percent decrease in mainline ASMs versus the first quarter 2014. Excluding special charges and fuel, mainline CASM was 9.49 cents, up 5.8 percent compared to the first quarter 2014. Regional CASM excluding special charges and fuel was 16.47 cents, down 0.9 percent on a 5.7 percent increase in regional ASMs versus the first quarter 2014. 

As of March 31, 2015, the Company had approximately $9.9 billion in total cash and short-term investments, of which $757 million was restricted. The Company also had an undrawn revolving credit facility of $1.8 billion.

Also in the first quarter, the Company returned $260 million to its shareholders through the payment of $70 million in quarterly dividends and the repurchase of $190 million of common stock, or 3.8 million shares, at an average price of $49.47 per share.

Shares repurchased under the buyback program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate the Company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at the Company's discretion.

The Company also purchased approximately 87,230 shares from its Disputed Claims Reserve at the prevailing market price to satisfy certain tax obligations resulting from the February 10, 2015 distribution.

Approximately $644 million of the Company’s unrestricted cash and short-term investment balance was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars to the U.S. dollar and approximately $23 million valued at 12.0 bolivars to the U.S. dollar, with the rate depending on the date the Company submitted its repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system. The Company’s cash balance held in Venezuelan bolivars decreased $12 million from the December 31, 2014 balance of $656 million due to payments made in bolivars for local operating expenditures.

During 2014, the Company significantly reduced capacity in the Venezuelan market and is no longer accepting bolivars as payment for airline tickets. The Company is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses or other accounting adjustments, which could be material, particularly in light of the additional uncertainty posed by the February 2015 changes to the foreign exchange regulations and the continued deterioration of economic conditions in Venezuela. More generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by the Company and can significantly affect the value of its assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect the Company’s business, results of operations and financial condition.

Notable Accomplishments

Merger Accomplishments
·         Merged frequent flyer programs by moving US Airways Dividend Miles members into AAdvantage®
·         In April, received a single operating certificate from the FAA which allows the airline to operate under one certificate
·         Achieved a ratified 5-year contract with the carrier’s 15,000 pilots that provides industry leading pay rates
·         Optimized the Company’s flight schedule at Chicago O’Hare International Airport and Dallas/Fort Worth International Airport
·         Co-located operations at eight more airports across its network, bringing the total number of co-locations to 114

Finance Accomplishments
·         Completed a $500 million unsecured bond offering priced at 4.625% and a $1.2 billion enhanced equipment trust certificate (EETC) issue priced at a blended rate of 3.425%. In addition, in April the Company refinanced its $750 million 2014 slot, gate and route term loan at lower interest rates and improved collateral terms
·         On March 20, the Company was added to the S&P 500 index

Marketing, Network and Fleet Accomplishments
·         Took delivery of the first two Boeing 787 Dreamliners, which will enter domestic service in May 2015, and begin flying internationally in June 2015. Also, as part of its ongoing fleet renewal program, the Company took delivery of 18 new mainline aircraft, and retired its last Boeing 767-200
·         Signed a codeshare agreement with Korean Air to place its code on American flights between Dallas/Fort Worth International Airport and Seoul, South Korea
·         Became the official airline partner of the Los Angeles Clippers and was named the official airline of the Chicago Cubs and Wrigley Field

Community Relations Accomplishments
·         Commemorated an historic day for the Civil Rights movement by operating a charter aircraft from Washington, D.C., to Montgomery, Ala. for the 50th anniversary of the March on Selma
·         Launched Fuel Smart, a company-wide fuel saving program to reduce usage of aircraft auxiliary power units when jets are parked on the ground; a portion of the savings generated by this reduced usage will benefit Air Compassion for Veterans, a nonprofit organization providing air transportation to injured veterans and active duty military traveling for medical, rehabilitation, or other veteran-related purposes
·         Celebrated 30 Medal of Honor recipients by operating a charter flight from New York to Washington so those recipients could participate in National Medal of Honor festivities

Special Items
In the first quarter, the Company recognized $311 million in net special charges, including:
·         $223 million in merger related integration expenses, including $216 million in mainline special charges and $7 million in regional special charges
·         $99 million in charges relating to the Company’s new pilot joint collective bargaining agreement
·         $6 million in net credits for bankruptcy related items, principally consisting of fair value adjustments for bankruptcy settlement obligations
·         $8 million non-operating net special credits comprised of a $17 million early debt extinguishment gain on the repayment of American’s AAdvantage® loan with Citibank, offset in part by a $9 million charge related to the prepayment of certain aircraft financings
·         $9 million in tax special charges related to certain indefinite-lived intangible assets

Conference Call / Webcast Details
The Company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CT, which will be available to the public on a listen-only basis at An archive of the webcast will be available on the website through May 24.

Investor Guidance
For financial forecasting detail, please refer to the Company’s investor relations update, to be filed with the Securities and Exchange Commission on Form 8-K immediately following its 7:30 a.m. CT conference call. This filing will be available

About American Airlines Group
American Airlines Group (NASDAQ: AAL) is the holding company for American Airlines and US Airways. Together with regional partners, operating as American Eagle and US Airways Express, the airlines operate an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. The American Airlines AAdvantage®program allows members to earn miles for travel, vacation packages, car rentals, hotel stays and everyday purchases. Members can redeem miles for tickets as well as upgrades to First Class and Business Class, vacation packages, car rentals, hotel stays and retail products. American is a founding member of the oneworld alliance, whose members and members-elect serve nearly 1,000 destinations with 14,250 daily flights to 150 countries. Connect with American on Twitter @AmericanAir and at

Monday, 20 April 2015

Aer Lingus Takeover

There is a lot of debate these days surrounding the IAG takeover bid for Aer Lingus. Lots of people are adamant that we should not sell our "national airline".
First of all, Aer Lingus is no longer a legitimate national airline. It is a private company in which the Government just happens to have a 25% stake. In actual fact, Ryanair brings a whole lot more to Ireland, in terms of passengers and tourism income, than Aer Lingus does.

Another sticking point is the Heathrow landing slots, which many believe could be sold, thereby affecting connectivity. It may be an issue for Shannon and Cork airports, which is troubling. But the Dublin-London route is the busiest twin city route in the world, I can't see connections between the two becoming an issue should a sale be agreed. Connections to London itself will be of little consequence in Shannon or Cork as Ryanair will still offer flights to Stansted and Luton. But it is the onward connections which become an issue, flights from Cork/Shannon via Heathrow on to wherever it may be. Again, if the routes stay busy and profitable, then there shouldn't be a problem. However, should passenger numbers drop off on these routes, IAG may well pull them. Then again, as Aer Lingus is a private company itself, it would be unlikely to keep a loss making route, unless it was subsidised by the government.

On the other hand, IAG would be keen to keep any transfer passenger within their umbrella. So Aer Lingus flights into Heathrow, connecting to British Airways flights could potentially become even more commonplace.

The future of many staff at the airline is also in doubt, and with good reason. For many years Aer Lingus was a lazy, lumbering national carrier, propped up by the government. The jobs were easy, laid-back and over paid. With the dawn of privatisation, the new management sought to streamline their staff, get more work out of them for less money. This obviously resulted in conflict with the staff who were used to having it easy. Who could blame them, when for so long they were getting easy money for less work. Many of the staff are lucky that the airline maintains some resemblence of loyalty to the staff, where another management team may have replaced them entirely with harder working, cheaper alternatives. IAG may take this line, and to be honest it would be a good thing for Aer Lingus, although obviously not for the staff.

Lastly, a recent opinion piece by Sean Barrett in the Independent suggests that a sale would damage economic recovery. I can't agree with this suggestion (although I am happy for someone to prove me wrong). Barrett suggests that links to the USA would be at risk in the event of a sale to IAG, therfore damaging our economic recovery as US businesses would be less attracted to Ireland. I believe that Barretts arguement more or less contradicts itself. IAG would want to maintain profitable routes, and if the trans-atlantic routes are as big a draw for businesses as he says, then IAG would want to keep them and make them more profitable. People seem to think that all IAG wants to do is cut routes and downsize the airline, they forget that it is a business, keen on making a profit, as is Aer Lingus. The same standards apply whether Aer Lingus is taken over or not. Bottom line, both Aer Lingus and IAG are businesses, profit is their goal. Any loss making routes would not be maintained by either, independent of the other. Likewise, profitable routes will be maintained by both.

Personally, I can't see an IAG takeover making a massive impact on our connectivity, but I am open to being proved otherwise.

Friday, 17 April 2015

Airbus proposes 11-across A380 seating

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The dreaded middle seat may soon become harder to avoid. That's thanks to a new seat layout unveiled by Airbus this week at the Aircraft Interior Expo inHamburg, Germany.
The European jetmaker has come up with a seating layout giving airlines the option for even more seats in the economy section of its A380 double-decker superjumbo jet. Airbus is doing so with a layout that squeezes an extra seat into each row in economy.
Previously, Airbus' high-density configuration for its A380 fit 10 seats per row. Now, there will be 11 for airlines that chose the layout. Airbus showed a mock-up of the 11-across seating in Hamburg that featured a 3-by-5-by-3 arrangement.
The layout is one of three new economy class "choices" Airbus customers can select for their planes. They're dubbed Premium, Comfort and Budget.
Business Traveller magazine writes "Premium will be similar to today's premium economy product, which comes with a 19-inch width, and is aimed at business and wealthy leisure travelers." The Comfort layout will be similar to a typical economy seat.
But it's the Budget layout that will feature the 11-across seating in the A380 and will be targeted toward carriers looking to lure more coach-class passengers while keeping fares low. They could be installed into Airbus' planes as soon as 2017, according to NBC News.
"Ninety percent of world travelers are economy but not all are homogeneous," Christopher Emerson, Airbus SVP of Marketing, tells the Leeham Co. aviation consultancy via its News and Comment blog. "We want to give a choice to the 90% of the economy passengers.
"They are going to be the driver of the growth, the doubling of growth in the next 15 years," he adds.
A Budget configuration also apparently will be available on Airbus' other widebodies, which would lead to narrower seating in a 9-across layout on Airbus' A330s and a 10-across layout on its A350s. Emerson tells Leeham Co. that those layouts were designed for markets where price is fliers' top -- and perhaps only -- concern.
"This is the Budget Economy matter," Emerson says to Leeham, noting such markets skew heavily toward China and Southeast Asia. "They are completely agnostic to comfort."
As for the extra A380 seats, how has Airbus come up with the room?
John Walton, a "passenger experience" expert, offers this explanation via the Runway Girl Network:
"Airbus has achieved its record density by cutting seat width by between 1 and 0.5 inches, slashing armrest widths by just over 2cm (nearly an inch), angling window armrests outwards, trimming aisles and — in perhaps the worst case of foot space restriction for window passengers since Bombardier's Q400 turboprop — jamming window seats up against the wall so far that they overhang six inches above the start of the curved sidewall."

Wednesday, 15 April 2015

Irelands Ancient East

A New initiative from Fáilte Ireland was announed this week, Irelands Ancient East is a follow up to the hugely successful Wild Atlantic Way which runs down the western seaboard.

A fantastic promotion of the east, at least on paper. This new initiative looks to promote our ancient history in the likes of the Boyne valley, Gleandalough, Waterfords Viking Quarter etc. Attractions that have been there for a long time but until now have received very little promotion. Estimates from Fáilte Ireland suggest the initiative could attract up to 600,000 visitors to the region.

This should go some way to spreading the wealth from Tourism more evenly around the country. This combined with the Wild Atlantic Way and the Centre Parcs development in Longford are beginning to see Ireland marketed as a more whole package in terms of Tourism. Hopefully this will get more Tourists out of Dublin and the south-west regions and into more under-explored parts of the country.

I just hope it doesn't rain too much!

Related Articles : Domestic Tourism Outlook 2015

Monday, 13 April 2015

Domestic Tourism Outlook for 2015

CSO Statistics were released today providing information on where Irish people go for their holidays. No surprise that the UK is the most popular, followed by Spain and France. The domestic tourism market also fared reasonably well with Irish residents taking 1.65 million domestic trips in the fourth quarter of 2014.

CEO of Fáilte Ireland, Shaun Quinn had this to say on the figures.
 "Fáilte Ireland will be playing its part this year to strengthen this domestic performance through relentless marketing – both traditional and online – of the Discover Ireland brand.”

Right away I see a problem. More marketing is not what is needed to bring along domestic tourism. What we need is investment in development. We know what we can expect from Fáilte in terms of their promotions, Aerial shots of the Rock of Cashel, Cliffs of Moher etc. The same thing every time, or some variation of it. Rather than pumping money into marketing, why not put that money into on the ground development?

Yup, looks the same as it did 5 years ago

Yes we have nice Scenery, yes you can surf, hike up a mountain etc. But what then when the weather turns? Sure, Dublin has plenty to offer tourists, both Domestic and International. But what about the rest of the country?

Take Killarney for example. It has almost everything to offer, horse trekking, beautiful scenery, bus tours and so much more when the sun is shining. When the rain comes down, if you don't want to go to the pub, you're in trouble.

Notice I said "When"..not "if"

Even in a business sense it makes sense, you can't keep shoving the same product down peoples throat forever. They will eventually get fed up with us peddling Guinness and Leprechauns.

We can't rely on the weather at all, so rather than spend money on marketing, put it where it will be seen to work. Developing weather proof attractions that we can all use. Just look at the Centre Parcs development, good Tourist Attractions Market themselves in many cases.

Wednesday, 8 April 2015

Thermo Tent has arrived! Insulated Comfort, Outdoors... The team at Irish company Thermo Tents Ltd has developed the world's very first correctly (thermally and acoustically) insulated tent, with applications in Camping and Disaster Relief. And they are coming to on March 24th. It's 'so long' to sweltering days, freezing night & noisy campsites.

Derek O’Sullivan, CEO of Thermo Tents Ltd counts himself lucky to have grown up in a picturesque little townland in the southwest of Ireland. "Perfect for camping in the outdoors, so I did. A lot," he says, "before mortgages and all of those exciting sorts of things took over! Anyway, although I love camping and the outdoors, I hated being too hot or too cold in my tents, whenever the temperature changed outside." Derek also hated that there was no noise barrier between himself and the outside world. "Especially annoying when you haven't been invited to the party!" he says. Derek goes on to speak about his other experiences. "This is an inconvenience for us recreational campers" he says. But Derek has also seen at first-hand what residents of overcrowded refugee camps all over the world have to put up with every single day. "These are ordinary people with families, just like you and me, who have been thrust into this way of living through absolutely no fault of their own. Believe me, these are real and practical problems for millions of refugees, particularly those in extremely cold or extremely hot climates. Thermo Tent will offer both recreational campers and refugees massive increases in comfort levels."

The first Thermo Tent prototype was commissioned in 2014 and after a lot of chopping, testing, changing, retesting (6 prototypes later) Thermo Tent 6 was born. This is the first in the range, and it incorporates a fully insulated sleeping tent. Thermo Tent 6 uses only breathable materials such as Poly-cotton and cotton based insulation, along with steel poles and an Oxford groundsheet. It's hydrostatic head 10,000mm. Derek says this is crucial. "Quality, quality, quality. The Thermo Tent specification is at the very top of the food chain. That will not be compromised. Cheap and cheerful is NOT Thermo Tent. We have developed a recreational tent that can stand up to anything already on the market, and it's insulated. We have also developed another tent, specifically to meet disaster relief needs and we're in advanced talks with a number of agencies right now."

And " Yes, we are using this avenue to announce Thermo Tent to the world. It's perfect for us. What better way to announce our arrival than on the world's biggest Crowd-funding platform? We can get market validation and offer customers the opportunity to pre-order fantastic rewards such as Thermo Tents, Treks in Ireland & Salt Water Chargers (another nifty Thermo Tent product - using only salt water as fuel to charge your electronic devices!). March 24th here we come." I think we should watch this space.

Analysis of the new Tourism Policy for Ireland

On Monday the 23rd of March Minister Donohoe launched the new Tourism plan for Ireland entitled "People, Place and Policy – Growing Tourism to 2025". This aims to set out the plans for growth in Tourism over the next ten years. 

And picked a perfect stereotype for the cover photo

This new policy marks a shift in thinking of how we should approach increasing revenue from Tourism. Whereas previously the main approach was to get as many visitors in as possible, this new policy seems to aim more at getting more revenue from less visitors, a policy which I wholeheartedly agree with. 

This should have been our line of thinking much earlier than now, it makes sense to try to gain more income from less visitors. This makes our tourism policy much more sustainable and has less negative impact on the native population. Providing greater value for the tourist must be key in this. Getting them off the buses and into the towns is a must. Therefore there must be improvements in the attractions and activities offered, particularly in the more remote parts of the country. By this, I am mostly referring to providing things to do when the weather turns bad. Aside from going to the pub, in most places outside the cities, there is very little to do when the rain comes down. It is possible that, while there will be still be bus tours etc running, we lose revenue spent on outdoor activities when the weather is poor.

Bring out the BBQ!

The policy also details and increased emphasis on the role of local communities in Tourism. Again, this is a policy I am in favour of. As the locals know the areas much better than central government would, it makes sense that they should take the lead in highlighting the best of their area to visitors. Interaction with the local population is also a sure way to make sure that visitors enjoy their time in Ireland.

The Wild Atlantic Way will also be an integral part of our Tourism future, as it should be. The drive is a magnificent route with fantastic views. It also draws visitors out of Dublin and will help to spread the benefits of Tourism to more remote parts of the country. However, there is one major drawback. Currently, you cannot rent a car if you are under the age of 25. Whether this is regulated, or just something the car companies are implementing themselves, I am not sure. However, this excludes a significant amount of people from being able to drive along the route and is something that needs to be addressed as it seems nonsensical. Most other countries will allow cars to be rented from at least 23. I could go the the USA now and rent a Ford Mustang for a day, yet I can't rent a Clio here?

The policy also outlines the goal to increase employment in tourism to 250,000 and increase visitor numbers to 10 Million. Both ambitious,yet achievable goals. There are also mentions of the continued role for festivals and events in the sector. While I do acknowledge the importance of these in Tourism, I am wary that we are beginning to see an over-reliance on these. Every town and village seems to be coming up with their own festival for various different things, for the sole purpose of getting in tourists, both domestic and international. At the moment I believe we are at the right level, but much more and it may become too much.

Overall, I must commend Fáilte Ireland and the Minister for taking some positive steps in this new policy. We have the raw materials for an excellent tourism product, and must keep pushing forward with investment and innovation to capitalize on this.

The full policy document can be viewed at