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At 79 years, Wilbur Ross will be one of the oldest people serving in any administration, as he serves as Commerce Secretary in the Trump administration. Wilbur Ross is best known for the turnaround efforts in the steel industry. In 2002 he acquired LTV Corp, a third largest steel producer in the U.S. facing tough times and legacy costs, for $125 million in cash and $200 million in environmental liabilities. In 2005 he sold his International Steel Group to Arcelor Mittal for $4.5 billion, and is still an independent director on the Arcelor board. Ross's earlier experience was as a bankruptcy specialist at Rothschild Inc. in the 1970's working on restructurings at Texaco, TWA and Continental Airlines. Analyst Charles Bradford is cited in this report by WSJ's John Miller, who competed with Ross in restructuring proposals for failing assets, and describes Ross as working harder and being tougher to make the deals. Some of these restructurings involved cutting pensions and large layoffs. The entire U.S. steel industry faced problems from foreign competition and legacy costs at the time. This included representing bondholders for Taj Mahal Casino in Atlantic City. At the time Ross told creditors considering seizing the asset for a possible missed payment that it would be better to keep Trump in charge for Trump properties as they would be worth more with Trump inside. This led to Ross later providing critical backing for the Trump campaign and raising money from the business community. Mitt Romney had similiar work at Bain Capital in turnaround of failing companies, later turning to politics as Governor of Massachusetts, and 2012 Republican nominee for president. Both Romney and Ross have come under criticism for their role in cost cuts at companies involving layoffs and cutting worker benefits. ...

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Airline capacity is shrinking, and the delays in the Airbus and Boeing fuel efficient planes development and introduction means even less capacity. This year airlines will have retired one plane for every two being added, last year about 1 planes was retired for every 4 being added according to Aero Transport Data Bank, a French infomation company. And fuel accounts for 40% of airlines direct operating cost, compared to 15% in 2002 according to Ascend Worldwide, an aviation consultancy.

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Airlines are placing placeholder schedules full of flights 6 to 9 months ahead of travel dates. The 2 months before the travel date the real schedule will be placed. At the time of travel some flights with few passengers will be cancelled. Airlines are also flying directly to travel destinations from smaller cities, new flights are setup for destinations such as Israel because of vaccinations, Reykjavik, and other destinations such as Greece that are opening up for vaccinated people in the US. In 20 years there has never been a time when airlines are planning flights in this way. A vacation surge is under way as vaccinations increase. Federal money to aid airlines recovery is helping airlines bring back planes and new flights, retrain pilots. Business travel is down and likely to stay that way, so that the surge is expected mostly from vacation travel. Delta has the unique situation where it can increase capacity by 30% by ending its block on middle seats on April 30, 2021. Delta's available seat miles are expected to be 80% of 2019 showing that a recovery is underway as more people book airline travel. ...

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AMR announces it will purchase 260 A320 planes from Airbus and 200 additional 737's from Boeing. This is the first order from Airbus since the 1980's. Airbus and Boeing have agreed to $13 billion in lease financing to fully cover 230 deliveries . AMR president Horton says financing has been arranged for all othe orders from 2013 to 2016 and for 80% of 2017. This is critical because AMR is still losing money. Its second quarter loss increased to $286 millon from $11 million the prior year. Total debt is at $17.1 billion on June 30, 2011 compared to $16.1 billon the prior year, and cash balance at $5.1 billion the same as prior year. The new order will help reduce fuel costs. They will use 35% less fuel per seat than the old MD-80 planes according to AMR CEO Arpey. The new engines on the aircraft deliveries of A320s and 737s in 2017 and 2018 will provide even more fuel efficiencies compared to the 737s and A320s for this model year. For this reason Standard &Poors says the large order and financial commitment by AMR does not affect its ratings. It said the order will result in an airline that is over time more profitable because of the fuel effiencies gained but also more heavily indebted. S&P estimates of fully adjusted debt are at $24 billon. For Boeing the order means a decision to go with a new engine 737 and not an all new model that would succeed the 737. The technology was there says Jim Albaugh, CEO of the Boeing commercial plane unit, but the production system was not clearly understood to get production to 60 planes a month and avoid delays. For Airbus the AMR order is a significant advance. Except for Southwest which has an all 737 fleet, AMR was the last holdout without any Airbus planes. And the decision by Boeing to stay with a new engine 737 means Airbus wil not have to worry about Boeing leapfrogging the A320neo, which is anew engine A320. ...

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Judith Dobrzynski's interview with David Neelman, CEO of Jet Blue, at the airlines offices in Forest Hills, Queens. Neelman talks about the problems facing Jet Blue as it faces losses in 2006. This follows rapid expansion at the low cost carrier. He says Jet Blue did not monitor costs effectively. "Other problems include not pricing connections competitively with other airlines and poor revenue management. Analysts say low cost carriers will have a difficult time with high oil prices. Neelman maintains that it still works for oil at $60 a barrel. Jet Blue is turning its order of 100 Embraer jets, planes with 100 seats and 200 mile range to advantage, by gaining flexibility to serve short haul destinations from New York and Boston to Columbus, Tucson, Nashville, Houston and other places.

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Airlines are using the savings from lower oil prices to do do much neded upgrading and improvements on planes, for improving airport facilities and to reward employees. Airlines are investing at the best rate in 13 years. Much of the investment goes to upgrade service for business class travel. As planes are full airlines have little incentive to reduce fares. American Airlines says it wil invest $2 billion to improve service inside planes. Air France-KLM says it is spending $1.2 billion to refurbish planes and modenize airport lounges, ground services. IATA estimate is for airline industry profits to go up from $11 billion in 2013 to $19.9 billion, increasing to $25 billion in 2015, almost doubling in 2 years.

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Boeing is working out pricing on its new 777X jet to include the fuel efficiency savings made by airlines using the new aircraft. The new plane would save 20% more fuel per seat than the current 777 jets. Airlines spent $210 billion on fuel in 2012. About half the cost of a long range flight is on fuel.The Dreamliner price is at about $290 million. The 777X could be priced around $400 million, with discounts bringing this down to above $200 million for the 400 seat aircraft. Earlier pricing efforts by Boeing on the 787 Dreamliner were based on manufacturing costs going down with a significant portion of work done by suppliers. After problems in manufacturing, supplier issues and the learning curve, Boeing will take a more conservative approach to pricing this time without the steep discounts in earlier periods. In pricing the A320neo EADS passed on half of the fuel efficiency savings to buyers, and only half added to the price.

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Delta is focussing attention on upgrading planes and improving customer service. Delta had the highest number of customer complaints in the first half of 2010, according to the Department of Transportation. Delta ranked 14th in on time performance. Delta is upgrading planes with video and TV programs and flat-bed seats. The airline is spending $1.2 billion to upgrade its terminal at JFK airport in New York.

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Heathrow was built haphazardly as traffic increased since its opening in 1946, with a capacity to handle 45 million passengers at its 4 terminals it was congested and handled 68 million annually. The building of Terminal 5 will ease congestion and increase capacity by 45% making a big difference for British Airways which will operate out of T5 and a big difference in baggage handling ( a million bags weren't ready for passengers at destination in 2006), in the lounges and lounge environments for waiting passengers 2500 at a time) ., and after an annex is built by 2010 passengers will not have to be taken by bus to waiting planes. other airports like Schipol with 4 runways compared to Heathrow's 2 and built with a better layout and plan, and airports in Asia of Singapore Airlines and in the Middle East at Doha are upgrading so BA will only be doing what places are doing. Because the terminal hangups have been costly for British Airways leading to a shrinking of about 20% of its flight network, as it concentrated more on upscale customers, and lost passengers to more efficient airlines., ithe cost will likely be paid off quickly for BA. Demand. is so high at Heathrow that a pair of takeoff and landing spots can cost as much as $50 million and would be going up as Star Alliance and Skyteam member airlines move ito BA's old facilities. Considering the losses from th inefficient setup at the old terminal BA's estimate that T5 savings would cover its cost of 330 million pounds ($660 million) to equip the new building in in the next 10 years may even be understated. Of this 62 million pounds was spent on the new lounges. BA leases the T5 Terminal from Heathrow's BAA owned by Spain's Ferrovial SA, which spent $4.3 billion to build T5. ...

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When Airbus launched its superjumbo jet in 2000 with seating for 550 passengers large airports said they needed to upgrade facilities to meet the larger size. Technological advances and preference for smaller jets flying directly to many locations have doomed the Airbus A-380. Airbus announced it will stop making the A380 in 2021.

Technological advances since 2000 with lighter carbon fiber parts and super efficient engines make it possible to fly smaller jets directly to many airports reducing the need to use hubs. Airlines preferred these jets. Only Emirates flying out of Dubai which uses half of the A380 superjumbo jets has continued with the large aircraft which has 37 gates specially designed for 380 use. 

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An indepth look at Mexico, its assets, its huge potential and what is holding Mexico back. It ranks much higher than Brazil in many respects- higher investment as a fraction of its GDP, technical education, an easier place to do business, less regulation, better management talent, more industrialized. In 2010 Mexico had $400 billion of business with the U.S. With rising Chinese wages Mexico is an attractive place for foreign investment, with a hardworking and educated workforce. Mexico suffered badly during the 2008 recession in the U.S. It is trying to reduce its dependence on exports to the U.S in key areas such as the automotive industry. Exports to the U.S. by the automotive industry are now 65% of the total, and the auto industry association in Mexico is working to bring this figure to 50% by exporting to Latin America and Europe. Economic growth was 5.4% in 2010, and expected to be 4-5% in 2011. Drug violence may have reduced the growth by one percentage point according to some estimates. The think tank, Mexican Institute for Competitiveness, estimates that economic growth would be 2.5% percentage points higher if labor market and competition laws are changed, and the oil industry is opened up to foreign investment as happened in Brazil. A study by OECD and the Federal Competition Commission (CFC) of Mexico has shown that 31% of Mexican household spending goes to products operating in high price monopolistic or oligopolistic markets. The bottom ten percent spend even higher proportion of incomes, around 38%, for products supplied in such markets. This includes pharmaceuticals, airline travel, banking, and electricity. Taking on these cartels is a difficult task. The CFC is beginning to take the first steps in this direction, in what will be a long road to fair prices for Mexican consumers. Banking was opened to Wal-Mart. The collapse of Mexicana was an opportunity to auction landing slots to other airlines. An auction system has been developed by CFC for drugs. A new competition law sets penalties for collusion in pricing, with upto 10 years in jail. And Carlos Slim's telephone monopoly was fined $1 billion for its telecom monopoly practices. In 2009 the Calderon government shut down Luz y Fuerza, a state electricity company costing the governmment $3 billion in subsidies for an highly inefficient operation. ...

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Pearlstein says American Airlines (AMR) management had hoped to reduce employees count by 13,000, reduce benefits for employees and retirees and reform work rules by going through bankruptcy in the manner of other airlines such as Delta and Northwest. As it turns out AMR's unions and US Airways have made their own deal and come up with labor agreements that are likely to result in a merger deal with AMR with 1.2 billion in savings from synergies, instead of relying on labor savings for $800 million as AMR management had planned. This is because US Airways CEO, Doug Parker, sees increased savings and revenue from a new combined airline and a better hands on management team. Part of the reason is also the the way the combined airline provides additional feeder traffic from smaller cities to hubs in the east coast and midwest markets and in the Miami routes to South America. The Pension Benefit Guarantee Corporation also tacitly sees the benefit of a stronger airline so that its funds are not depleted further by having to support AMR's underfunded pension plan. The creditors have also realized what all this means by increasing the value of AMR bonds to 50 cents on the dollar from 30 cents on the dollar....

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Profit outlook for global airlines dims with the sluggish global economy and high fuel prices. This is affecting most airlines including Etihad and Emirates airlines in the Middle East. Qantas forecast a 91% drop in pretax profits for the fiscal year ending June 2012 falling to A$50 million.

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How the Delta Pan Am merger is still a mess at JFK Terminal. Not a good sign for future mergers. Describes the results of prior mergers and shows a rather mixed record at best. Cites difficulties such as meshing computer reservation systems and facilities. Of major importance is the pride in their work and energy of the people involved, and how it be best tapped into, considering the experience of Continental and Gordon Bethune. America West's Doug Parker is trying to do this at US Airways, and Brazilian airline TAM is working with Varig assets.

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Problems with the CSeries project at Bombardier include cost overruns, and development problems delaying the first model from late 2013 delivery by 2 years. A Swedish carrier dropped out as a customer in August 2014. The effort to compete directly with Boeing and Airbus in larger planes was a risky move as the larger competitors are improving fuel efficiency and reducing prices. Bombardier, suppliers, and the governments of UK and Canada have increased the investment in the CSeries project from $3.4 billion to $4.4 billion. Bombardier's total aerospace sales are $9.39 billion. The project was started by Mr. Beaudoin, grandson of the founder and currently the CEO, when he headed the aerospace division in 2004. It started as an effort to tackle slowing sales by building a new passenger aircraft with 125-160 seats that was 20% more fuel efficient than existing aircraft using engines built by Pratt & Whitney. The competing versions in this market segment were the Airbus 320 and the Boeing 737. Airbus and Boeing responded by putting more fuel efficient engines on the existing A320 and the 737 instead of developing whole new models, something Bombardier had not expected. In Dec. 2010 Airbus launched the A320 neo line, single aisle jets with 124 to 240 seat capacity, promising 15% more efficiency using the same Pratt engine to be used on the CSeries. In 2011 Boing came up with the 737 Max line. Because these are a bit larger than the CSeries is a plus for airlines. Analysts say about 75% of the market is taken as airlines have placed large orders for the A320 neo and the 737 Max. With the CSeries Bombardier is now betting the company that the new aircraft will attract buyers....

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Discount airline Azul carried 2.2 millon passengers in its first year. It was founded by David Neeleman of Jet Blue Airways. Azul operates out of Campinas, a city near Sao Paulo, with 14 Embraer jetliners covering 16 cities. Plans are to add 4 desinatios in 2010, and increase the fleet to 21 by end of 2010 and 33 by end of 2011, according to Neelman. Azul now has about 4% market share in Brazil with plane occupancy at 80%.

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Janet Yellen is nominee to be Treasury secretary in the new administration of Joe Biden. The economic rebound from the pandemic that started in the summer is faltering without additional stimulus and help to businesses and people affected by the pandemic. She is the former chairman of the U.S. central bank the Federal Reserve.  Yellen faces a divided country and likely a divided Congress on many issues facing the country. She says of these divisions and the challenging task she faces of forging compromises- "Right now we live in a country where people look at the same set of facts and come to diametrically opposite conclusions, so that is a big challenge to anyone who takes that job, to build support for your policy outcomes." Yellen believes that the slow recovery after the 2009 financial crisis was because of a lack of a big enough stimulus and policy consensus across parties and with public opinion backing this up. During the pandemic in March 2020 the first stimulus was passed for $3.3 trillion  with support from the Congress and the Trump administration. Today Congress is split on the second stimulus with Democrats pushing for about $2.2 trillion for aid to state and local governments, jobless workers virus testing strategy. Republicans calling for about one third of this or $650 billion to help small businesses and industries such as tourism, retail and airlines. Because  interest rates are near zero much depends on getting an effective stimulus for speedy economic recovery. Conversations between the Treasury Secretary and the Federal Reserve, America's central bank, are critical to getting things done. A lot also depends on how Democrats and Republicans can put aside differences for the sake of getting the recovery back in place where it was during the summer. The media has a role to play in not stoking differences in public opinion which was the case close to the election to an unprecedented degree. One critical aspect of American process in getting things done is to bring Congress and the public with an elected president. Without a conciliatory approach and humility few presidents have succeeded as Congress and public opinion is also critical to getting things done. The House changes every 2 years so that even with  majorities- made transient by the founders of the constitution- nothing is certain without getting the other political party on your side. For the sake of the country and the people devastated by the pandemic, the professional class, media and politicians, Congress and the president need to bring a clear and transparent willingness to look at the national interest going forward.  ...

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Tom Horton's role in the merger of American AIrlines with U.S. Airways. Tom Horton was the chairman of American Airlines, and helped execute the merger, which was very favorable to shareholders.

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Inflation slows to 3.2% for October 2023, and decelerates from 3.7% in the prior month. Moderate energy prices contributed, so did lower used car prices and lower airline fares. It is also broad based decline which makes it sustainable. Biden says- "I am fighting every single day for lowering costs to hardworking families." It reduces the pressure on the Fed to raise interest rates further. Inflation in food, bakery products and fruits and vegetables was 0.2 percent and apartment rental at 0.5 percent, electricity at 0.3% making it truly broadbased. This points to major progress on inflation, that adds to gains in low unemployment that have not been seen for decades. Wage gains for workers after the UAW agreement are spreading to other companies and industries which provides cost of living relief for workers and families across the 51 states for 2024. Lowering inflation and increasing suppressed wages is the way out of the cost of living crisis facing Americans. ...

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This report in WSJ shows how European countries are maintaining salaries of employees who would otherwise be laid off. Governments have setup programs in France, Britain, Germany and other countries to provide employers with the money for 80-84% of salaries up to 2500 pounds ($3165) in Britain and 5330 euros a month in France. As a result 1 worker out of three in the private sector in France for subsidy applications for 6.9 million workers are already received. For the German program 2.4 million workers will get this benefit. About 1 million companies in Europe retain employees with this program of governments simply sending out the salaries with funds directly to households. This helps to keep out the stress for families, particularly families with children. It is as if the employees are not really laid off but asked to stay at home for manufacturing facilities and work from home in shorter hours where work can be done remotely.  Money is quickly deposited into the bank account of employees in these countries, though it is slower in Italy and Spain. It is as if the European approach is put the whole economy on pause for 2 months and restart it almost like before with only a small dent in employment once the coronavirus is pushed out with lockdowns and strict control actions. This will cap German unemployment at 5.9% compared with 5% last year, only a modest increase. The cost is not that much considering what it accomplishes. 10 billion euros is the cost in Germany where the state fund for this has 26 billion euros. 10 billion pounds in Britain. And 20 billion euros in France.  The U.S. adopts a similar approach also through its $349 billion program which provides loans to companies with less than 500 employees to meet payroll for 8 weeks and pay some overhead. Loans are forgiven based on job retention and employees on the payroll and only if the employees are retained. Another program is for companies larger than this. And a third program targets entire industries such as airlines, aerospace, and companies in other industries so that they do not have to layoff employees. U.S. unemployment insurance is modified to work along similar lines maintaining incomes of employees laid off because of the pandemic. Another program sends checks directly of $1200 to households with lower incomes to help them and to help people at poverty level or without jobs. The thrust of both the European and American efforts is the same, lose as few jobs as possible, keep people's incomes steady, and do this in a way that the economy can pick up quickly to the former level in as short a time as possible. Compared to Europe U.S. unemployment will be higher predicted at 9.8% with the expected rebound lowering the unemployment in 2021. ...